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DOJ to Provide More Guidance on Voluntary Self-Disclosures in Mergers and Acquisitions

The Department of Justice (DOJ) is planning to offer additional guidance on voluntary self-disclosures (VSD) within the mergers and acquisitions (M&A) sector and the role of compliance in such transactions.

DOJ to Provide More Guidance on Voluntary Self-Disclosures in Mergers and Acquisitions

Marshall Miller, Principal Associate Deputy Attorney General, revealed that the DOJ has received substantial feedback from the private sector regarding self-disclosures in M&A since unveiling its new VSD policy earlier this year. This policy is part of a broader DOJ initiative to encourage companies to self-report instances of white-collar crime, including through leniency for issues discovered during post-acquisition due diligence.

Miller emphasized that promoting corporate responsibility includes avoiding unintended consequences, such as deterring companies with strong compliance programs from acquiring entities with misconduct histories. He highlighted that acquiring companies should not face penalties when they engage in thorough pre-acquisition due diligence and prompt post-acquisition integration to detect and remedy misconduct at the acquired firm.

Miller anticipates that Deputy Attorney General Lisa Monaco will address voluntary self-disclosures in the M&A space in the near future. He also indicated that the DOJ aims to extend its VSD approach to emphasize the critical role of the compliance function in evaluating and derisking M&A decisions.

These comments by Miller came shortly after Assistant Attorney General Jonathan Kanter of the DOJ's Antitrust Division noted that the agency had received a significant number of public comments on its new draft merger guidelines and expressed the DOJ's commitment to vigorous merger enforcement.

Miller also highlighted the importance of extending the approach to holding companies accountable for breaching the terms of agreements resolving criminal charges to civil settlement agreements and violations of CFIUS (Committee on Foreign Investment in the United States) mitigation agreements or orders. He noted that "Where companies shirk their agreed-upon responsibilities, they will pay a steep price."

In the context of compensation systems, Miller emphasized that "compensation systems should reward compliance-promoting behavior." He cited the recent example of Grupo Aval bank subsidiary Corficolombiana, which was required to include compliance-related incentives in its compensation and bonus systems for employees consistent with local labor laws as part of its deferred prosecution agreement.

Regarding compensation clawbacks, Miller stated that "[A] paper policy not acted upon will not move the needle—it’s really no better than having no policy at all. Clawback policies and employment contracts should be reviewed to ensure they are fit for purpose—and that review needs to take place long before a company discovers misconduct so that it is well positioned to get the best result for its shareholders."

Miller concluded his speech by echoing Monaco regarding the DOJ's emphasis on sanctions and other forms of economic crime as part of its national security enforcement efforts. He emphasized that "National security laws must rise to the top of your compliance risk chart, with the recognition that even the most innocuous-looking transaction or activity could implicate our collective security."

The DOJ's efforts aim to strike a balance between encouraging corporate responsibility, preventing misconduct, and fostering transparency in the M&A space and broader corporate compliance landscape.


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