By Richard J. Morvillo and Sarah E. Barney

Seyfarth Synopsis: As usual, the U.S. Attorney’s Office for the Southern District of New York (the “SDNY”) is on the hunt for fraudsters and other white collar criminals. Though the Department of Justice has rewarded corporations for self-reporting to and cooperating with it, the SDNY recently took an important step in providing a meaningful incentive to individuals who self-report financial fraud and public corruption.

On January 10, 2024, U.S. Attorney Damian Williams announced the launch of the SDNY Whistleblower Pilot Program. The policy represents a marked departure from the manner in which the SDNY has historically treated cooperators and is designed to encourage early voluntary disclosure of criminal conduct by individual participants in certain non-violent offenses. While only time will tell whether the program is successful in incentivizing whistleblowers to cooperate early and often, it may serve as a test case for other jurisdictions looking to adopt similar programs.

The Requirements of the Policy

The policy applies to individuals who disclose to the SDNY information regarding criminal conduct committed by or through public or private companies, exchanges, financial institutions, investment advisers or investment funds involving fraud, corporate control failures, bribery or fraud relating to federal, state or local funds. Under the pilot program, the SDNY will enter into a non-prosecution agreement (“NPA”) with a qualifying individual who cooperates with the SDNY by furnishing it with such information, provided the following conditions are met.

  • The information must be voluntarily provided and not in response to a government inquiry or an obligation to report misconduct.
  • The information provided must not be public or previously known to the SDNY.
  • The individual who reports the information must be willing to provide substantial assistance to the SDNY in its investigation and prosecution of the conduct of “one or more equally or more culpable persons.”
  • The individual must also disclose not only all criminal conduct in which the individual participated, but also all criminal conduct of which the individual is aware.


While the pilot program creates a broad safe haven for certain cooperators, it does not cover the reporting of all criminal conduct of a non-violent nature.  In particular, it excludes individuals providing information about violations of the Foreign Corrupt Practices Act or federal or state campaign financing laws, federal patronage crimes or corruption of the electoral process or bribery of federal officials. 

It also excludes certain categories of individuals. For example, federal state and local elected or appointed officials and officials of federal investigative and federal law enforcement agencies are ineligible. Moreover, the program is not available to the chief executive officer or chief financial officer (or their equivalent) of a public or private company. Interestingly, it does not extend to a person who is or is expected to become “of major public interest.” Persons who engage in criminal conduct involving the use of force or violence, certain sex offenses, offenses involving terrorism or national security issues are also not covered. Finally, persons who have been convicted of a felony or for any conduct involving fraud or dishonesty are outside the policy.


