Negotiating Global Settlements: The US Perspective

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21.1 Introduction

Strong incentives exist for corporations – particularly those in highly regulated industries vulnerable to potentially debilitating collateral consequences – to avoid litigating a case brought by the government. Among other considerations, protracted and unpredictable litigation can create risks of (1) financial and reputational harm to the company, (2) weakening relationships with regulators, (3) significant legal expense and (4) severe legal and regulatory consequences associated with an unfavourable litigation outcome. As a result, when threatened with enforcement action or indictment, corporations often seek to enter into settlement negotiations with investigating authorities. Nevertheless, a corporation entering into such negotiations must carefully weigh the various attendant burdens and collateral consequences of such agreements.

21.2 Strategic considerations

As a preliminary matter, it is important to consider the impact of all interactions with US authorities on the company’s ability to reach a settlement on favourable terms. Even early in an investigation, a corporation can develop a cooperative working relationship with authorities through prompt and complete disclosure and assistance with requests.

While cooperation is not the right strategic approach in all cases, establishing a record of proactive and complete cooperation can have a substantial effect on the final terms of any resolution, as US government authorities typically consider the nature and extent of a corporation’s cooperation with law enforcement in contemplating whether to settle a matter and on what terms. Both the US Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC or the Commission) have explicitly included voluntary disclosure and cooperation in their enforcement policies. By conducting an internal investigation and self-reporting potential misconduct to authorities, a corporation may increase its chances of receiving cooperation credit and, in turn, more favourable settlement terms.

When beginning to negotiate the terms of a potential settlement agreement at the close of the government’s investigation, a corporation must be particularly attuned to both the timing and the breadth of such an agreement. Regarding timing, certain stages of litigation can be particularly costly for a corporation; securing settlements early may be advantageous for a corporation. For example, in some cases – particularly where the key facts are known early and there is public pressure on the government to act quickly – a speedy settlement may be struck before a lengthy and expensive investigation is conducted. Such circumstances are rare, however, and the government will normally be reluctant to reach a settlement before a full investigation has been completed.

A more common timing consideration is whether settlement can be achieved before indictment or the filing of a complaint, as such public actions carry the risk of significant legal, financial and reputational consequences. Most negotiated corporate resolutions are reached before charges are filed, as companies are eager to avoid the uncertain public and shareholder reaction to a contested litigation.

In terms of the breadth of a potential settlement agreement, a corporation must consider the scope of both the conduct being investigated and the nature of the potential release from liability. To the extent that the government opts to pursue charges, it can be advantageous for those charges to be reflected in a single settlement agreement or in distinct agreements announced simultaneously. This strategy can mitigate the risk of legal, financial and reputational harm associated with multiple days of negative press, carry-over investigations and future litigation. If the government determines not to pursue charges, it can be advantageous to diplomatically encourage a ‘declination’ – a formal notice that the government has declined to pursue the case further[2] – to provide the company valuable closure.

Owing to the government’s focus on the prosecution of individuals, however, it is unlikely that the government will release from liability company employees who engaged in potential wrongdoing as part of a settlement with a company. For example, the Biden administration has repeatedly emphasised that individual prosecutions of culpable employees are the DOJ’s ‘first priority’.[3]

21.3 Legal considerations

21.3.1 Privilege considerations

At times during the investigative process, legal considerations may be in tension with strategic ones. In particular, a company may need to weigh the value of additional cooperation credit for disclosing relevant privileged documents to the government against the value of protecting privileged documents from future discovery in follow-on civil litigation or investigations by other government entities (such as state attorneys general).

Under current DOJ policy, ‘cooperation credit is not predicated upon the waiver of attorney–client privilege or work-product protection’, but still requires the timely disclosure of ‘relevant facts’,[4] which may require disclosure of some privileged materials prepared during the course of an investigation. Such disclosure to the government may waive any relevant protections during follow-on civil litigation.[5] In such instances, a company may consider entering into a limited waiver agreement with the government as a middle ground, but courts may be sceptical of such an agreement.[6]

As part of its investigative process, the government may also engage the company in discussions as to whether charges are warranted. While such advocacy is usually advisable, advocacy documents may not always be privileged. For example, a Wells submission[7] is not privileged or confidential, and therefore can be used later in civil litigation or made publicly available.[8] Alternatively, companies may opt to initiate oral discussions with the authorities to prevent the creation of discoverable material.

