Deferred Prosecution Agreement
A deferred prosecution agreement (DPA) is a negotiated resolution between the U.S. Department of Justice and a corporate defendant in which the government files criminal charges but agrees to defer their prosecution for a specified period — typically two to three years — in exchange for the company's acceptance of responsibility, payment of monetary penalties, cooperation with the government's investigation, and implementation of compliance reforms.
The DPA structure evolved from the DOJ's recognition that criminally indicting a major corporation — with the associated reputational damage, loss of licenses, and disruption to employees and investors — can cause collateral harm disproportionate to the underlying misconduct, particularly when only a limited number of individuals within the organization were responsible. DPAs allow the DOJ to hold corporations accountable through financial penalties, compliance mandates, and public admissions of fact while avoiding the potentially catastrophic consequences of a criminal conviction.
Under a DPA, the DOJ files a criminal information in federal court but simultaneously enters into a written agreement with the corporation under which prosecution is suspended. The agreement sets out the factual basis for the charges, the corporation's acceptance of responsibility for the described conduct, the monetary penalty to be paid (calculated under the DOJ's Sentencing Guidelines and Principles of Federal Prosecution of Business Organizations), and a set of compliance obligations the corporation must fulfill during the deferral period.
Compliance obligations in securities-related DPAs commonly include retaining an independent compliance monitor who reports to the DOJ on the adequacy of the company's compliance program; implementing specific enhancements to internal controls, books and records, and anti-fraud programs; cooperating fully with ongoing government investigations, including providing documents and making employees available for interviews; and periodically certifying compliance to the DOJ.
At the end of the deferral period, if the corporation has fully complied with its obligations, the DOJ moves to dismiss the criminal charges. If the corporation has breached the agreement — by committing additional crimes, failing to cooperate, or failing to implement required reforms — the DOJ can resume prosecution using the criminal information already filed and the factual admissions made in the agreement.
In the securities enforcement context, DPAs are most frequently used in cases involving bank fraud, accounting fraud, FCPA (Foreign Corrupt Practices Act) violations, and market manipulation. Major financial institutions including multiple large banks have entered into securities-related DPAs involving billions of dollars in monetary penalties. The DOJ's Securities and Commodities Fraud section works closely with the SEC's Enforcement Division in cases where both civil and criminal conduct is alleged, with the DPA often negotiated in coordination with a parallel SEC consent order.
Critics of DPAs argue that they allow corporations to avoid criminal convictions that would properly reflect the severity of the misconduct and that they are insufficient to deter future violations when the penalties are easily absorbed as a cost of business. Proponents contend that DPAs produce substantial compliance improvements, significant financial penalties, and cooperation that advances broader investigations of individual wrongdoers.