Saturday, January 7, 2017

DOJ Swiss Bank Program NPAs Spike the Data for Overall NPAs in 2015 (1/7/17)

Corporate Nonprosecution Agreements Plummet in 2016, but DOJ Still Willing to Make a Deal (National Law Journal 1/6/17), here.

From the opening:
Corporate nonprosecution agreements dropped dramatically in 2016 from the previous year, but the government is still offering deals to penitent white-collar defendants, according to a recent study by Gibson, Dunn & Crutcher. 
Last year the U.S. Department of Justice and the U.S. Securities and Exchange Commission collectively entered into 35 corporate nonprosecution agreements (NPAs) or deferred prosecution agreements (DPAs). That compares with 102 such agreements in 2015, according to the report. 
But there's a big caveat to what appears to be a steep slide in corporate NPAs and DPAs. It follows a dramatic spike in 2015, driven by the Justice Department's Swiss Bank Program. Most of the 2015 agreements were offered by the DOJ's Tax Division as part of a structured agreement to bring foreign bank accounts into compliance with U.S. tax law, which brought in $6.4 billion in recoveries, according to the report. 
ast year, of the 35 NPAs and DPAs, the majority, 26, involved matters other than tax-related and monetary transaction offenses. In all, they brought in $4.6 billion in recoveries, according to the report. 
Chart 2 illustrates the total monetary recoveries related to NPAs and DPAs from 2000 through today. Monetary recoveries associated with 2016 NPAs and DPAs also were consistent with recoveries in years past. Where 2014 and 2015—with 30 and 102 agreements, respectively—saw $5.1 billion and $6.4 billion in recoveries, 2016 saw $4.6 billion. 
[Graphic omitted - but recommend that readers see it in the original] 
"If you back out 2015, the numbers are essentially in the heartland of what NPAs and DPAs have been for nearly a decade," said F. Joseph Warin, chair of Gibson Dunn's Washington, D.C., office's litigation department. "On balance is what we're seeing is this vehicle has become an alternative to a plea of guilty for businesses that are in a regulated industry."
JAT Comment:  One open question is whether the Swiss Bank Program will be a template for resolutions of similar behavior in other countries.   And, even if there is no publicly announced program, whether DOJ/IRS will be willing to settle cases with other country banks on that basis in one on one negotiations.  Of course, the other countries may require some cooperation from their Governments in order to avoid privacy commands in their laws in order to divulge the data required under this template and that would likely require some public notice of a general program.  I anyone knows whether DOJ/IRS is willing to resolve other country banks' exposures on this or any other basis, please let me know either by email ( or by comments to this blog entry.

Also, readers interested in the general subject of NPAs and DPAs should check regularly with Professor Brandon Garretts' (UVA Law) database presentation here.

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