Porzio Life Sciences Enforcement Action Update: New DOJ Resolution Policy Requires CCO Certifications

July 07, 2022

By Porzio Life Sciences

Kenneth A. Polite, Jr. serves as the Assistant Attorney General for the Criminal Division of the U.S. Department of Justice ("DOJ"). During his remarks delivered at NYU Law’s Program on Corporate Compliance and Enforcement on March 25, 2022, Polite stated that he asked his team to consider requiring both the Chief Executive Officer ("CEO") and the Chief Compliance Officer ("CCO") to certify at the end of the term of a corporate resolution/settlement agreement "that the company’s compliance program is reasonably designed and implemented to detect and prevent violations of the law (based on the nature of the legal violation that gave rise to the resolution, as relevant), and is functioning effectively."

At a recent Global Enforcement & Compliance Best Practices series event, Assistant Chief in the Corporate Enforcement, Compliance and Policy Unit (the “Unit”) of the DOJ Fraud Section Lauren Kootman discussed and defended the upcoming DOJ policy. Kootman stated that the policy is meant to ensure CCOs have “adequate visibility and access to information” about their companies’ business activities and compliance programs, pointing out that the goal of the policy is not to punish CCOs but to empower them.

Kootman noted that companies should consider specific questions and criteria, beyond simply citing the number of dedicated compliance resources, staff, and funds, to ensure that their compliance programs are "adequately resourced and empowered." These criteria include, among others: ensuring that the CCO has access to important information, has a seat at the table, and is involved in high-risk transactions and other important decisions at the company; investigating compliance concerns and ensuring adequate preservation of information; tying compensation to compliance incentives; and adopting effective reporting processes.

With the increased risk exposure for CCOs, settling companies will need to ensure that certain violations do not occur again and will need to certify the reasonableness of steps taken to ensure a more diligent buildout of compliance programs.

A copy of Assistant Attorney General Polite's statement is available here.

For more information regarding DOJ Enforcement, please see the Government Prosecutions section of the Enforcement Actions Database.

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