14 March 2019

Large “transactions” part II: DPPS moves further towards US-style settlements

In a recent interview with a Dutch newspaper, the head of the Dutch Public Prosecution Service (DPPS) discussed a legislative proposal that would allow the appointment of special observers to monitor if a company is acting in line with a compliance programme. If this proposal is implemented, the Netherlands will move further towards a US-style settlement practice. The Dutch Minister of Justice and Security has responded positively to the proposal, which comes after recent plans to implement a mandatory process of judicial review of large settlements.

As discussed in a previous In context article, the DPPS has decided to support the proposed introduction of judicial review. The DPPS believes, however, that the threshold for the mandatory judicial review can be raised to settlements with a value of at least EUR 1 or 2 million.

The DPPS would also like to see a legal basis to impose compliance monitoring on companies that have settled a criminal case. Under the current framework, a compliance programme may be imposed on a company if it forms part of a settlement that the company has agreed to. According to the DPPS, the law should be amended to also create the option to appoint special observers to monitor if the company acts in accordance with the compliance programme.

When asked about other areas for improvement, the head of the DPPS mentioned the possibility of making payments to victim compensation funds, where appropriate, as part of a settlement. This practice resembles what is already common practice in the US: the SEC’s establishment of fair funds and disgorgement plans. These funds and plans are created for investors who were harmed by a violation.

Given these developments, fundamental changes seem to be coming soon. Settlements concluded by Dutch prosecutors are moving more and more towards the US practice, while also addressing the public call for checks and balances and for more transparency about larger settlements in the Netherlands.

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