- Following revisions to the U.S. Department of Justice’s (DOJ or Department) corporate criminal enforcement policy in September, an official with the Criminal Division announced that the Department may issue further guidance related to the evaluation of compliance policies.
- Specifically, the Department is considering whether it will issue new guidance on policies governing employee use of encrypted and so-called ephemeral messaging applications, which allow messages to be automatically deleted after they have been viewed.
- Additionally, the DOJ is exploring the need for further guidance on the evaluation of corporate compensation clawback policies.
In prepared remarks delivered on Dec. 1, Acting Principal Deputy Assistant Attorney General Nicole Argentieri indicated that the Department is considering new guidance for its revised corporate criminal enforcement policy, related to the use of ephemeral messaging applications and compensation clawback policies. This comes less than three months after Deputy Attorney General Lisa Monaco announced updates to the policy in September.
Personal Devices and Ephemeral Messaging Apps
The September memorandum on revisions to the corporate enforcement policy included a provision instructing prosecutors to consider whether companies had policies governing the use of personal devices and third-party messaging apps. In her recent remarks, Argentieri focused specifically on encrypted and ephemeral messaging services. Argentieri stated that under current policy, the Department considers whether companies that permit the use of such apps are “continually assessing and revising their policies” in order to ensure compliance, particularly with respect to data retention obligations.
While she acknowledged the legitimate uses for such apps, Argentieri cautioned that ephemeral messaging services “present significant challenges for companies’ ability to ensure they have a well-functioning compliance program and ability to access such communications when necessary.” As it weighs the need for further guidance, Argentieri stated that the Department will consider the quickly changing technological landscape, industry-specific record retention requirements and data privacy concerns.
Compensation Clawback Policies
In September, Deputy AG Monaco urged companies to adopt compensation structures that promote compliance, including policies that deter misconduct through financial penalties such as clawback provisions for individuals involved in misconduct. Argentieri stated that the Department is in the process of meeting with agency partners, executive compensation experts, regulators, and members of the defense bar as it crafts potential guidance on this issue. After considering input from these sources, the DOJ “will consider how prosecutors might reward companies that employ clawback policies and/or bonuses and positive incentives for compliant behavior.”
Argentieri’s remarks come as the Department continues to signal a renewed focus on corporate enforcement and white collar prosecutions. As the DOJ considers further policy guidance, companies would be well advised to take proactive steps to implement or strengthen policies governing the use of encrypted or ephemeral messaging applications. Policies should address the permitted use of these applications and the methods to be used for the retention of business communications. Recent enforcement activity by the government demonstrates the significant penalties regulators have recovered in situations where entities did not have sufficient policies and procedures in place to monitor and retain these communications. Additionally, while the DOJ promulgates additional guidance on the subject, companies should consider adopting compensation policies that provide financial disincentives for employees who engage in misconduct. Any such policies must be carefully crafted so that they comply with the various local laws that may be impacted by any sort of compensation clawback.