On March 7, 2024, in an address at the American Bar Association’s 39th National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco announced a significant new Department of Justice (DOJ) policy—a first-of-its-kind whistleblower rewards program designed to create financial incentives for individuals who report misconduct to DOJ. DOJ has historically prioritized incentivizing corporations to voluntarily self-disclose their own misconduct; but, according to Monaco, the new DOJ policy will appeal to individual employees who are uninvolved but otherwise learn about their company’s misdeeds. Monaco noted that while other federal agencies have their own “indispensable” whistleblower programs, these programs function as “a patchwork quilt that doesn’t cover the whole bed.” DOJ intends for its new program to fill the “gaps.”
Specifics of DOJ Whistleblower Program
According to Monaco, the DOJ program, which will be developed in a “sprint” over the next 90 days, will be “simple.” Under the program:
- DOJ will offer a portion of a resulting forfeiture to individuals who report “significant” corporate or financial misconduct.
- Reports must include truthful information not previously known to DOJ.
- Whistleblowers cannot have been involved in the criminal activity they report.
- Payments will be offered only after all victims have been properly compensated and only in cases where there is no existing financial disclosure incentive—including qui tam or another federal whistleblower program.
DOJ expects to announce a formal start date later this year. Monaco highlighted that while the program may reward information on violations of any federal law, DOJ has a specific interest in whistleblower reports relating to:
- Criminal abuses of the US financial system;
- Foreign corruption cases outside the jurisdiction of the Securities Exchange Commission (SEC), including Foreign Corrupt Practices Act (FCPA) violations by non-issuers and violations of the recently enacted Foreign Extortion Prevention Act; and
- Domestic corruption cases, especially involving illegal corporate payments to government officials.
New Program Consistent with DOJ Enforcement Priorities
In her remarks, Monaco reiterated that DOJ remains committed to several core enforcement priorities: holding individuals accountable; seeking stronger penalties for corporate recidivists; and using both carrots and sticks to deter corporate crime. For example, in January 2023, DOJ revised its corporate enforcement policy to provide a presumption of a declination of prosecution to companies that voluntarily self-disclose misconduct, fully cooperate, and remediate in a timely and appropriate manner (which we wrote about here); and in October 2023, introduced a Safe Harbor Policy for voluntary self-disclosures related to mergers and acquisitions, pursuant to which DOJ will presumptively decline to prosecute a company that voluntarily self-discloses misconduct that it discovers at another company that it acquired within six months of the closing date, subject to fulfilling certain conditions. Monaco made clear that these policies will remain in effect alongside the new whistleblower program, and that corporations that voluntarily self-disclose will still receive the benefit of the most favorable resolutions.
Recent Whistleblower Trends
The DOJ announcement continues the trend of increasing reliance on whistleblower policies to incentivize self-disclosure and cooperation. Earlier this year, the US Attorney’s Office for the Southern District of New York (SDNY) launched the new SDNY Whistleblower Pilot Program, which offers non-prosecution agreements (NPAs) to individuals who self-disclose their own misconduct—a significant departure from past DOJ policy (see our blog post here). Monaco also highlighted a similar program at the US Attorney’s Office for the Northern District of California (ND Cal), which is currently piloting a program that offers NPAs to wrongdoers who self-disclose to authorities and cooperate against more culpable targets.
Other federal agencies, including the SEC, the Financial Crimes Enforcement Network (FinCEN), and the Commodities Futures Trading Commission (CFTC), have in parallel launched or updated their own whistleblower programs, encouraging cooperation with sizable financial awards and other forms of protection from prosecution. For example, after adding $300 million to the fund for informant payouts, FinCEN received more than fifty tips within the first month.
Key Takeaways from Monaco’s Announcement
DOJ’s announcement of a financial incentive program for individuals who are not involved in the misconduct they report could be a gamechanger.
- First, the new program may increase the number of matters reported to DOJ for investigation. Data from whistleblower programs of other agencies show that when individuals are incentivized, reporting typically increases. As has always been true, a robust and effective corporate compliance program is the best defense to aggressive DOJ enforcement.
- Second, DOJ’s new program may place additional pressure on corporations to consider self-disclosing misconduct soon after they learn of it. As Monaco said, the new DOJ policy makes clear to corporations, “knock on our door before we knock on yours.”
