A Clearer Path Forward? SDNY’s New Corporate Disclosure Framework

On February 24, 2026, the U.S. Attorney’s Office for the Southern District of New York (SDNY) announced its new Corporate Enforcement and Voluntary Self-Disclosure Program. Under the program — which was previewed in early February by SDNY U.S. Attorney Jay Clayton — eligible companies that self-report certain illegal activity, fully cooperate, commit to ongoing reporting for a three-year period, and agree to remediate any harm caused by misconduct “will have a clear, agreed-upon path to a declination.”

SDNY’s program builds on — but in several respects, diverges from — the revised self-disclosure policy issued by the U.S. Department of Justice’s Criminal Division (Criminal Division or CRM) last year. Both frameworks provide incentives for voluntary self-disclosure, cooperation, remediation, and ongoing compliance commitments. But SDNY’s approach departs from CRM’s in several meaningful ways. For example:

• A broader definition of “timeliness”: Under the CRM policy, a disclosure must be “voluntary” and made before an imminent threat of disclosure or government investigation. The focus is on whether the company disclosed before the misconduct became known to the government and before a credible threat of exposure. But SDNY takes a softer approach: SDNY’s program will credit disclosures even when the government already has the information, so long as the company had a “good-faith belief” that SDNY was unaware of the misconduct. This expansion addresses longstanding gray areas — e.g., internal whistleblower allegations (noting that the CRM policy contains a whistleblower carve out, which preserves declination eligibility if the company self discloses within 120 days of an internal whistleblower report), parallel reporting, or rumors of an ongoing investigation — that previously complicated a company’s decision on whether to self-report. 
• Fast-tracked conditional declinations: CRM’s policy provides for declination where a company voluntarily self-discloses, fully cooperates, and remediates, absent aggravating circumstances. However, these conditions typically do not materialize until the end of a full investigation — which can take years. SDNY introduces fast-tracked, conditional letters, issued within weeks of a qualifying disclosure. These conditional declinations become final once the company completes agreed-upon cooperation and remediation obligations. 
• Fundamental shift in “aggravating circumstances”: CRM’s policy treats aggravating circumstances “related to the nature or seriousness of the offense, egregiousness or pervasiveness of the misconduct within the company, severity of the harm caused by the misconduct, or criminal adjudication or resolution within the last five years based on similar misconduct” as factors that can defeat the presumption of declination. SDNY reframes the analysis. Rather than focusing primarily on traditional aggravating factors, SDNY defines declination eligibility in part by category of offense. Financial market misconduct (e.g., fraud, insider trading) may remain eligible even where senior management was involved. By contrast, certain offenses — including terrorism, sanctions evasion, foreign corruption, sex trafficking, human trafficking and smuggling, international drug cartels, slavery, forced labor, or physical violence — and the knowing or reckless financing of such activity or laundering of funds in support of these activities, automatically foreclose a declination. 

Takeaways

The Criminal Division’s policy remains the baseline framework and applies nationwide for cases involving the Criminal Division, whereas SDNY’s new program reflects how one of the Justice Department’s most active districts — which almost always pursues investigations without the involvement of the Criminal Division — intends to operationalize similar incentives.

Some practical takeaways to keep in mind:

• Venue matters more than ever. The strategic value of voluntary disclosure may now differ depending on whether the matter is likely to be handled by CRM, other U.S. Attorney’s Offices, or SDNY. Financial services companies may find SDNY’s program particularly attractive given its treatment of aggravating circumstances. It remains to be seen which policy applies in instances where SDNY and CRM are both involved, such as cases brought under the Foreign Corrupt Practices Act. 
• Early disclosure incentives have strengthened. SDNY’s conditional declination approach reduces the leap of faith associated with CRM’s policy, which requires companies to cooperate throughout the entire (sometimes multiyear) investigation before learning their fate. 
• Compliance programs remain critical. The program still requires full cooperation, remediation, and ongoing reporting. Effective compliance, documentation, and response protocols are in every company’s best interest. SDNY’s program does not diminish the importance of effective compliance controls. 
• Documentation is key. SDNY’s “good faith belief” standard for timely disclosures underscores the importance of documenting a company’s knowledge and decision-making process when potential misconduct is discovered.

We’ll continue to follow the implementation of SDNY’s new voluntary self-disclosure program here on Enforcement Edge. For questions about this topic, contact the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations practice group.

© Arnold & Porter Kaye Scholer LLP 2026 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.