SDNY’s New Voluntary Self-Disclosure Program Offers Greater Leniency to Self-Reporting Companies and Underscores SDNY’s Prioritization of Individual Prosecutions

Last week, Jay Clayton, United States Attorney for the Southern District of New York, announced an updated Corporate Enforcement and Voluntary Self-Disclosure Program. The new program provides an opportunity for companies to cooperate and work with the Department of Justice (DOJ) by self-reporting illegal activity involving fraud and financial misconduct. In exchange, companies may receive credit in the form of declined criminal prosecution. And rather than waiting until the end of the process for a decision from SDNY, the new program provides for conditional declination letters within a few weeks of the company’s self-report.

Prior to Clayton’s announcement, SDNY followed the voluntary self-disclosure policy put in place by the DOJ’s Attorney General’s Advisory Committee in 2023, spearheaded by former U.S. Attorneys Damian Williams (SDNY) and Breon Peace (EDNY). The 2026 program presents certain material changes to the terms of the 2023 policy, particularly with respect to the timing of the disclosures and the elimination of certain aggravating factors that would weigh against a company receiving credit. These revisions, as summarized below, serve to further incentivize companies to voluntarily disclose qualifying illegal activities and to reduce the overall risk to companies in doing so.

Scope. While the 2023 policy applied to all U.S. Attorney’s Offices across the country, the SDNY’s new program has not yet been adopted outside the district. Until the DOJ promulgates department-wide guidance, which Deputy Attorney General Todd Blanche announced in December 2025 would be forthcoming, the new policy is specific to SDNY. In the short term, this may lead to companies choosing to report to the SDNY rather than other DOJ components in order to take advantage of the new guidelines. (And until DOJ announces its new department-wide guidance, companies should take care to identify the applicable program in their district.)

Expanded Reporting Period. SDNY’s 2026 program also expands the time period during which a company may self-report and receive credit. Under the 2023 policy, a company needed to self-disclose illicit activity before that conduct was reported publicly or otherwise known to the DOJ. In other words, companies needed to take steps to affirmatively identify and root out illegal activity because they only received credit for being the first to raise it. The 2026 version expressly rescinds this restriction and instead only requires that a company self-disclose (1) before receiving a grand jury subpoena or document request from an executive agency (such as the Securities and Exchange Commission), or (2) before it otherwise “learns of the existence of a government investigation.” This suggests a shift in focus that ultimately promotes participation by companies once information of wrongdoing becomes available to them, with less emphasis on how it became known. Still, companies are expected to act promptly upon learning of any wrongdoing and should remain diligent in monitoring and continually improving their internal controls and compliance programs.

Prompt Conditional Declination Letters. The hallmark of the new program is the availability of “conditional declination” letters at the outset of reporting, which aim to provide companies with greater assurance and transparency regarding prosecution decisions. “Promptly” upon a determination of eligibility by SDNY, a company will receive a conditional declination letter — usually within a couple of weeks of a self-report. Clayton’s press release indicated that one self-reporting company has already received such a letter, a model of which is provided online. The letter informs the company that it will not be prosecuted provided that the company complies with the cooperation, remediation, and restitution conditions set forth therein. By contrast, the 2023 policy required full compliance before the DOJ communicated or considered any possible declination. Because the new program offers conditional declination decisions so quickly, companies (and their management and shareholders) can expect greater visibility much earlier in the process, further incentivizing companies to participate in the disclosure program.

Fewer Aggravating Factors. The 2026 program also expands the availability of cooperation credit based on formerly “aggravating circumstances” that previously militated against a declination of charges. These two circumstances covered instances where the misconduct was (1) “deeply pervasive throughout the company” or (2) “involved current executive management of the company.” In short, under the prior policy, companies could be denied cooperation credit and prosecuted if the DOJ had cause to believe there was a significant risk of the misconduct continuing or recurring. The 2026 program, however, expressly excludes these aggravating factors, focusing only on a potential nexus between the misconduct and other serious criminal activities (such as sex trafficking or terrorism) as exclusionary.

Outcomes. For companies that successfully meet the requirements of the program, it offers more lenient resolutions in several regards. Upon completing the requirements of the program, participating companies will receive a final declination letter. Unlike the prior policy, deferred and non-prosecution agreements are no longer on the table for companies that satisfy the voluntary self-disclosure criteria. And notably, SDNY will no longer seek or require the payment of criminal fines or forfeiture, so long as the company makes “reasonable best efforts to provide prompt and full restitution to all injured parties.” This is another marked departure from the prior policy, which required forfeiture and disgorgement along with restitution. Moreover, under the new program, SDNY will not seek to impose monitorships as part of the resolution. On the other hand, for companies that elect not to self-report, there is a presumption of a guilty plea, deferred prosecution with a monetary penalty, or non-prosecution with a statement of facts and monetary penalty.

Taken altogether, the 2026 SDNY program presents a framework that more robustly incentivizes, and provides opportunities for, companies to obtain a declination of charges by self-reporting fraud and related misconduct. It also reduces the collateral costs of self-disclosure and provides more transparency to the reporting company throughout the process. 

At the same time, SDNY’s revamped program is a bellwether of this DOJ’s white-collar priorities, specifically an emphasis on individual prosecutions rather than corporate enforcement. The press release for the program is explicit in this regard, stating that the program will allow SDNY to “focus on holding individuals accountable,” and that during Clayton’s tenure, SDNY has prosecuted executives and employees based on information from corporate self-disclosures. The program therefore signals that DOJ’s generally lighter touch as to corporate enforcement is likely to continue. 

However, and to be clear, enforcement against individuals still remains active, and nothing in the new program minimizes that risk. To the contrary, Clayton’s announcement makes clear that information from corporate self-disclosures will continue to be used to build cases against individual defendants, including company executives. And of course, a company’s decision to self-report remains a sensitive one requiring a fact-specific analysis.