On February 24, 2026, Jay Clayton, the US Attorney for the Southern District of New York (“SDNY”), announced an updated Corporate Enforcement and Voluntary Self-Disclosure Program to incentivize companies to disclose illegal activity involving fraud and other financial misconduct affecting market integrity.¹

With this updated program, SDNY has sought to give companies certainty that they will receive a declination from criminal prosecution upon meeting certain conditions, and to accelerate the potential benefit with the issuance of a conditional declination letter at the outset. The program provides that qualifying companies “can expect a conditional declination letter within two to three weeks of making a self-report” – long before a company would typically have visibility into the likely outcome of an investigation.²

To qualify for the program, a company must: (1) self-report qualifying illegal activity, which generally covers fraud and intentionally deceptive conduct by a corporate entity; (2) fully cooperate with law enforcement; (3) commit to ongoing reporting of criminal conduct for three years; and (4) remediate the harm caused by the misconduct, including full restitution to victims.

In its announcement, SDNY stated that at least one company has already received a conditional declination letter from the Office within a month of self-reporting.³

Program Details

The program targets a broad range of illegal activity related to corporate fraud, including fraud by a company or one of its employees, officers, directors or entities; fraud in connection with securities, commodities or digital assets; false statements made to an auditor or regulators; and other willful violations of the federal securities and commodities laws.⁴

In a departure from prior policy, a company is not disqualified from participating in the program if it has knowledge of a whistleblower report, there has press reporting, or there has been a prior self-report to another agency regarding the misconduct.⁵

The program consists of a two-stage declination process:

• First, companies that make a qualifying voluntary self-disclosure will receive a conditional declination letter shortly after reporting. To qualify, a company must voluntarily self-report the qualifying illegal activity, fully cooperate with law enforcement, commit to three years of ongoing reporting of criminal misconduct, and commit to remediate the harm caused by the misconduct, including by committing to make full restitution to all injured parties. As part of the conditional declination, the Office will commit to not seek or require payment of any form of financial penalty in the form of a criminal fine or forfeiture (provided the restitution obligation is satisfied) and will not require the company to employ or be supervised by a monitor.⁶

• Second, upon satisfaction of all cooperation, remediation, and restitution obligations, the Office will issue a final declination letter, concluding the matter without criminal charges.⁷

“Full cooperation” to meet the requirements for the final declination letter includes, but is not limited to, identifying involved or responsible individuals, as well as material witnesses; sharing non-privileged factual results of internal investigations; promptly providing relevant documents, including documents located abroad or in foreign languages and making all efforts to address and mitigate barriers such as data privacy laws and blocking statutes; making available former and current employees; and preserving all records and communications, including non-email and ephemeral messaging applications, for all relevant custodians.⁸

The three-year ongoing reporting obligation is noteworthy as it extends to all credible evidence or allegations of criminal conduct by the company or any of its employees relating to violations of US law. The program specifies that it will evaluate appropriate resolutions of subsequent self-reported misconduct on a case-by-case basis.⁹

Timeliness of Self Reporting and Absence of Aggravating Factors

There are circumstances that may disqualify a company from participating in the program.

First, certain aggravating circumstances may disqualify a company from participation in the program – including any nexus to terrorism, sanctions evasion, international drug cartels, sex trafficking, or the knowing or reckless financing of these activities or laundering of funds in support of these activities. Notably, any nexus to “foreign corruption” is identified as an aggravating circumstance, so violations of the Foreign Corrupt Practices Act may not be eligible under the policy.

Second, delay in making a disclosure—including a delay to complete a company’s internal investigation—may disqualify a company from receiving a declination under the program. Disclosure must be made upon discovery of the illegal activity, before the company learns of the existence of a government investigation, and independently of any preexisting obligation to report to DOJ.¹⁰ The program does not specify the length of a delay that would be disqualifying, but notes that delays stemming from an attempt to be “strategic or self-serving” may disqualify a company.¹¹

Key Considerations for Companies

• The potential for near-term certainty of a declination creates a meaningful incentive for self-disclosure.
• Companies should consider the scope of “full cooperation,” in particular, compliance with the three-year reporting requirement and any potential investment necessary to comply with this obligation. 
• While timeliness is critical, identifying employees as potentially involved in criminal conduct before a company has completed its own investigation carries meaningful risk that must be evaluated.