During a speech last month, Lauren Kootman, the Assistant Chief of the Corporate Enforcement, Compliance, and Policy Unit of the Fraud Section of the Department of Justice (“DOJ”), signaled a daunting change for chief compliance officers (“CCOs”).
It was reported that Kootman touted a “likely” new requirement that would be incorporated into every corporate fraud settlement. This requirement would require CCOs to certify that the company’s compliance program was “reasonably designed” to prevent violations in the future. Kootman reportedly took the position that this would “empower” CCOs—giving them involvement in transactions and decision-making.
Though claiming that the new requirement would not “put a target on the back of a chief compliance officer,” in essence DOJ indicated that without certification from the CCO there would be no deal with the Government. DOJ has already included such a certification in last month’s $1.1 billion settlement with Glencore to resolve bribery and market manipulation charges.
Putting aside the vagaries of what constitutes a reasonably designed program and whether DOJ implicitly blessed the program as part of the agreement to settle a case, such a requirement could also put CCOs (and the company) in DOJ’s crosshairs in the event of a post-settlement violation. It also remains to be seen whether such a requirement would be imposed only in settlements involving DOJ’s Criminal Division or whether they will also be required in False Claims Act settlements.