Ethicsverse Day Keynote: Presidential Appointees and DOJ Veterans on What Works

The current regulatory environment presents a fundamental paradox: while some enforcement priorities have shifted, the legal framework requiring robust compliance programs has never been stronger—creating both unprecedented challenges and hidden opportunities for savvy organizations.

This special episode of The Ethicsverse examines the evolving regulatory enforcement landscape under the current administration, drawing insights from seasoned Department of Justice veterans and former presidential appointees. The discussion explores the shifting priorities in corporate enforcement, the enduring importance of robust compliance programs, and strategic considerations for organizations navigating government investigations. Through expert perspectives on voluntary self-disclosure, cooperation strategies, and compliance program effectiveness, this document provides critical guidance for ethics and compliance professionals operating in an environment of regulatory uncertainty and enhanced individual accountability focus.

Featuring:

• Leigha Simonton, Member/Partner | Former U.S. Attorney, Dykema
• Scott Hogan, Member/Partner | Former First Assistant U.S. Attorney, Dykema
• Matthew S. Axelrod, Partner | Former Assistant Secretary for Export Enforcement, Senior Counselor, Special Counsel, Gibson Dunn
• Matt Kelly, CEO & Editor, Radical Compliance
• Nick Gallo, Chief Servant & Co-CEO, Ethico

The Law Remains Unchanged Despite Policy Shifts

• Compliance officers face the unprecedented challenge of reminding employees that legal obligations persist regardless of perceived enforcement pullbacks.
• Business teams, having heard about pauses in areas like FCPA enforcement, are questioning whether they still need to worry about compliance risks, with some even asking if they can now engage in previously prohibited conduct.
• The fundamental response remains clear: it’s still illegal, there’s a five-year statute of limitations that extends beyond any four-year administration, and enforcement risk exists from state agencies and foreign enforcement bodies.

Sanctions and Export Controls Enforcement Intensifies

• Unlike other corporate enforcement areas that have seen de-prioritization, sanctions and export controls enforcement has accelerated due to its direct nexus to national security priorities.
• The head of the Criminal Division has identified sanctions as a priority enforcement area, while Commerce leadership has promised dramatic increases in export controls enforcement.
• Recent enforcement actions, including a $216 million OFAC penalty, demonstrate that this area remains under intense regulatory scrutiny with full resource allocation.

Compliance Officers Face Expanded Responsibilities with Uncertain Resources

• The current regulatory environment has simultaneously expanded compliance officers’ plates while creating uncertainty about resource allocation and organizational support.
• New priority areas include enhanced tariffs and export controls, immigration enforcement implications for visa holders, cartel enforcement affecting Mexico-related operations, and expanded False Claims Act applications.
• This expansion occurs alongside concerns that leadership may reduce compliance investment based on perceived enforcement pullbacks, creating a challenging resource allocation dynamic.

Fundamental Compliance Program Requirements Endure

• Despite policy shifts, the core need for strong compliance programs remains unchanged, driven by DOJ’s continued use of compliance program effectiveness as a key factor in corporate investigations.
• Companies must still be prepared to explain their programs and demonstrate why misconduct occurred despite program strength, while strong programs continue to reduce the likelihood of investigations altogether.
• The DOJ guidance on compliance program evaluation remains active and binding, with criteria for self-disclosure heavily dependent on having robust compliance infrastructure in place.

Self-Disclosure Decisions Require Sophisticated Risk Analysis

• The decision to voluntarily self-disclose represents one of the most challenging strategic choices organizations face, requiring careful evaluation of the likelihood of government discovery versus the benefits of proactive disclosure.
• The key calculus centers on whether the government is likely to find out about the misconduct, considering factors like increased whistleblower programs, competitor disclosures, and reduced prosecutorial resources.
• Companies in high-priority enforcement areas like healthcare, government contracting, and sanctions face elevated risk and should weigh self-disclosure more heavily, particularly given the guaranteed declination benefits now offered.

Effective Cooperation Requires Total Transparency

• Successful cooperation with government investigations demands an “all-in” approach that surfaces good, bad, and ugly facts without attempting to bury or minimize damaging information.
• Half-hearted cooperation frustrates government officials and undermines credibility, making full factual disclosure essential even while advocating for favorable treatment based on those facts.
• The cooperation posture must be genuinely collaborative rather than adversarial, with companies proactively highlighting problematic documents and conducting thorough internal investigations rather than merely responding to subpoenas.

Individual Accountability Takes Center Stage

• The current administration has amplified the longstanding DOJ emphasis on individual accountability, moving toward a philosophy of prosecuting individuals rather than just companies in many circumstances.
• This shift reflects the view that fining companies punishes innocent shareholders and employees, while individual prosecution creates stronger deterrent effects for actual wrongdoers.
• Companies must now prioritize identifying and addressing individual misconduct, though this creates complex dynamics when senior executives are involved in the wrongdoing and control disclosure decisions.

Whistleblower Management Becomes Critical

• Effective whistleblower handling requires quick response, intentional listening, and meaningful follow-up to prevent internal concerns from becoming external enforcement actions.
• Most potential whistleblowers simply want to be heard and see corrective action taken, only turning to external reporting when they feel ignored or wronged by their employer.
• The expansion of whistleblower programs across multiple agencies makes internal capture of these concerns increasingly vital, requiring robust speak-up cultures and responsive investigation processes that demonstrate genuine organizational commitment to addressing problems.

Export Controls and Sanctions Require Specialized Expertise

• While FCPA compliance knowledge provides some foundation for international risk management, sanctions and export controls enforcement requires distinct specialized expertise due to complex regulatory structures and different risk profiles.
• Unlike FCPA’s focus on politically exposed persons and third-party consultants, export controls center on specific products, end users, and supply chain tracing responsibilities.
• Companies need dedicated trade compliance expertise, sophisticated screening procedures against prohibited party lists, and infrastructure to track items through distribution channels where compliance obligations follow the products regardless of downstream knowledge.

Compliance Program Effectiveness Demands Continuous Evolution

• Demonstrating compliance program effectiveness requires treating it as an open-book exam using published DOJ guidance, with over 100 subsidiary questions providing the framework for prosecutorial evaluation.
• Effectiveness cannot be proven through activity metrics alone but must show genuine risk-based adaptation, prompt remediation of identified vulnerabilities, and integration with business operations.
• The most compelling programs demonstrate continuous improvement based on emerging risks, follow through on identified weaknesses, and can articulate how their design addresses the specific compliance challenges facing their organization and industry.

Closing Summary