Securities Regulation Daily Wrap Up, ENFORCEMENT—SDNY U.S. Attorney’s office announces new self-reporting program for companies, (Feb 27, 2026)

By Lene Powell, J.D.

The program spells out how companies can avoid prosecution for certain illegal activity.

Building on a longstanding practice of rewarding self-reporting and cooperation, Jay Clayton, U.S. Attorney for the Southern District of New York and former SEC chairman, announced a new Corporate Enforcement and Voluntary Self-Disclosure Program, providing a “clear, agreed path” for the office to decline to prosecute companies for criminal conduct if certain conditions are met.

One company has already received declination under the program, according to a press release.

Clayton touted the program’s clarity. “When companies do the right thing—report quickly, cooperate fully, and remediate harm—they should know where they stand,” he said.

Prompt disclosure and cooperation also benefits victims, shareholders, employees, and markets, he said.

Broadly, the program is available for illegal activity involving fraud and financial misconduct affecting market integrity. Details are provided in a five-page document, SDNY Corporate Enforcement and Voluntary Self-disclosure Program For Financial Crimes.

Two-step process. The central feature is a two-step declination process. First, the office will provide a conditional declination letter shortly after an eligible company makes a qualifying report. Then, if a company subsequently satisfies cooperation and remediation obligations and restitutes victim losses, the office will provide a final declination letter, concluding the matter without criminal charges.

The office provided a model conditional declination letter for reference.

In addition to declination of prosecution, eligible companies will not be required to use a monitor. Companies also will not be required to pay a criminal fine or forfeiture, provided they make reasonable best efforts to provide restitution to injured parties, as specified.

The office said it has already provided a conditional declination letter to a self-reporting company within a month of the company making a disclosure.

Conditions. The office will decline to prosecute an eligible company for criminal conduct when the following factors are met:

1. The illegal activity is eligible to be self-reported under the program;

2. The company timely and voluntarily self-discloses the illegal activity to the Office;

3. The company commits to full cooperation and thereafter fully cooperates with the Office’s investigation; and

4. The company commits to remediating the illegal activity and thereafter fully remediates the illegal activity, including by making restitution to victims.

Accountability. Self-reports help hold individuals accountable, the office said.

“During U.S. Attorney Clayton’s tenure, the Office has brought criminal charges against individual executives and employees based on information originally obtained through corporate self-disclosures and will continue to do so,” the office stated.

But Clayton emphasized that the program is not a free pass for corporate wrongdoing.

“To be sure, companies that choose not to cooperate proactively and are found to have engaged in criminal conduct will face significant corporate consequences,” he said.

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