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DOJ Unveils New Policies to Incentivize Responsible Corporate Citizenship and Deter Wrongdoing

On September 15, 2022, before an audience at NYU School of Law that included the Director of the SEC’s Enforcement Division Gurbir Grewal, U.S. Attorneys for the Southern District of New York and District of New Jersey, and several line prosecutors, Deputy Attorney General Lisa O. Monaco announced important changes to corporate criminal enforcement. These changes are the result of ongoing study by the DOJ’s Corporate Crime Advisory Group, a group of DOJ experts tasked with a review of corporate enforcement efforts, which Monaco first publicized last October. During her most recent remarks, Monaco emphasized that the DOJ will implement a combination of incentives and deterrents to “make the business case for responsible corporate behavior” and shift the burden of corporate financial penalties away from shareholders. The Department also released an accompanying memorandum further describing the changes. Monaco’s remarks make clear that the DOJ is taking concrete steps to accompany the more aggressive prosecutorial stance against corporate crime that it adopted last October.

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Bifurcated Settlements Offer Advantages to Individuals Facing an Officer and Director Bar in SEC Enforcement Proceedings

Time to Read: 1 minutes Practices: Corporate & Securities Litigation, Securities & Public Companies

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Increasingly, individuals in SEC enforcement actions faced with the threat of imposition of a bar to their ability to serve as an officer or director of a public company are turning to bifurcated settlements. These bifurcated settlements with the SEC allow individual defendants to settle most components of an action, but reserve the question of whether they should be subjected to an O&D bar to the court. This approach gives individual defendants the flexibility to argue their case on the applicability of an O&D bar to a court, without risking a negative judicial ruling on liability. Given the SEC's somewhat rigid imposition of O&D bars in settlements, resorting to the judicial system, where courts have demonstrated a willingness to adopt a fact-specific and highly individualized analysis to whether an O&D bar should be imposed, can provide significant dividends to individual defendants.

In the attached article "Bifurcated Settlements: A New Approach to O&D Bars," Ropes & Gray counsel R. Daniel O'Connor, a former senior trial counsel at the SEC, and associate Annmarie A. Tenn discuss the novel use of bifurcated settlements to challenge the application of O&D bars. To view this article, please click here.

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