Earlier this month, the U.S. Attorney’s Office for the Southern District of New York (“S.D.N.Y”) announced a revised corporate self-disclosure policy designed to incentivize companies to cooperate in criminal investigations. The updated policy, which the S.D.N.Y. expects to publish soon, will offer carrots to corporations that disclose criminal conduct and agree to cooperate and remediate: (1) a swift, conditional agreement not to charge the company with a crime and (2) rapid resolution of any investigation. By forecasting early on to disclosing companies whether they stand to escape criminal charges, the new S.D.N.Y. Policy may offer companies and their shareholders more certainty. Regardless of whether corporations choose to self-disclose, they should adopt effective compliance programs with clear reporting channels so that employees can report potential misconduct.

About the Revised S.D.N.Y. Policy

U.S. Attorney Jay Clayton announced the updated S.D.N.Y. Policy at the Securities Enforcement Forum on February 5, 2026.[1]  While the Policy has yet to be formally unveiled, it is expected to consist of two phases. First, once a corporation self-discloses criminal conduct, the S.D.N.Y. will promptly provide the corporation with a conditional declination agreement. As part of the conditional declination agreement, the corporation will be required to cooperate with the S.D.N.Y.’s investigation and remediate any harms associated with the wrongdoing, including making whole any loss-holding victims. While it is unclear how quickly the S.D.N.Y. will grant a conditional declination, the S.D.N.Y. suggested that it could occur within a matter of weeks. After the corporation satisfies its obligations to cooperate and remediate harm, the S.D.N.Y. will finalize the declination agreement without a protracted investigation.

The existing corporate self-disclosure policy, implemented in 2023, provides that corporations that voluntarily self-disclose misconduct can receive certain benefits if they cooperate and remediate, including a declination. However, a corporation currently only qualifies for these benefits if that corporation becomes aware of the misconduct before it is publicly reported or otherwise known to the government and then discloses all relevant facts known to the corporation before an imminent threat of disclosure or government investigation. The policy also outlines aggravating factors that may require a guilty plea. If the appropriate resolution requires a guilty plea, the corporation will still receive a reduced criminal penalty, and the resolution will not require a monitor if the corporation has an effective compliance program.[2]

The updated Policy differs from the existing policy in two key ways. First, corporations that self-disclose wrongdoing of which the government is already investigating may still be able to benefit. Second, the new Policy provides clarity about the type of resolution at the outset. While the existing policy gives the S.D.N.Y. the discretion not to seek a guilty plea for a corporation that voluntarily self-discloses wrongdoing, fully cooperates, and remediates harm, the revised Policy guarantees that a corporation that meets the same conditions will receive a declination. This revision will provide certainty for corporations, directors, and shareholders in a way the existing policy does not.

Alignment with DOJ’s Corporate Enforcement Program

The new S.D.N.Y. Policy largely aligns with recent changes to the Department of Justice Criminal Division’s corporate enforcement policy (“CEP”). Both policies provide that the respective government agency will not prosecute a corporation that (1) voluntarily self-discloses the misconduct, (2) fully cooperates with the investigation, and (3) timely and appropriately remediates the misconduct. The CEP clarifies that there must not be any aggravating factors that could warrant a criminal resolution. If there are aggravating factors, prosecutors still have discretion to recommend a declination if the company’s cooperation and remediation efforts outweigh the severity of the conduct.[3]  As announced, it is unclear whether the S.D.N.Y. Policy will include a similar provision.  

Both policies also reflect the federal government’s desire to focus more on individual wrongdoing, rather than prosecuting corporations willing to cooperate, remediate harm, and implement strong compliance programs. In a May 2025 memorandum, Matthew Galoetti, the Head of the Criminal Division, explained that the Criminal Division revised its CEP to provide companies with transparency so that “directors, executives, employees, and counsel [] can make appropriate decisions when faced with potential misconduct.”[4] 

Key Takeaways

  • Certain Outcomes and Swift Resolution: If the new S.D.N.Y. Policy mirrors what has been announced, corporations that voluntarily self-disclose criminal conduct to the S.D.N.Y. and agree to cooperate and remediate stand to reap the benefit of a swift, provisional declination of criminal charges, potentially within weeks.

    The S.D.N.Y. also has committed to finalizing a declination and closing a matter swiftly, without the burden of an extensive, lengthy investigation. Ultimately securing a declination allows a corporation to fix the problem and report to the market that it will remain operational, reducing harm to the business and reputational risk.

  • Interplay of CEP and S.D.N.Y. Remains Unclear: It remains to be seen how the S.D.N.Y. Policy and the CEP will co-exist. For example, if a company self-reports to the S.D.N.Y. but is not successful in securing a declination, does it face the risk that the agency will share information with DOJ’s Criminal Division that could lead to its prosecution? Without this clarity, companies may be hesitant to voluntarily report misconduct.
  • The Importance of an Effective Compliance Program: Regardless of whether a corporation decides to voluntarily self-report, it is critically important for corporations to assess and strengthen their internal compliance functions where necessary. In particular, corporations should have clear and effective reporting mechanisms for whistleblowers to disclose potential misconduct. When there is wrongdoing, a corporation with a strong internal compliance function will be able to quickly identify and investigate that wrongdoing. A corporation in this position should consider retaining outside counsel to conduct an independent investigation, particularly where the compliance function identifies serious or repeated misconduct. That corporation and counsel can then potentially secure a declination agreement by promptly self-disclosing and working with the federal government.      

[1] Docket Media, LLC, Keynote Q&A Discussion with U.S. Attorney Jay Clayton (Feb. 9, 2026), https://www.youtube.com/watch?v=EaWIqPlebDI.

[2] Press Release, U.S. Atty’s Off. for S.D.N.Y., Damian Williams and Breon Peace Announce New Voluntary Self-Disclosure Policy for United States Attorney’s Offices (Feb. 22, 2023), https://www.justice.gov/usao-sdny/pr/damian-williams-and-breon-peace-announce-new-voluntary-self-disclosure-policy-united.

[3] See J.M. § 9-47.120.

[4] See Memorandum from Matthew R. Galeotti on Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime to All Criminal Division Personnel (May 12, 2025), https://www.justice.gov/criminal/media/1400046/dl?inline.