Wall Street criminal enforcer urges whistleblowers to come forward

By Luc Cohen

NEW YORK (Reuters) -The top enforcer of criminal malfeasance on Wall Street is calling on whistleblowers to come forward and report wrongdoing under a new program aimed at uncovering illegal activity.

Damian Williams, the top federal prosecutor in Manhattan, told reporters on Wednesday his office would enter into non-prosecution agreements under the program with individuals involved in non-violent criminal conduct who voluntarily report offenses and cooperate with investigators.

Currently, cooperating witnesses with criminal culpability themselves often enter guilty pleas in the hopes of receiving a lenient sentence. The new policy provides an alternative under which prosecutors would agree not to bring charges in exchange for meaningful cooperation.

"That, in turn, will help us bring more misconduct to light," said Williams, who has brought high-profile financial fraud and public corruption cases since becoming the U.S. Attorney for the Southern District of New York in 2021 including the successful prosecution of former cryptocurrency mogul Sam Bankman-Fried last year.

The program is focused on cases involving fraud, failures of corporate controls or bribery, and will apply only to instances in which prosecutors were not already aware of the misconduct a witness discloses to them. It also will not apply to chief executive officers or chief financial officers of companies, elected officials, or other public figures.

Since taking office, Williams has prioritized speeding up prosecutions and often has urged people with knowledge of wrongdoing to come forward.

In 2022, after charging FTX founder Bankman-Fried with stealing billions of dollars from the cryptocurrency exchange's customers, Williams urged anyone who participated in the scheme to "come see us before we come see you." Three of Bankman-Fried's former closest colleagues pleaded guilty and testified against him.

Joshua Naftalis, a former Southern District of New York prosecutor, said the new guidelines will encourage more cooperation. In the past, prosecutors generally did not tell witnesses whether they would earn a non-prosecution agreement or be required to plead guilty until after they shared information, Naftalis said.

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"It adds more certainty, which is what people want when they go into the U.S. attorney's office and self-report," added Naftalis, now a partner at law firm Pallas.

Williams' office and other Justice Department entities already consider non-prosecution agreements for companies that voluntarily disclose wrongdoing. The U.S. Securities and Exchange Commission, which brings civil financial fraud cases, offers financial compensation to whistleblowers who alert the agency to wrongdoing.