Federal prosecutors in Manhattan are urging Wall Street companies to confess to fraud in exchange for behind-the-scenes deals that would spare them from criminal charges, fines, and public disclosure of their wrongdoing, the Financial Times reported.

The U.S. Attorney’s Office for the Southern District of New York—long regarded as the country’s premier white-collar prosecutor and the office that brought down Drexel Burnham Lambert and Steve Cohen’s SAC Capital—has spent recent weeks meeting with major law firms and corporate advisers to pitch the more lenient regime, the newspaper said. 

The new voluntary self-disclosure policy, which applies only to fraud, can be used even when alleged misconduct was widespread, caused serious harm, reached senior executives, or had already surfaced in the press or through a whistleblower, the FT reported. Prosecutors may still charge individuals, but companies would not be charged even if the conduct turned out to be worse than initially disclosed, and the terms of the agreements would not be published.

Jay Clayton, the U.S. attorney for the Southern District of New York and a former chair of Apollo Global Management, told the FT the policy was meant to help the office uncover fraud more quickly. “That’s what the American people want from their companies and their Justice Department,” he said in the report. Clayton also served as the chair of the U.S. Securities and Exchange Commission for nearly four years under the first Trump administration. 

At a conference on Wednesday, he issued a blunt warning to companies that decline to come forward: “If you don’t report and we find it, we’re going to kill you,” he said, according to the FT. “That’s the deal . . . If you know [about fraud], and you don’t tell us, that’s bad.”

Companies that take the deal can expect a letter within two to three weeks stating that the office does not intend to prosecute, the news outlet reported, giving “the company, its management and its shareholders clarity as to the outcome of the investigation at the outset,” according to a document outlining the plan. Firms can also avoid “any form of financial penalty in the form of a criminal fine or forfeiture” provided they make “reasonable best efforts” to reimburse victims.

In exchange, participating companies must report any “credible evidence or allegations” of US law violations by the company or its employees for three years after the deal. The agreements are available even to repeat offenders, but not to companies that already know they are under SDNY investigation, the newspaper said. 

The policy marks a notable softening at an office historically known for aggressive corporate prosecutions and reflects a broader business-friendly tilt under Clayton. The shift comes as overall U.S. white-collar prosecutions have fallen to their lowest level in at least four decades, the Department of Justice has lost more than a quarter of its lawyers since January 2025, and President Donald Trump has pardoned large numbers of white-collar offenders, according to the FT.

“There’s more carrot here, but there’s also a lot less stick,” a former federal prosecutor told the FT, adding that for companies the disclosure calculus “really boils down to, what are my odds of getting caught?”

The shift also follows, and builds upon, a new policy issued by the Justice Department in March. 

In it, the DOJ said that companies which voluntarily self-disclose misconduct, fully cooperate, remediate in a timely manner, and lack aggravating circumstances will generally receive a declination rather than prosecution. Aggravating circumstances include the seriousness or pervasiveness of the misconduct, the severity of harm, and recent or similar corporate recidivism. 

But even when a declination is granted, companies must pay disgorgement, forfeiture, and restitution or victim compensation tied to the misconduct, and those declinations will be made public, the department said in March. 

Unlike the Main Justice policy, the SDNY does not plan to publish its agreements, the FT reported, though their existence could become public if an individual is charged or if regulators require the company to disclose them. The deals also do not require a “statement of fact,” the detailed account of wrongdoing typically attached to non-prosecution agreements.