Federal Prosecutors Plan Greater Leniency for Companies That Cooperate

Key Takeaways

• Cooperation Incentives Set to Expand: The U.S. Attorney for the Southern District of New York said federal prosecutors plan to increase incentives for companies that cooperate in criminal investigations.
• Non-Prosecution Agreements Emphasized: Prosecutors may move more quickly to offer non-prosecution agreements, allowing companies to avoid charges in exchange for continued cooperation.
• Individual Accountability Remains a Focus: The approach is intended to support efforts to identify and prosecute individual wrongdoing rather than penalizing entire organizations.
• Retail Investors Cited as a Priority: The U.S. attorney said enforcement attention remains focused on protecting retail investors, including scrutiny of small-cap stocks, private funds, and prediction markets.
• Scaled-Back FCPA Enforcement Discussed: The U.S. attorney criticized past enforcement of the Foreign Corrupt Practices Act, arguing it disadvantaged U.S. companies and focused too heavily on corporate penalties.

Deep Dive

Federal prosecutors in Manhattan plan to increase incentives for companies that cooperate in criminal investigations, including offering agreements that allow firms to avoid prosecution, according to remarks delivered Thursday by the U.S. attorney for the Southern District of New York.

Speaking at the Securities Enforcement Forum in New York, Jay Clayton said companies need clearer and more immediate benefits for assisting prosecutors in identifying individual wrongdoing. The comments, first reported by Reuters, outline how federal prosecutors intend to approach corporate cooperation going forward.

Clayton said that approach would include moving quickly toward non-prosecution agreements, known as NPAs, which require continued cooperation but do not involve criminal charges.

“Our approach is going to be: let’s get an NPA signed as quickly as possible that calls for continued cooperation,” Clayton said.

Enforcement Focus and Cooperation

Clayton’s remarks come as the U.S. Department of Justice adjusts its enforcement priorities under the Trump administration, with a greater focus on immigration and drug-related cases and a reduced emphasis on certain areas of corporate crime enforcement.

He said cooperation frameworks should be designed to encourage companies to help prosecutors uncover misconduct by individuals rather than prolonging uncertainty for organizations that engage early and transparently.

The use of non-prosecution agreements has drawn criticism in the past from some lawmakers, who argue that such arrangements can limit corporate accountability. Clayton did not address those criticisms directly but said the approach could also benefit shareholders by reducing prolonged legal exposure.

Clayton, who previously served as chair of the Securities and Exchange Commission and was appointed U.S. attorney by Donald Trump, said protecting retail investors remains a priority in his current role.

He said his office is paying close attention to potential misconduct involving small-cap stocks, private funds, and prediction markets. When asked whether he expects criminal prosecutions related to so-called event contracts, Clayton said that he does.

Remarks on Foreign Corruption Enforcement

Clayton also addressed enforcement of the Foreign Corrupt Practices Act, the 1977 law that prohibits companies operating in the United States from bribing foreign officials.

While stating his opposition to corruption, Clayton said past enforcement of the law had placed U.S. companies at a disadvantage and focused too heavily on corporate penalties rather than individual accountability.

“I hate corruption of foreign officials,” Clayton said. “I hate the FCPA as applied.”

The Justice Department paused enforcement of the law last year before resuming it under a more limited framework. Clayton’s comments suggest federal prosecutors intend to place greater emphasis on early cooperation and negotiated resolutions in corporate cases. How widely non-prosecution agreements are used, and in which types of investigations, is likely to become clearer as the policy is applied in practice.

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