Funds Face Further Responsibilities as DOJ Shifts Focus From Corporate to Individual Wrongdoing

On Sept. 9, 2015, the Department of Justice (“DOJ”) announced new measures to fortify its pursuit of corporate wrongdoing in criminal and civil matters. The policy shift, set forth in a memorandum from Deputy Attorney General Sally Yates, seeks to hold individuals accountable for corporate wrongdoing and ensure full cooperation from corporations in “ferreting out” individual misconduct.

Funds are already facing heightened regulatory requirements. The newly announced policy now marks an additional shift for funds under investigation. Most significantly, the memorandum departs from prior policy in announcing that no credit for cooperation will be given to corporations that fail to satisfy prosecutors that they have cooperated “completely” with respect to investigating individuals within their firm.

The new standard for full cooperation requires companies to identify the individuals responsible for the misconduct the government is investigating — to learn who they are — and disclose that information to the prosecutors. The rules also explicitly apply to employees at all levels, including top-level management.

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