During settlement negotiations, a corporation must also be careful in sharing drafts of settlement documents because materials shared with the government may become discoverable in civil litigation. Although documents related to settlement negotiations are generally protected under Federal Rule of Evidence 408,[9] the documents may nonetheless ultimately be deemed discoverable[10] or even admissible as evidence.[11]

21.3.2 Limitations and tolling agreements

In the course of a government investigation, statutes of limitations will often come into play.[12] The government may ask the company to sign a tolling agreement – an agreement to waive the right to claim that litigation should be dismissed owing to the expiry of a statute of limitations for a particular period.[13] It may be in the best interests of the company to sign it, as a form of cooperation and to avoid a precipitous filing of charges by the government. Tolling agreements serve to relieve the government of the pressure of taking formal action before the relevant limitations period runs and allow for time for facilitating a settlement agreement.[14]

21.4 Forms of resolution

21.4.1 Prosecutorial settlements: DPAs, NPAs and guilty pleas

Most corporate criminal investigations initiated by US prosecutors are resolved by deferred prosecution agreements (DPAs) and non-prosecution agreements (NPAs). DPAs and NPAs are generally thought of as a middle ground between declining prosecution and obtaining a conviction.[15]

In an NPA, no criminal charges are filed against the company. As a result, an NPA need not be made public unless prosecutors seek to publicise the results of the investigation or the company is itself required to disclose the agreement; however, the DOJ generally makes NPAs available on its website. A DPA differs in that the government brings criminal charges against the company, which it agrees to dismiss at the end of a specified period if the company complies with the DPA’s terms. Because a DPA is filed with the court, it becomes a public document. Consequently, unlike an NPA, over which the government has full discretion to adopt terms and conditions, a DPA may be subject to some level of judicial review, but judges have historically been relatively deferential to the government in approving them.[16]

The ability for a company to receive multiple NPAs or DPAs has drawn criticism, and the practice may be disfavoured under the Biden administration. In October 2021, the DOJ questioned whether a ‘recidivist’ company with prior NPAs or DPAs should qualify for another NPA or DPA.[17] Moreover, the DOJ instructed prosecutors that ‘all prior misconduct needs to be evaluated when it comes to decisions about the proper resolution with a company, whether or not that misconduct is similar to the conduct at issue in a particular investigation’.[18] This includes those within and outside the DOJ, such as prosecutions or regulatory action by other countries or states.[19]

In recent years, there have been some high-profile corporate guilty pleas.[20] The major difference between a guilty plea and an NPA or DPA is that a guilty plea results in a conviction, which generally comes with harsher collateral regulatory consequences and more significant reputational harm. Such risks for a corporation are significant. However, guilty pleas are rare; NPAs and DPAs remain prosecutors’ primary settlement mechanism.

21.4.2 Regulatory settlements: consent orders and civil NPAs and DPAs

Companies under investigation by federal and state regulators whose enforcement mechanisms are administrative or civil may resolve an investigation by voluntarily entering into a consent order where an institution typically consents to the issuance of a cease-and-desist order or the assessment of a civil monetary penalty, or both. A consent order is a formal enforcement action; it is a public document and, although it may not always be filed, its terms are enforceable in court. Consent orders often vary in the level of detail they provide concerning the wrongdoing, although they are often less detailed than a criminal settlement. A consent cease-and-desist order may oblige the company to undertake remedial measures to correct misconduct and ensure future compliance. The term of the order is usually indefinite. A consent civil monetary penalty assessment obliges the institution to pay a penalty, and the order’s terms are fully satisfied by the payment.

Previously, NPAs and DPAs were the exclusive domain of the DOJ, but the SEC[21]and the Commodity Futures Trading Commission (CFTC)[22] also adopted their use to resolve certain civil securities law violations. NPAs and DPAs, however, remain uncommon for civil enforcement actions by the SEC. Between 2007 and the time of writing in 2023, neither the CFTC nor the SEC has entered into any NPAs or DPAs.[23]

21.5 Key settlement terms

Whether negotiating a settlement agreement in the criminal or regulatory context, many common principles come into play. To facilitate a successful negotiation, a company must have a comprehensive understanding of (1) benchmark terms for historical settlements regarding similar misconduct, (2) those terms that are most significant to the company and (3) any distinguishing factors in the matter at issue that encourage terms less severe than the benchmarks.

