Abstract
In 1991, the United States Sentencing Commission promulgated the first guidelines for the sentencing of organizational defendants. Like their counterpart for individual defendants, the organizational guidelines promised to bring coherence and consistency to the sentencing of corporations, partnerships, and other business organizations. The guidelines did so by calculating a corporate defendant's penalty based on the seriousness of the offense and the existence of specified aggravating and mitigating factors.
Over the last 14 years, much practice and commentary has focused on one of the guideline's mitigating factors: whether a company has an effective corporate compliance program. Link to the text of the note Compliance programs are corporate procedures and standards designed to prevent illegal conduct by educating and motivating employees to comply with the law and to deter and detect legal violations. The guidelines' commentary sets forth seven criteria for evaluating a compliance program's effectiveness, including whether the company has designated compliance personnel, drafted compliance standards and procedures, communicated the standards and procedures to its employees, and monitored and audited employee adherence to compliance obligations. Link to the text of the note These criteria immediately became the gold standard for designing and implementing an effective compliance program.
IIn early 2002, the Sentencing Commission appointed an Ad Hoc Advisory Group to review the organizational sentencing guidelines and propose needed changes. The Advisory Group learned that in the ten years since the guidelines were introduced, companies had implemented and adopted best practices that refined and built on the original seven criteria. The Advisory Group sought to codify many of these best practices in the amendments it recommended to the Commission. The Commission proposed most of these amendments to Congress, whose inaction rendered the amendments effective on November 1, 2004. What follows are the top ten things attorneys and organizations should know about these amendments.