DealLawyers.com Blog

In October 2023, the DOJ announced the initiation of a “Mergers & Acquisitions Safe Harbor Policy” intended to incentivize voluntary self-disclosure of wrongdoing uncovered during the M&A process. This recent Cleary blog says that last month, the DOJ issued its first declination to prosecute based on that policy.  Here’s the intro:

On June 16, 2025, the Department of Justice’s National Security Division (“NSD”) and the U.S. Attorney’s Office for the Southern District of Texas announced a landmark declination to prosecute private equity firm White Deer Management LLC following its voluntary self-disclosure of sanctions violations committed by an acquired company. This marks the first application of the safe harbor provisions for voluntary self-disclosure in connection with mergers and acquisitions—a policy put in place during the previous administration—and demonstrates the benefits of NSD’s enforcement policies while highlighting continued enforcement priorities across administrations.

The White Deer declination, coupled with the non-prosecution agreement entered into with the acquired entity Unicat Catalyst Technologies LLC, provides critical guidance for companies navigating potential sanctions and export control violations discovered during post-acquisition integration.  It underscores that the voluntary self-disclosure framework established under the previous administration remains fully operational and continues to offer substantial benefits to companies that act swiftly and responsibly upon discovering misconduct.

The blog says that key factors in the DOJ’s decision include voluntary self-disclosure, exceptional cooperation, timely implementation of comprehensive remedial measures, and the fact that the misconduct involved former Unicat employees who acted without the knowledge of new management.

– John Jenkins