21.5.1 Monetary penalties

Nearly all corporate settlements with US authorities include some form of monetary penalty. The form largely depends on the US authority and its practices. Typically, monetary penalties in regulatory settlements comprise a civil monetary penalty. Disgorgement of profits or restitution to harmed parties may also be required, but are rarer.

Generally, the factors that US authorities consider in determining monetary penalties mirror those used to determine whether to bring charges against the corporation in the first place, including the nature of the offence, the company’s timely and voluntary disclosure of wrongdoing, and the company’s remedial actions. For example, the SEC considers two principal factors in determining monetary penalties: the presence or absence of a direct and material benefit to the corporation itself as a result of the violation and the degree to which the penalty will recomp­ense or further harm the injured shareholders.[24]

21.5.2 Continuing obligations

In addition to monetary penalties, settlement agreements will often include other continuing obligations. For example, settlement agreements often oblige a company to disclose additional related conduct or evidence of illegal activity discovered during the term of the DPA or NPA. Since 2020, the DOJ Fraud Section also typically requires company executives to certify on the date of the DPA’s or NPA’s expiration that the company has disclosed ‘any and all evidence’ of related conduct or evidence of illegal activity.[25] Settlement agreements also nearly always contain language stating that the company will commit to undertake remedial efforts, such as the enhancement of its compliance programmes.

A potentially substantial obligation in corporate settlements is the imposition of a monitor to oversee a company’s compliance with a settlement agreement and report back to the government on the company’s progress. While the DOJ clarified in 2023 that prosecutors should not apply a presumption either for or against monitors,[26] there appears to be a resurgence of the imposition of outside monitors.

Monitorships, which may last for a number of years, are a financial and functional burden on a company in terms of the cost of both retaining the monitor itself and implementing recommended reforms. Further, monitors are generally given broad access to the corporation’s files, outside the protection of an attorney–client relationship, which can pose a risk of further legal exposure for the company. Monitors are obliged to disclose any additional violations of law to relevant authorities and their reports can be subject to Freedom of Information Act requests, which may create additional exposure in follow-on civil litigation.

Given the substantial expense and disruption caused by a monitorship, it is in a corporation’s interests to try to avoid the imposition of a monitor. The most effective way for a company to avoid the imposition of a monitor is to voluntarily report its misconduct, to cooperate fully with government investigations and to proactively demonstrate a comprehensive remediation plan. Where a monitor is imposed, a corporation can mitigate the disruption by negotiating limits to the monitor’s duration, scope of responsibility and access to corporate files.

21.5.3 Collateral consequences

A criminal or regulatory settlement can also trigger a number of collateral consequences, which can vary depending on the types of violations the settlement covers and the industry of the affected entity. For example, a guilty plea for a bank could mean the loss of its financial holding company status and federal deposit insurance, and, for foreign banks, the potential termination of offices in the United States. A guilty plea for a broker-dealer could mean automatic loss of broker-dealer registration, a bar from acting as a registered investment adviser and revocation of its status as a well-known seasoned issuer. A guilty plea for a corporation could also result in, among other things, disqualification from membership of certain self-regulatory organisations, a temporary or permanent bar from participation in federal procurement contracts (debarment) or loss of state licences. Compounding these difficulties, collateral consequences can apply to regulated businesses across a corporation’s legal structure, even if those businesses were not directly involved in the offence.

Corporations may need to seek waivers or exemptions from multiple regulators, including the SEC, the CFTC, the Federal Reserve, the Department of Labor and the Financial Industry Regulatory Authority, to allow them to continue engaging in the affected business activities. The wavier process should be planned well in advance of settlement, as each regulator may have more than one relevant exemption.[27] The company must therefore assess the relevant regulations for each authority that oversees the company’s activities. Collateral consequences have many permutations, which depend on the form of the settlement (e.g., DPA, NPA, guilty plea, conviction or consent order) or the nature of the offence.[28] In addition to automatic disqualifications, various discretionary actions are available to regulators for which waivers or exemptions could be sought.[29]

