Sentencing Commission Proposes Changes to Guidelines That Could Affect Day-to-Day Business Decisions

January 21, 2010By John R. Fleder

By Peter M. Jaensch & John R. Fleder

The January 21, 2010 Federal Register contains a notice that the United States Sentencing Commission has proposed amendments to the Sentencing Guidelines and their Commentary concerning corporations and other business organizations.  In addition, the Commission has raised an issue seeking public comment.

The proposed amendments address steps corporations are expected to take when the corporation detects that it has engaged in criminal conduct. The organization “should respond appropriately”, including, where there is an identifiable victim or victims, making restitution and remediating the harm caused, presumably even before a company is convicted of a crime.  The Commission believes that compliance might require self-reporting and cooperation with authorities, as well as other forms of remediation. Organizations would also be expected to evaluate their compliance and ethics program and make necessary changes to avoid recurrences of criminal behavior.  Further, the amendment adds to the responsibilities of high-level personnel, specifying that such employees “should be aware of the organization’s document retention policies” and should ensure that these policies are consistent with an effective compliance program.

The notice also opens for comment the question whether an organization should receive a reduction in the level of the offense, thereby lowering the sentencing range, if it: (a) structures responsibility so that operational compliance officers report directly to the company’s board, (b) the compliance section of the company detects a violation prior to actual or likely discovery outside the organization, and (c) the organization reports the violation promptly to the authorities.

If enacted, these amendments could have significant effect on corporate structure and decision-making.

The Commission has invited public comments to be submitted by March 22, 2010.  It has indicated that it will also hold a public hearing on the proposed amendments discussed above, as well as the other amendments to the Sentencing Guidelines that are included in the January 21, 2010 Federal Register notice.

Categories: Enforcement