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DOJ Compliance Guidance Places New Emphasis on Middle Management, Use of Data


A recent revision to U.S. Justice Department guidance on corporate compliance is placing increased emphasis on the role of middle management and access to internal data as it broadens the scope of how prosecutors evaluate companies’ policies and controls.


“We wanted to make sure the midlevel management is also echoing that theme, ensuring compliance programs are adequately resourced and empowered,” Sally Molloy, chief of a Justice Department policy and training unit, said this week during an online event hosted by the American Bar Association.


The updated guidance, released this mnth, adds nuance to a document intended to instruct prosecutors on how to evaluate corporate compliance programs. Since it was originally released in 2017, corporate compliance officers have used the guidance as an informal set of standards when developing compliance programs.


Portions of the previous guidance focused on the need for executives and board directors to set the tone for a company’s culture of compliance. The new version adds emphasis to middle managers’ role in enforcing that tone.


The revised guidance also asks prosecutors to evaluate whether a compliance program is adequately resourced and empowered to function effectively—beyond the previous version’s directive to merely determine whether a program had been implemented effectively.

Ms. Molloy, whose unit is situated within the fraud section of the Justice Department’s criminal division, said the most recent revision was intended to reflect the experience of prosecutors and feedback from the private sector.


The increased focus on middle management aligns with a growing recognition that top level executives aren’t the only ones responsible for a compliance program’s success, lawyers say.

“Those are the folks [middle management] that are so important in order to make it all work,” Nicole Sprinzen, vice chair of white collar defense and investigations at law firm Cozen O’Connor, said during a webinar this week hosted by The Wall Street Journal and Dow Jones Risk & Compliance, a data provider owned by Wall Street Journal publisher Dow Jones & Co.


Access to internal operational data—another point emphasized in the revised guidance—is also key in determining whether a compliance program is effective and in gauging the effectiveness of changes to it, said Ephraim Wernick, a partner in the government investigations and white collar practice group at Vinson & Elkins.


“Being able to show the government how that works in practice will be significant,” Mr. Wernick, a former assistant chief of the fraud section of the Justice Department’s criminal division, said during the Dow Jones webinar.


By Dylan Tokar and Jack Hagel, 26 June 2020, The Wall Street Journal

Image by Gerd Altmann from Pixabay

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