USA Law and Practice Contributed by: Eric Bruce and Justin Simeone, Freshfields US LLP
7.4 Discretion for Mitigation and Aggravation
negotiated resolutions are extremely common in most, if not all, US enforcement contexts. They often include features such as: • a fixed term of years during which the defendant must comply with the terms of the agreement or risk the government pursuing a formal action; • monetary penalties; • obligations to cease ongoing violations, remediate harm caused to victims, and improve internal processes to prevent future violations; • reporting requirements (eg, the company must report any violations of law or the nego - tiated resolution directly to the enforcement agency); and • often, compliance monitors, who are appoint - ed as neutral third parties to oversee the defendant’s compliance with the law and the agreement, report to the government on the defendant’s activities, and review and audit the defendant’s activities. Plea agreements are used in criminal cases and require the defendant to acknowledge guilt. Pleas must be approved by a judge and result in the entry of a conviction against the defend - ant. In practice, courts rarely modify or reject plea agreements proposed by the parties, but it is possible for them to do so. Civil regulators like the SEC use settlement agreements to the same effect. A settlement agreement does not necessarily require an admission of liability or wrongdoing (although the regulator may demand one). Nor does it necessarily need to be approved by a court or automatically result in the entry of a judgment against the defendant in the same way that a plea agreement results in a conviction.
US authorities have extensive discretion to grant defendants credit for self-reporting and other forms of co-operation, up to and including declining to bring enforcement actions. US enforcement agencies also have discretion to resolve violations of law through negotiated agreements. These agreements account for the vast majority of criminal resolutions in the US. There are three main types of negotiated agree - ments: non-prosecution agreements (NPAs), deferred prosecution agreements (DPAs), and plea or settlement agreements. • NPAs – in NPAs, the agency agrees not to prosecute on the condition that the individual or company will co-operate with the agency in its investigations of other individuals or entities and abide by other conditions (fines, monitorships, etc). • DPAs – the agency defers filing charges, sometimes indefinitely, based on the defend - ant’s compliance with certain conditions. Importantly, neither DPAs nor NPAs require a defendant to admit wrongdoing. This can be an important point, as it may affect a defend - ant’s potential civil liability to private parties. • Plea/settlement agreements – the agency files charges and reaches an agreement with the defendant to end the enforcement action after it has already begun. As part of these agree - ments, the agency may agree to dismiss one or more of the charges, which often reduces the penalty. State and federal criminal prosecutors all have the authority to enter into plea agreements. DPAs and NPAs are available at the federal level and may be available in some states, depending on local laws. Regardless of the precise form,
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