SDNY Announces New Corporate Enforcement and Voluntary Self-Disclosure Program for Financial Crimes

Key Takeaways:

• The U.S. Attorney’s Office for the Southern District of New York (SDNY) has issued a new Corporate Enforcement and Voluntary Self-Disclosure Program for Financial Crimes, effective February 24, 2026.
• The SDNY program offers a clear path to declination for eligible companies that self-report qualifying financial crimes, fully cooperate, remediate harm, and make restitution.
• The SDNY policy diverges from the Department of Justice’s Criminal Division Corporate Enforcement Policy (CEP) in several important respects, including a significantly narrower definition of aggravating factors that would disqualify a company from a declination.

Overview of the SDNY Program

On February 24, 2026, the SDNY announced its updated voluntary corporate self-disclosure program for illegal activity involving fraud and financial misconduct affecting market integrity. The program is designed to encourage early voluntary self-disclosure of criminal conduct, promote timely and effective enforcement of criminal laws, encourage repayment of victims, and provide companies with greater certainty when reporting potential financial misconduct to federal prosecutors.

Under the SDNY program, eligible companies that self-report qualifying illegal activity, cooperate fully, commit to ongoing reporting of criminal conduct for three years, and remediate harm will receive a “clear, agreed-upon path to a declination.” Notably, shortly after a company makes a self-report, the SDNY will issue a conditional declination letter stating its intent to decline prosecution, conditioned on the company’s cooperation and satisfaction of all eligibility requirements, including full restitution of victim losses. Companies that self-report can expect such a conditional declination letter within two to three weeks of making a self-report.

Critical Difference: Aggravating Factors

The most significant divergence between the SDNY policy and the DOJ’s CEP relates to the treatment of aggravating factors. This difference has substantial implications for companies considering voluntary self-disclosure.

Implications of the Narrower SDNY Approach

The SDNY’s narrow approach to aggravating factors represents a significant departure from the DOJ CEP and offers several potential benefits for companies considering voluntary self-disclosure:

Greater Certainty. Under the DOJ CEP, even if a company voluntarily self-discloses, fully cooperates, and timely remediates, prosecutors retain the discretion to recommend against a declination if there are aggravating circumstances related to the nature and seriousness of the offense, pervasiveness of misconduct, or severity of harm. The SDNY policy, by contrast, provides that these factors will not disqualify a company, offering companies more predictability as to outcome.

Companies with Serious or Widespread Misconduct. Under the DOJ CEP, companies with serious or widespread misconduct—even if promptly self-reported—may still face the prospect of a criminal resolution rather than a declination. Under the SDNY policy, such companies may still be eligible for a declination so long as they satisfy the other requirements and the conduct does not have a nexus to the enumerated serious offenses.

Recidivists. Companies with prior criminal adjudications are expressly not disqualified from a declination under the SDNY policy. Under the DOJ CEP, a criminal adjudication or resolution within the last five years based on similar misconduct is an aggravating circumstance that may disqualify a company from a declination, although prosecutors retain discretion to nonetheless recommend a declination.

Consequences of Not Self-Reporting

Both policies create significant incentives for self-reporting by establishing strong presumptions against favorable treatment for companies that do not self-report. Under the SDNY policy, companies that learn of illegal activity but choose not to self-report face the risk of having that decision weighed heavily against any future declination request. When a company does not self-report illegal activity and the SDNY later determines that the company’s directors, officers, or employees are criminally liable, there will be a presumption that an appropriate resolution will take the form of a guilty plea, a deferred prosecution agreement, or a non-prosecution agreement with a statement of facts, plus the payment of restitution, forfeiture, and a fine.

Similarly, under the DOJ CEP, a company that met some but not all of the factors required for a declination would be subject to prosecutorial discretion on form, term length, compliance obligations, and monetary penalties, with a maximum reduction of only 50% off the U.S. Sentencing Guidelines fine.

Other Key Features of the SDNY Program

Eligible Conduct. The SDNY program covers fraud by a company or its employees; fraud in connection with securities, commodities, or digital asset offerings or trading; false statements or fraud upon an auditor or federal regulator of financial markets; and other willful violations of the securities and commodities laws that undermine market integrity or harm market participants.

Timing of Disclosure. To be eligible, a company must report the illegal activity prior to receiving a grand jury subpoena or document request from a law enforcement agency or regulator, and before the company learns of the existence of a government investigation. Knowledge of a whistleblower submission, press reporting (absent public reporting of a government investigation), or a prior self-report to another agency will not disqualify a company.

No Financial Penalties. The SDNY will not seek or require payment of any criminal fine or forfeiture, provided the company makes reasonable best efforts to provide prompt and full restitution to all injured parties.

No Monitors. A company will not be required to employ or be supervised by a monitor as part of any resolution with the SDNY.

Continuing Reporting Obligation. For a period of three years, the company must bring to the SDNY’s attention all credible evidence or allegations of criminal conduct by the company or any of its employees that relates to violations of U.S. laws.

Conclusion

The SDNY’s new Corporate Enforcement and Voluntary Self-Disclosure Program for Financial Crimes offers a more predictable path to declination than the DOJ’s CEP, particularly for companies that may have concerns about the seriousness or pervasiveness of the underlying misconduct. Companies facing potential financial crimes within SDNY’s jurisdiction should carefully consider whether voluntary self-disclosure under this program may be advantageous, keeping in mind that the narrower definition of aggravating factors may provide greater certainty of outcome. Companies should also be mindful that both policies create significant adverse presumptions for companies that fail to self-report and should factor those risks into their decision-making.