The method of receiving a waiver or exemption from these collateral consequences depends on the agency. For example, when seeking waivers from the SEC, a corporation requests an exemption from SEC staff, which can either make a recommendation to the Commission or act directly with delegated authority from the Commission. In contrast, the Department of Labor, in granting exemptions for qualified professional asset manager status, engages in a formal rule-making process, including a public notice and comment period.[30]

Timing is critical for the waiver process because a company will need to ensure that there is no gap in its licences and statuses. Complicating matters, regulators often take different views as to when statutory disqualifications based on convictions or settlements commence. For example, the SEC views ‘conviction’ as entry into a guilty plea, while the Department of Labor says that conviction is at sentencing, which can take place well after entry of a guilty plea.

21.5.4 Admissions and follow-on civil litigation

With increasing frequency, government authorities are requiring corporations to make factual or legal admissions as a condition of settlement. In addition to reputational impact, such admissions can expose a company to significant liability in follow-on civil litigation. Courts have allowed civil plaintiffs to rely on factual or legal admissions in prior settlement agreements, including DPAs and NPAs.[31] Courts have been more reluctant to allow plaintiffs to rely on administrative consent orders, but litigation on the issue has been met with mixed results.[32]

To avoid civil exposure, corporations entering into settlements with the government should ideally try to neither admit nor deny charges. At the very least, companies should negotiate for narrowly tailored factual statements and flexible language to enable it to defend itself in follow-on civil litigation.

Additionally, settlement agreements that dictate that the corporation cannot contradict the findings of facts can restrict the corporation’s positions in follow-on civil litigation. It is important that such agreements, at a minimum, contain exceptions that allow a company to take good-faith positions in follow-on civil litigation.[33]

21.6 Resolving parallel investigations

21.6.1 Other domestic authorities

Most large-scale investigations of corporations involve a number of government agencies from federal and state governments, both prosecutorial and regulatory. Coordinating with multiple agencies can be challenging, but coordinated settlements carry benefits for a company. For example, coordinated settlement announcements can occur on a single day, allowing a company to better control the release of information and limit the effect of harmful disclosures on the market. There is a distinct trend towards more multi-agency settlements, as agencies increase collaboration, even across borders.

21.6.2 Foreign authorities

Owing at least in part to the internationalisation of enforcement, the global nature of modern-day securities frauds, increased regulatory activity on the state level and the increased complexity of the markets, regulatory investigations today tend to involve a variety of authorities.[34] A corporation must therefore carefully evaluate whether a settlement with certain authorities should be postponed until a global resolution can be reached. Coordinated global settlements often afford the company the opportunity to predict and prevent excessive, cumulative or unnecessary monetary penalties, continuing obligations and collateral consequences.


Footnotes

[1] Nicolas Bourtin is a partner and Bailey Springer is an associate at Sullivan & Cromwell LLP. The authors acknowledge the contributions of former associates Kate Doniger, Stephanie Heglund, Steve A Hsieh and Ryan Galisewski to earlier editions of this chapter.

[2] Precise practices may differ. For example, the US Department of Justice (DOJ) may issue a declination letter reporting that it has closed its investigation or declined to prosecute. See DOJ, Fraud Section, Declinations, www.justice.gov/criminal-fraud/corporate-enforcement-policy/declinations (last updated 24 Mar. 2022). The policy of the US Securities and Exchange Commission (SEC) is to send ‘termination letters’ to ‘notify individuals and entities at the earliest opportunity when the staff has determined not to recommend an enforcement action against them to the Commission’. SEC, Office of Chief Counsel, Enforcement Manual § 2.6.2, Termination Notices.

[3] Lisa O Monaco, Dep. Att’y Gen., Keynote Address at ABA’s 36th National Institute on White Collar Crime (28 Oct. 2021), www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-gives-keynote-address-abas-36th-national-institute.

[4] Justice Manual § 9-28.720, Principles of Federal Prosecution of Business Organizations, Cooperation: Disclosing the Relevant Facts (rev. Nov. 2017) [This section of the Justice Manual was updated in March 2023].

[5] For example, the Second Circuit Court of Appeals held that voluntary submission of a legal memorandum to the SEC during its investigation waived protections of the work-product doctrine in a subsequent civil class action suit. In re Steinhardt Partners, L.P., 9 F.3d 230, 232 (2d Cir. 1993). But the court declined ‘to adopt a per se rule that all voluntary disclosures to the government waive work product protection’. Id. at 236.

