Despite criticism and increasing scrutiny, lawyers say the use of APDs and NPAs will continue to increase. Some people consider these types of deals to be safe, says Joseph Warin, president of Gibson Dunn & Crutcher`s white-collar defense and investigative practice. “I think that`s a naïve view.” Deferred Prosecution Agreements (DSAs) encourage individuals and businesses to provide upcoming information about misconduct to the SEC and assist in a subsequent investigation. In return, the SEC refrains from suing the cooperation partners for its own violations if they comply with certain obligations. The SEC struck its first no-suit deal with children`s clothing retailer Carter`s in December, eleven months after it launched its law enforcement cooperation initiative, which opened the door to such deals. The SEC`s decision to use data protection authorities and NPAs is part of the Commission`s wider efforts to promote greater cooperation between individuals and businesses in investigations and enforcement actions. In addition, Noble Corp., one of the oil and gas services companies also involved in the DoJ investigation, voluntarily disclosed its conduct and also offered extensive cooperation to the DoJ and sec. “In part for these reasons, we entered into a no-prosecution agreement with the company, and Noble paid a criminal penalty that was well below the bottom of the policy range,” Breuer said. Mark Schnapp, co-chair of the white-collar crime practice at the law firm Greenberg Traurig, says the no-suit agreement means the SEC is becoming more aggressive in its investigations and prosecutions. “The SEC`s use of an NPA recognizes both the early collaboration of companies and the company`s continued involvement in their enforcement efforts,” he says. Below are two diagrams of Gibson Dunn & Crutcher. The first graph shows the number of deferred and non-criminal agreements concluded by the Ministry of Justice between 2000 and 2010; The second graph shows the fourteen different allegations that led to the thirty-two Department of Justice agreements in 2010.
To resolve these investigations, the Department of Justice entered into five deferred prosecution agreements and one non-prosecution agreement, and accepted two guilty pleas. No defendant was required to maintain a compliance check. “The overall solution to these cases shows . the range of possibilities available to us. But, perhaps more importantly for you, it also shows the range of options available to companies that are serious about collaboration and prevention,” Breuer said. In addition, the number of DPAs to resolve potential prosecutions under the FCPA has also increased at the Department of Justice, accounting for 14 of the 32 agreements reached in 2010. In comparison, FCPA violations accounted for about 24% of agreements in 2009, 26% in 2007 and only nine percent in 2006. While Justice Department spokeswoman Laura Sweeney declined to comment on the increase in deferral and non-prosecution agreements, she pointed to a speech by Deputy Attorney General Lanny Breuer in November in which he stressed the value of cooperation. The timing of the no-suit agreement with Carter`s is also important, said Steven Scholes, a partner at the law firm McDermott Will & Emery and a former attorney in the SEC`s Enforcement Division.
Carter joined the NPA just 30 days before the SEC filed charges against them. By that time, Carter had already fully cooperated with the SEC. On a practical level, this means that they have rolled the dice to see if their cooperation would later be rewarded with an NPA. “Companies and their lawyers will have to make reasonable assumptions about whether they will receive a no-suit agreement after their cooperation,” he says. The no-suit agreement with Carter`s led to fraud and insider trading charges against former executive vice president Joseph Elles. By joining the NPA and cooperating in the investigation of Elles, Carter`s gained an overestimation of net profit for a period of five years. .