New SDNY Self-Reporting Adds Complexity to Corporate Self-Reporting Decisions

On February 24, 2026, the United States Attorney’s Office for the Southern District of New York (the “Office”) revised and expanded its “Corporate Enforcement and Voluntary Self-Disclosure Program for Financial Crimes” (the “Program”) to incentivize companies to self-report potential criminal conduct and standardize the way in which the Office issues declinations.  The changes are part of a broader U.S. Department of Justice (“DOJ”) effort to promote early disclosure, cooperation, and remediation in corporate enforcement. Companies that self-report eligible categories of misconduct, fully cooperate, and remediate in satisfaction of the Program’s requirements can receive a conditional declination and potentially a final declination of prosecution rather than facing criminal charges. While the Program provides welcome clarity, the decision to self-report remains complex with a number of fact-specific issues for corporations to consider.

Key Takeaways

• Conditional declinations issued early: The Office will provide what it describes as a  “conditional” declination letter within two to three weeks after the company self-discloses certain categories of financial fraud (i.e., corporate, securities, or commodities fraud, misconduct involving auditors or  financial regulators, or other criminal securities law violations) and commits to cooperate and remediate the misconduct. To convert a conditional declination into a final declination, companies that report wrongdoing must fulfill all the requirements set forth below.
• High bar for “full cooperation”: To obtain a declination, the Program requires, and imposes, among other things, the following:
• Timely, truthful, and accurate self-disclosure of all known non-privileged information relevant to the misconduct. This requirement is similar to the general requirement for self-disclosure.
• A three-year obligation to proactively disclose “all credible evidence or allegations of criminal conduct by the company or any of its employees that relates to violations of U.S. laws.”  This requirement poses unknown risks and appears to be quite broad in scope.
• Use of “best efforts” by the company to secure testimony from relevant witnesses, an imprecise and as-yet undefined standard, which may create practical challenges in cases where evidence or witnesses are located abroad. 
• Credit for belief that information not already known to government:  A company may receive a declination when self-disclosure is made before the company learns of the existence of a government investigation. Thus, a voluntary self-disclosure without knowledge of a government investigation is sufficient, even if the information is already known to the government. 
• No final declination until restitution made to all injured parties: To convert a conditional declination into a final declination, companies that report wrongdoing must commit to and complete restitution to all victims. As part of the Program, the Office provides a model conditional declination letter, which discusses disclosure of “illegal activity.” Entering into a letter agreement with the Office involving a restitution obligation, describing “illegal activity,” and requiring disclosure of all credible evidence or allegations of criminal conduct for three years thereafter is highly sensitive and could have collateral consequences that a company must weigh carefully.
• Increased risk for non-reporting: Under the Program, there will be a “strong presumption” against issuance of a declination for a company that did not self-report.

Structure of the Program

The Program provides a framework for companies that uncover predefined categories of criminal misconduct listed above to obtain a declination by voluntarily disclosing, cooperating, remediating, and paying restitution. To qualify, companies must promptly self-report to the Office “all known facts about the nature of the misconduct, the individuals involved, and any affected parties” relating to potential criminal conduct and must do so before receiving a grand jury subpoena, document request, or otherwise learning of any government investigation. Knowledge of a whistleblower submission to the company or to any government agency will not disqualify a company from receiving a declination.

Following a company’s self-disclosure, the Office will issue a conditional declination letter stating its intent not to prosecute, contingent on the company’s continued cooperation and fulfillment of all eligibility criteria, including complete restitution to victims.  As a prerequisite to receiving a conditional declination letter, the company must also commit to remediating the harm caused by the “illegal activity,” including by paying full restitution to victims.

During the Office’s investigation, the company is also expected to provide “full cooperation,” including timely and comprehensive disclosure of all relevant, non-privileged facts and documents; identification of witnesses and individuals involved in the misconduct; producing non-privileged findings from internal investigations; using “best efforts” to secure employee availability for interviews and testimony and to ensure their complete and truthful participation; and “making all efforts” to minimize obstacles created by foreign data privacy or blocking statutes.  Companies are also subject to an ongoing three-year obligation to cooperate with the Office by proactively disclosing “all credible evidence or allegations of criminal conduct by the company or any of its employees that relates to violations of U.S. laws.”

The Office will provide a final declination only after the company has fully cooperated and remediated the misconduct, including potentially strengthening compliance programs and disciplining responsible personnel, and paying full restitution to victims. 

By its terms, the Program applies to (i) fraud by a company or corporate entity, or an employee, officer, director, or agent, (ii) fraud in connection with a securities, commodities, or digital asset offering, or the trading or brokering of securities, commodities, or digital assets, (iii) false statements or fraud upon an auditor or federal regulator of financial markets, or (iv) other willful violations of the securities laws.  The Program does not apply to other white-collar offenses, such as bribery or money laundering. While the Program excludes cases involving “aggravating circumstances,” including any nexus to terrorism, sanctions evasion, or human trafficking from participation, it does not automatically disqualify a company based on the seriousness of the offense, the harm caused, executive involvement, or prior criminal history.

Conclusion

The Program is part of a broad DOJ effort to incentivize corporate self-disclosure. Yet substantial questions remain about how the Office will administer the Program in practice. The Program, which provides a “strong presumption” against a declination for a company that does not self-report, complicates already difficult and fraught self-reporting decisions and presents significant obligations.  When faced with credible allegations of misconduct, companies should assess whether self-reporting under the revised framework is in the company’s best interests, and any decision to self-report should be carefully considered with counsel.