[6] Most federal courts of appeal have declined to allow a selective disclosure to regulators during an investigation of documents protected by the attorney–client privilege or work-product doctrine without a resultant waiver of the privilege or protection with respect to third-party civil litigants. See, e.g., Gruss v. Zwirn, 2013 WL 3481350, at *5–8 (S.D.N.Y. 10 Jul. 2013) (reviewing ‘the origin and current viability of the “selective waiver” doctrine’ and reversing the findings of a magistrate judge that a confidentiality agreement with the SEC prevented waiver). But see In re Steinhardt Partners, L.P., 9 F.3d. 230, 236 (2d Cir. 1993) (‘[W]e decline to adopt a per se rule that all voluntary disclosures to the government waive work product protection. . . . Establishing a rigid rule would fail to anticipate . . . situations in which the SEC and the disclosing party have entered into an explicit agreement that the SEC will maintain the confidentiality of the disclosed materials.’).

[7] A Wells notice is a letter that a securities or commodities regulator, such as the SEC, the Commodity Futures Trading Commission (CFTC) or the Financial Industry Regulatory Authority, sends to a corporation or individual when it intends to bring a civil action against them.

[8] The SEC Enforcement Manual indicates that advocacy materials presented to the SEC may be discoverable and admissible in evidence, notwithstanding the protections of Federal Rule of Evidence 408. See SEC, Office of Chief Counsel, Enforcement Manual § 3.2.3.2, White Papers and Other Materials (excluding Wells submissions) (28 Nov. 2017). See also In re Initial Pub. Offering Sec. Litig., 2004 WL 60290, at *2 (S.D.N.Y. 12 Jan. 2004) (‘Wells submissions are not – or at least, not intrinsically – settlement materials.’).

[9] See Fed. R. Evid. 408 advisory committee’s note (‘[S]tatements made during compromise negotiations of other disputed claims are not admissible in subsequent criminal litigation, when offered to prove liability for, invalidity of, or amount of those claims.’).

[10] For example, courts in the Southern District of New York consistently hold that ‘Rule 408 does not apply to discovery’: e.g., Morgan Art Found. Ltd. v. McKenzie, 2020 WL 3578251, at *5 (S.D.N.Y. 1 Jul. 2020). Rather, courts apply the discovery standard of Federal Rule of Civil Procedure 26(b)(1) to determine the discoverability of settlement negotiations: e.g., Id.

[11] See, e.g., In re Gen. Motors LLC Ignition Switch Litig., 2015 WL 7769524, at *2 (S.D.N.Y. 30 Nov. 2015) (admitting consent decree as evidence ‘not . . . to prove that New GM violated the Safety Act . . . but for other purposes that are plainly relevant’); In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010, 2012 WL 413860, at *3 (E.D. La. 9 Feb. 2012) (granting a motion in limine to prevent jury from receiving evidence about a deferred prosecution agreement (DPA) that resolved allegations about an earlier oil refinery accident in Texas but deeming a DPA potentially relevant for future proceedings, such as punitive damages).

[12] Unless otherwise provided by statute, an enforcement action by a federal regulator that seeks a civil fine or penalty is generally subject to the standard five-year limitations period for proceedings. 28 U.S.C. § 2462.

[13] See SEC, Office of Chief Counsel, Enforcement Manual § 3.1.2, Statutes of Limitations and Tolling Agreements (28 Nov. 2017); DOJ and SEC, A Resource Guide to the US Foreign Corrupt Practices Act at 35 (8 Jul. 2020), www.justice.gov/criminal-fraud/file/1292051/download (‘[C]ompanies or individuals cooperating with DOJ may enter into a tolling agreement that voluntarily extends the limitations period.’).

[14] A tolling agreement signed by the corporation will not toll the statute of limitations against individuals; rather, to toll the time to bring charges against an individual, the government will have to secure a separate tolling agreement with that person.

[15] See Justice Manual § 9-28.1100, Principles of Federal Prosecution of Business Organizations, Collateral Consequences (updated Jul. 2020). This section of the Justice Manual was updated in March 2023. (‘[W]here the collateral consequences of a corporate conviction for innocent third parties would be significant, it may be appropriate to consider a non-prosecution or deferred prosecution agreement with conditions designated, among other things, to promote compliance with applicable law and to prevent recidivism. Such agreements are a third option, besides a criminal indictment, on the one hand, and a declination, on the other.’).