  • Unlike the SEC whistleblower program, there is no direct financial incentive for putative whistleblowers to approach the SDNY with evidence of misconduct. But the avoidance of prosecution provides a powerful reason for whistleblowers to come forward.
  • Historically, the SDNY has required cooperators to plead guilty to all offenses that they have committed as part of their cooperation deal. The prospect of obtaining an NPA is an incentive for an individual to proffer early, before the SDNY has come into possession of the information from another source. This makes the program especially attractive to individuals who would be targets for prosecution given their involvement in a scheme and capitalizes on the insider knowledge these individuals may have.
  • Because the policy is limited to the SDNY, prospective whistleblowers whose conduct touches multiple jurisdictions may be driven to approach the SDNY, and not their local U.S. Attorney or Main Justice.  An NPA with the SDNY will not bind other parts of the Department of Justice, theoretically leaving the whistleblower exposed to prosecution elsewhere. It is rare, however, that another U.S. Attorney’s Office would prosecute an individual who entered into an NPA with the SDNY.  That is not the case with agencies like the Securities and Exchange Commission or Commodity Futures Trading Commission, and an individual who self-reports violations of the securities or commodities laws may wind up being named in a civil proceeding brought by one of these agencies even if he cooperates with it as well. 
  • The policy gives the SDNY sole discretion to determine whether an individual has met the requirements and whether to enter into an NPA. As a consequence, there is risk involved in an individual blowing the whistle and incriminating themselves, and potential whistleblowers should carefully assess the risks before bringing information to the SDNY.
    • Given the secrecy surrounding investigations by the SDNY, it is difficult to anticipate whether the SDNY will take the position that it is already in possession of the information provided. And, even if the information is technically “new”, if the information an individual provides is incremental, there is still a chance that the SDNY will determine that the information it is not sufficiently unique to be qualify under the policy.
    • It will also be up to the SDNY to determine whether there are “one or more equally or more culpable persons” than the whistleblower. This requirement  effectively excludes the “king pin” and others from deriving benefits from pointing downward to individuals with lesser culpability and ensures that the cooperation is geared toward prosecuting those at least as involved in the criminal activity as the whistleblower. That subjective judgment will likely be made by a prosecutor early on in an investigation where the only thing that is clear is the whistleblower’s version of events. There is no guarantee that the SDNY will agree with the whistleblower’s assessment of the relative culpability of others and thus there is no assurance that the cooperation will result in an NPA.
    • The SDNY will also determine whether an individual who self-reports may be disqualified because the individual is or is expected to become “of major public interest.” A person seemingly may be disqualified simply because of their public stature, status or notoriety.  More problematic is the possibility that an individual who participates in a crime that the SDNY believes may result in serious harm to the public or significant economic losses may be deemed “of major public interest” after incriminating themself. The more publicity a case is likely to generate, the more likely a central player in the crime is to be disqualified under the policy.
    • To qualify, an individual must report all crimes he is aware of or has participated in. The SDNY typically conducts a thorough interview to uncover any illegal activity that a cooperator has engaged in, partially because it does not want to be surprised by a revelation of criminal activity during the cross-examination of a cooperator. The policy is unclear about the consequences of such self-reporting.  After confessing to a qualifying crime as part of her cooperation, an individual who reveals her participation in other criminal activity may be subject to prosecution for the latter crime.    
  • The policy enumerates the factors the SDNY will consider in deciding whether to enter into to an NPA with an individual who does not meet its requirements. While in such a case the SDNY may follow its traditional approach of requiring a guilty plea from that individual, the inclusion of such factors suggests that the SDNY is open to considering an NPA where the cooperation is early, substantial and valuable in prosecuting others for serious crime.
  • It will be interesting to see how the granting of an NPA under the policy will play out at a trial where the whistleblower testifies. During cross-examination of a cooperator, defense counsel often tries to convince the trier of fact that the testimony is not credible because the cooperator is testifying against the defendant in order to get a 5K1 letter and a lenient sentence.  Countless juries have credited cooperators who pled guilty nonetheless because they testified as to their criminal conduct and still had to face sentencing for those crimes without any guarantees. The pilot program may lend more fire power to the defense lawyer’s attempt to discredit a cooperator now that the cooperator will get a complete pass for his cooperation. Juries may be more prone to think that escaping prosecution altogether provides sufficient motivation for a cooperator to testify falsely.


As highlighted by the observations, the SDNY’s short and sweet program requirements do not eliminate the need for thoughtful consideration of the risks associated with divulging self-incriminating conduct. While the rationale behind the policy and its requirements is sound, there is a tension between the desire for an NPA and the vulnerability that comes with confessing to a crime.  This tension may deter some whistleblowers from utilizing the program given the broad discretion the SDNY has to determine whether the program’s requirements have been met. 

Nevertheless, because the program offers whistleblowers in the SDNY an attractive option they did not have before, it is likely to get traction. Traditionally, a putative cooperator had the choice between taking her chances at trial or accepting a plea and cooperation agreement with the hope that her cooperation would convince the sentencing judge to go easy on her.  Pleading guilty was often the “less bad” choice for an individual who was not the primary target of a prosecution. Now, with the launching of the pilot program, so long as the whistleblower has someone she can point at who is at least equally culpable, offering her cooperation may result in a free pass for financial fraud or public corruption crimes.  Companies should recognize that the program will attract some whistleblowers who have information about misconduct at their place of employment. As a consequence, companies should continue (1) to adopt robust compliance programs; (2) to train employees on those compliance policies and to be attentive to possible indications of fraud or financial crimes; (3) to encourage employees to report suspected wrongdoing internally and to make internal reporting mechanisms easily available; (4) to investigate any credible allegations of misconduct; and (5) to consider whether to disclose any misconduct they uncover.