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Developments
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 See also Attorney-Client Privilege
DOJ
revises its Thomson Memo Dec 2006
- Re: corporate waivers of attorney-client
privilege
- Re: company's advancing attorney's fees to
employees
- Follows judicial and Congressional criticism
Attorney-Client
Privilege Protection Act Dec 2006
- Introduced by Senator Specter on 12.08.06
- "the Department of Justice and other
agencies have increasingly employed tactics that undermine the adversarial
system of justice, such as encouraging organizations to waive attorney-client
privilege and work product protections to avoid indictment or other sanctions."
- Text of act
Senate
Judiciary Committee Sept 2006
- Hearings held in September 2006 criticized effect
of Thompson Memo on right to counsel in corporate investigations
- Sen Specter: "excessive and it impinges
upon the constitutional right to counsel"
USA
v Stein (SDNY) June 2006
- Application of Thomson Memo was found to violate
constitutional rights of KPMG partners
- See USA v Stein
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The McNulty Memorandum
2006
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DOJ
revises its Thomson Memorandum
- By adding new approval requirements before
federal prosecutors can request waivers of
attorney-client privilege and work
product protections
from corporations in criminal investigations
- By instructing prosecutors not to consider a
corporations advancement of attorneys fees to employees when making a charging
decision
- DOJ press release
12.12.06
-
McNulty speech 12.12.06
-
Text of
McNulty Memo
-
Model Annotated Corporate Plea Agreement 12.19.07
Attorney-client
communications should rarely be sought
- If a corporation chooses not to provide
attorney-client communications after the government makes the request,
prosecutors are directed not to consider that declination against the
corporation in their charging decisions
- Prosecutors are to request factual
information first and make sure they can establish a legitimate need before requesting a waiver of privilege to obtain attorney-client
communication or legal advice
Prior
approval requirements:
- Privileged attorney-client communications or
legal advice
- US Attorney must obtain written approval from
the Deputy Attorney General
- Privileged factual information
- Prosecutors must seek the approval of their US
Attorney
- US Attorney must then consult with the Assistant
Attorney General of the Criminal Division before approving these requests
Prosecutors
shouldn't impede advancement of
attorneys fees
- Not to consider a corporations advancement of
attorneys fees to employees when making a charging decision
- Rare exception for extraordinary instances where
the advancement of fees, combined with other significant facts, shows that it
was intended to impede the governments investigation
- In those limited circumstances, fee advancement
may be considered only if it is authorized by the Deputy Attorney General
Deputy
AG McNulty
- Senate committee testimony 9.12.06
Commentary
- Survey of initiative to protect attorney-client
privilege finds weakness
Legislation
and Rulemaking
- introduced by Sen. Arlen Spector
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Thompson and Holder Memoranda 2003
/ 1999
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Thompson
Memo 1.20.03
- Included at DOJ Criminal Resource Manual §161
- DOJ policy lists the factors that federal
prosecutors must consider in determining whether to bring criminal charges
against a corporation
- Revised the Holder Memo
- Unlike the Holder Memo, the Thompson Memo is binding on all federal
prosecutors
- Language concerning
cooperation and advancing of
legal fees by business entities was carried forward from Holder Memo without change
- Prosecutors can consider a corporation
uncooperative if it appears to be protecting its culpable employees and agents
. . . through the advancing of attorneys fees.
Holder
Memo 1.16.99
- Provided guidance
as to what factors should generally inform a prosecutor in making the decision whether
to charge a corporation in a given case"
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Deferred Prosecution Agreements 
SEC_CODE_REF_0090001192884
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AEP
Energy Services (AEPES) 1.16.05
America
OnLine, Inc. (AOL) 12.15.04
American
International Group (AIG) 11.30.04
Banco
Popular de Puerto Rico 9.22.04
BankAtlantic
4.24.06
Bristol-Myers
Squibb 6.13.05
Computer
Associates 9.22.04
Computer
Associates 9.22.04
Micrus
2.28.05
Monsanto
Company 1.06.05
Operations
Management International 9.22.04
PNC
ICLC Corp 9.22.04
University
of Medicine of New Jersey ("UMDNJ") 9.22.04
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SEC - Seaboard Report
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Seaboard
Report of Investigation
- Framework for evaluating cooperation in
exercising prosecutorial discretion
Evaluation
criteria
- What is the nature of the misconduct?
- How did it arise?
- Where in the organization did it occur?
- How
long did it last?
- How much
harm did it inflict?
- How was it
detected?
- What response did the company take?
- Were the Board and audit committee informed?
- Did
the company commit to learn the truth?
- Did the
company promptly inform the SEC?
- What
assurances are there that the conduct is unlikely
to recur?
- Is the
company the same company in which the misconduct occurred (merger - bankruptcy)?
ABA
Letter to SEC Chairman Cox 2.05.07
- ABA proposes specific modifications to SEC
cooperation standards contained in Seaboard Report
- Click
here
to read letter
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Corporate Cooperation -
Precedent Examples
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Merrill
Lynch DOJ 2003
- As company accepted responsibility for its
actions
- Company agreed to take remedial actions
- Over facilitating improper revenue recognition by
Enron
PNC
Financial Services DOJ 2003
- As company accepted responsibility for its
actions
- Company agreed to take remedial actions
over improper use of off-balance sheet entities
Banco
Popular de Puerto Rico DOJ 2003
- As company accepted responsibility for its
actions
- Company agreed to take remedial actions and
paid $21.6mm in forfeitures
- Over failure to file Suspicious Activity
Reports
Chiquita
Brand, International DOJ 1996
- Illegally dumped slaughterhouse waste into a
river
- Submitted false discharge monitoring reports
- Subsidiaries' officers were convicted of
conspiracy and Clean Water Act felonies
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Arthur Andersen RIP
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Was
one of the Big Five accounting firms
- Collapsed in 2002 as a result of Enron scandal
- Firm was convicted of obstruction of justice
- Firm had to stop auditing public companies
because of SEC rules
- Conviction was overturned by Supreme Court on
appeal
Supreme
Court decision
- Overturned conviction because of flaws in jury
instructions
- Instructions allowed the jury to convict Andersen
without proving that the firm knew it had broken the law or that there had been
a link to any official proceeding that prohibited the destruction of documents
Firm
was also implicated in WorldCom scandal
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Related Topics
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