[16] Decisions from the US Courts of Appeals for the District of Columbia and Second Circuit confirm that the long-standing practice of limited judicial oversight over consensual enforcement settlements is the favoured approach. For example, in United States v. Fokker Services BV, 818 F.3d 733, 747 (D.C. Cir. 2016), vacating 79 F. Supp. 3d 160 (D.D.C. 2015), the DC Circuit issued a writ of mandamus and vacated a decision by District Judge Richard Leon that rejected as too lenient a proposed DPA between the DOJ and Fokker Services. The Court of Appeals reasoned that ‘the court’s withholding of approval would amount to a substantial and unwarranted intrusion on the Executive Branch’s fundamental prerogatives. Id. at 744. Similarly, in June 2014, the Second Circuit, in SEC v. Citigroup Global Markets, 752 F.3d 285 (2d Cir. 2014), reversed the lower court’s rejection of an SEC settlement as insufficient and significantly limited district courts’ ability to review settlement agreements.

[17] Lisa O Monaco, Dep. Att’y Gen., Keynote Address at ABA’s 36th National Institute on White Collar Crime (28 Oct. 2021), www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-gives-keynote-address-abas-36th-national-institute (‘One immediate area for consideration is whether pretrial diversion — NPAs and DPAs — is appropriate for certain recidivist companies.’).

[18] Id.

[19] In September 2022, the DOJ released additional guidance about how, when determining an appropriate resolution, companies’ history of past misconduct will be considered. The guidance emphasised that the DOJ disfavours multiple DPAs or non-prosecution agreements for companies; however, under the guidance, the DOJ accords less weight to criminal resolutions concluded more than 10 years before the conduct under investigation or civil resolutions concluded more than five years before the conduct under investigation. The guidance also instructs prosecutors to consider the circumstances of earlier resolutions, whether the company is in a highly regulated industry and changes in corporate structure, such as acquisitions. See Lisa O Monaco, Dep. Att’y Gen., Remarks on Corporate Criminal Enforcement (15 Sept. 2022), www.justice.gov/opa/speech/deputy-attorney-general-lisa-o-monaco-delivers-remarks-corporate-criminal-enforcement.

[20] For example, in May 2022, Allianz Global Investors US LLC pleaded guilty to criminal securities fraud for a scheme in which portfolio managers misled investors regarding the degree of risk involved with certain investment strategies. DOJ, Press Release, Three Portfolio Managers and Allianz Global Investors US Charged in Connection with Multibillion-Dollar Fraud Scheme (17 May 2022), www.justice.gov/opa/pr/three-portfolio-managers-and-allianz-global-investors-us-charged-connection-multibillion.

[21] See SEC, Office of Chief Counsel, Enforcement Manual § 6.2.2, Deferred Prosecution Agreements (28 Nov. 2017); SEC, Office of Chief Counsel, Enforcement Manual § 6.2.3, Non-Prosecution Agreements (28 Nov. 2017); SEC, Press Release, SEC Announces Initiative to Encourage Individuals and Companies to Cooperate and Assist in Investigations (13 Jan. 2010), www.sec.gov/news/press/2010/2010-6.htm (announcing Cooperation Initiative, including cooperation agreements, DPAs and NPAs).

[22] See CFTC, Division of Enforcement, Enforcement Manual § 7.2, Cooperation Tools (20 May 2020), www.cftc.gov/sites/default/files/2021-05/EnforcementManual.pdf.

[23] See 2021 Year-End Update on Corporate Non-Prosecution Agreements and Deferred Prosecution Agreements (3 Feb. 2022), www.gibsondunn.com/2021-year-end-update-on-corporate-non-prosecution-agreements-and-deferred-prosecution-agreements/#_edn9 (‘The SEC, consistent with its trend since 2016, did not enter into any NPAs or DPAs in 2021.’).

[24] SEC Release No. 2006-4, Statement of the Securities and Exchange Commission Concerning Financial Penalties (4 Jan. 2006), www.sec.gov/news/press/2006-4.htm.

