SDNY Formalizes New Corporate Self-Disclosure Policy

The U.S. Attorney's Office (USAO) for the Southern District of New York (SDNY) on February 24, 2026, officially unveiled an updated self-disclosure program offering unprecedented benefits (i.e., declination of prosecution) to companies that promptly report financial criminal conduct and provide "meaningful" cooperation, including correcting the resulting harm and repaying victims.

As Holland & Knight reported in December 2025, the policy signals an ambitious initiative to encourage early, proactive and full cooperation – including a three-year reporting commitment – in cases involving fraud and market‑integrity crimes.

What's Included in the New Policy

The new framework promises "swift resolution and certainty" for companies that voluntarily disclose wrongdoing involving fraud or financial misconduct affecting market integrity. Though the structure mirrors U.S. Department of Justice (DOJ) Criminal Division's May 2025 policy, SDNY's version reflects a distinctly Wall Street‑oriented approach.

Companies meeting the criteria (outlined in the section below) are eligible to receive a conditional declination shortly after self‑reporting and satisfying the SDNY's long list of "full cooperation." The most challenging disclosures include "identifying individuals involved in or responsible for the illegal activity" and witnesses who would be expected to have material information.

This program marks a meaningful shift from the DOJ's 2023 uniform voluntary self‑disclosure policy that removed the presumption of guilty pleas but still left open the possibility of fines or negotiated resolutions such as non-prosecution agreements and deferred prosecution agreements.

Criteria

The program applies broadly to misconduct involving fraud by a company or its employees, including:

• securities, commodities or digital asset fraud
• false statements to auditors or regulators
• violations of key investment‑related statutes, such as the Securities Exchange Act of 1934 and Commodity Exchange Act

Self-disclosure of misconduct outside of these categories may not qualify for declination under this particular program.

To qualify for this program:

• the illegal activity is eligible to be self-reported under the program
• the company timely and voluntarily self-discloses the illegal activity to the USAO
• the company commits to full cooperation and thereafter fully cooperates with the USAO's investigation (including "ongoing reporting of criminal conduct for three years")
• the company commits to remediating the illegal activity and thereafter fully remediates the illegal activity, including by making restitution to victims

Next Steps

Once cooperation, remediation and restitution are complete, the SDNY's declination should become final. As a result, companies that have satisfied the conditions of self-disclosure and cooperation according to the SDNY would then not be confronted with a prosecution regarding the criminal activity or risk of consequences such as criminal fine, forfeiture or the imposition of an external corporate monitor.

To help discharge their obligations under the program, companies would be required to demonstrate that they have made "reasonable best efforts" to fully compensate victims.

Factors That Do Not Preclude Participation

Importantly, several circumstances that might ordinarily complicate cooperation will not disqualify a company from the program. These include:

• involvement of senior leaders or pervasiveness of the misconduct
• past criminal adjudications
• awareness of an employee whistleblower report to a government agency
• media coverage of alleged misconduct, as long as it does not report on a government investigation
• prior disclosure of the issue to another regulatory authority

Aggravating Circumstances May Bar Declination

Though the SDNY adopts an expansive view of eligibility, certain categories of misconduct remain outside the scope of this program's intended use, such as activities involving terrorism, human trafficking, foreign corruption or connection to drug cartels.

Speed is Paramount

As U.S. Attorney for the SDNY Jay Clayton emphasized in December 2025, "time matters," and the speed of disclosure remains critical under the formalized policy. To qualify, a company must disclose before learning of any government investigation or receiving a subpoena or regulatory request from agencies such as the U.S. Securities and Exchange Commission (SEC), U.S. Commodity Futures Trading Commission (CFTC) or state attorneys general.

The SDNY warns that delays – especially those viewed as strategic – may render a company ineligible even if its internal investigation is ongoing. In exchange for rapid reporting, the USAO commits to providing an eligibility determination within two to three weeks – far earlier than companies typically receive insight into the likely resolution of a federal inquiry.

Practical Implications

Clayton framed the policy as reinforcing corporate responsibility: Companies that act quickly, cooperate fully and remediate effectively "should know where they stand." With this formal program, the SDNY positions voluntary disclosure as aligned with the interests of victims, shareholders and the broader public.

The initiative also solidifies the DOJ's broader pivot toward incentive‑driven enforcement. As anticipated in December 2025, the department continues to expand "carrot‑based" approaches designed to promote transparency and early cooperation, particularly in industries where market integrity is paramount.

Companies operating in securities, commodities and digital‑asset markets should evaluate the significant benefits now offered under this policy when addressing potential misconduct. As always, decisions concerning self‑disclosure require a careful assessment of risks, facts and timing.

For additional guidance on this policy and its implications, please contact the authors or a member of Holland & Knight's White Collar Defense and Investigations Team.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.