[26] DOJ, Remarks as Prepared for Delivery: Deputy Attorney General Lisa Monaco Delivers Remarks at American Bar Association National Institute on White Collar Crime (2 Mar. 2023), www.justice.gov/opa/speech/deputy-attorney-general-lisa-monaco-delivers-remarks-american-bar-association-national.

[27] The SEC has many, including: (1) status as a well-known seasoned issuer; (2) status under § 9(a) of the Investment Company Act of 1940 (ICA) as an investment adviser, depositor or principal underwriter of registered investment companies; and (3) exemptions from certain capital-raising restrictions, under Regulations A and D. See also generally Richard A Rosen and David S Huntington, ‘Waivers from the Automatic Disqualification Provisions of the Federal Securities Laws’, 29:8 Insights: The Corp. & Sec. Law Advisor at 2 (8 Aug. 2015) (cataloguing various SEC waivers).

[28] Criminal convictions have much more severe consequences than a DPA, NPA or administrative consent order. For instance, § 9(a) of the ICA automatically bars an entity from acting as investment adviser or providing certain other services to registered investment companies if that entity or an affiliated entity has been convicted within the past 10 years of any felony or misdemeanour arising out of the conduct of the business of a bank. 15 U.S.C. § 80a-9(a)(1).

[29] For example, under § 15(b)(4) of the Securities Exchange Act, the SEC has the discretion after a conviction to suspend or revoke the registration of a broker-dealer if it finds, after notice and comment, that it is in the public interest. See 15 U.S.C. § 78o(b)(4)(B).

[30] 29 C.F.R. pt. 2570, subpt. B.

[31] See Menaldi v. Och-Ziff Capital Mgmt. Grp. LLC, 277 F. Supp. 3d 500, 509 (S.D.N.Y. 2017) (‘The key difference between the factual allegations in the Old Complaint and those in the New Complaint is the level of detail regarding Och–Ziff’s dubious dealings in Africa. Of great help are the DPA and the SEC Settlement, both of which are incorporated into the New Complaint.’); 7 W. 57th St. Realty Co., LLC v. Citigroup, Inc., 2015 WL 1514539, at *1 n. 1 (S.D.N.Y. 31 Mar. 2015), aff’d, 771 F. App’x 498 (2d Cir. 2019) (‘the Court has also considered documents that are incorporated into the Amended Complaint by reference, including non-prosecution and deferred prosecution agreements that certain Defendants entered into with the United States Department of Justice’).

[32] For example, the Second Circuit has held that ‘a consent judgment between a federal agency and a private corporation which is not the result of an actual adjudication of any of the issues . . . can not be used as evidence in subsequent litigation between that corporation and another party’. Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976); see also Waterford Tp. Police & Fire Ret. Sys. v. Smithtown Bancorp, Inc., 2014 WL 3569338 (E.D.N.Y. 18 Jul. 2014) (striking from the complaint references to consent agreements with the Federal Deposit Insurance Corporation and the New York Banking Department). But see In re Bear Stearns Mortg. Pass-Through Certificates Litig., 851 F. Supp. 2d 746, 768 n. 24 (S.D.N.Y. 2012) (‘[S]ome courts in this district have stretched the holding in Lipsky to mean that any portion of a pleading that relies on unadjudicated allegations in another complaint is immaterial under Rule 12(f). Neither Circuit precedent nor logic supports such an absolute rule.’) (citation omitted).

[33] See, e.g., In re Wells Fargo, DPA ¶ 5 (20 Feb. 2020), www.justice.gov/usao-cdca/press-release/file/1251336/download (‘If the USAOs determine that Wells Fargo has made a public statement contradicting its acceptance of responsibility . . . , the USAOs shall so notify Wells Fargo. Thereafter, Wells Fargo may avoid a breach of this Agreement by publicly repudiating the statement within five days after such notification. Wells Fargo shall be permitted to raise defenses and to assert affirmative claims in other proceedings relating to the matters set forth in the Statement of Facts provided that such defenses and claims do not contradict, in whole or in part, any statement contained in the attached Statement of Facts.’).

[34] Many of the highest-profile settlements have been the result of cooperative efforts between US and foreign regulators. The 10 largest FCPA settlements with the United States were the result of cooperative investigations between US and foreign authorities.

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