Nov 92026

Beyond the Ballot: What the 2026 Midterms Mean for Your Business

White Collar Watch
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On Thursday, November 12, 2026, from 12:00 to 1:00 p.m. ET, Sidley lawyers Michael Borden and Lisa Miller will host a webinar, Beyond the Ballot: What the 2026 Midterms Mean for Your Business, examining the election results and their practical implications for companies navigating an evolving political and regulatory environment.

The discussion will address emerging congressional oversight priorities, potential changes in federal regulatory and enforcement agendas, and the legislative priorities of the next Congress. Panelists will also offer practical insights into how businesses can anticipate heightened scrutiny, manage political and reputational risks, and prepare for the challenges and opportunities ahead in 2027 and beyond.

Register here for the webinar to learn more about what the election results could mean for your business.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.

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Better Late Than Never: DOJ’s National Security Division Resolves First “Near Miss” Self-Disclosure Under Department-wide Corporate Enforcement Policy

On October 27, 2026, the U.S. Department of Justice (DOJ or the Department) announced that its National Security Division (the NSD) had entered into a non-prosecution agreement (NPA) with Extreme Networks, Inc. (Extreme Networks) to resolve sanctions and export control violations involving sales to a Russian weapons manufacturer. The resolution is the first “near miss” NPA under DOJ’s Department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy (the CEP), and the first resolution under the CEP announced by the NSD. The resolution illustrates how the Department distinguishes between an imperfect self-disclosure, which may still earn substantial credit, and a failure to self-disclose at all.

The Extreme Networks Agreement

According to DOJ, between March 2018 and March 2022, Extreme Networks used a Russia-based subsidiary and a third-party distributor to fulfill purchase orders from Moscow Machinery Building Plant Avangard (MMZA), a weapons manufacturer whose owner has been on the Specially Designated Nationals and Blocked Persons List maintained by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) since July 2014, while concealing MMZA’s role in those sales. Extreme Networks also filed false export information, which impeded enforcement of sanctions and export controls that DOJ described as “designed to protect national security and economic interests.”

DOJ classified the matter as a “near miss” under the second prong of the CEP’s three-part framework. Although Extreme Networks self-disclosed the misconduct, it did so only when a news publication was poised to report on it. Because the disclosure was made under the imminent threat of public disclosure, it did not satisfy the CEP’s requirement that a voluntary self-disclosure be timely.

DOJ nonetheless agreed to resolve the matter through an NPA, citing the absence of aggravating circumstances and the company’s cooperation and remediation, which included:

  • Providing relevant facts and documents and making employees available for interviews;
  • Terminating its relationship with the third-party distributor used to facilitate the sales;
  • Improving screening procedures and hiring additional compliance personnel; and
  • Implementing diligence procedures in connection with mergers and acquisitions.

The NPA requires Extreme Networks to forfeit $487,860.92, the proceeds it received from its export misconduct, and pay a $487,860.92 criminal fine. Extreme Networks also agreed to a settlement amount of $1,529,685.00 with OFAC to resolve a parallel action arising out of the same conduct. OFAC considered the case to have been voluntarily self-disclosed and egregious, noting Extreme Networks “acted with reckless disregard for U.S. sanctions when it failed to conduct sufficient due diligence to recognize that MMZA was a blocked person, and when it failed to heed numerous warning signs that MMZA was the ultimate recipient of the goods.” Extreme Networks’ obligation to pay a portion of the OFAC settlement amount was deemed satisfied by its payment of the fine to DOJ, resulting in Extreme Networks being required to pay $1,041,824 pursuant to the settlement agreement with OFAC, which is available here.

The Resolution Demonstrates DOJ’s New CEP in Practice

As discussed in our prior Update, DOJ adopted the Department-wide CEP in March 2026. The CEP establishes three tiers: declinations for companies that voluntarily self-disclose, fully cooperate, timely remediate, and present no aggravating circumstances; “near miss” resolutions where “a company attempted in good faith to self-disclose but either it failed to satisfy DOJ’s technical criteria for voluntary disclosure or aggravating circumstances are present and prosecutors do not recommend declining”; and resolutions for all other companies. Extreme Networks fell within the first branch of the second tier because its disclosure was made in good faith but was not considered timely under the CEP’s criteria.

The resolution suggests that DOJ will apply the timeliness requirement strictly, including the condition that a disclosure precede any “imminent threat of disclosure or government investigation.” Extreme Networks’ resolution contrasts with the July 2026 declination granted to Campus Eye Management, where DOJ identified timely voluntary self-disclosure as a key factor supporting first-tier treatment, as discussed in our prior Update. Taken together, the two resolutions indicate that DOJ is distinguishing between companies that fully satisfy the CEP’s disclosure requirements and those that fall short, while continuing to reward cooperation and remediation in both circumstances.

The resolution also offers insight into how DOJ assesses aggravating circumstances. Although the misconduct involved sanctions and export controls that DOJ characterized as protecting national security, DOJ did not treat the case as aggravated. This is consistent with the CEP’s focus on the circumstances of the misconduct rather than the category of offense. The relevant factors include (i) the nature and seriousness of the offense, (ii) the egregiousness or pervasiveness of the misconduct within the company, (iii) the severity of harm caused, and (iv) corporate recidivism. Accordingly, a national security nexus by itself does not appear to preclude near-miss treatment.

Key Takeaways

  • The CEP now governs corporate misconduct across DOJ. Before March 2026, DOJ’s voluntary self-disclosure program was organized under the Criminal Division. DOJ has expanded the CEP to every DOJ component other than the Antitrust Division, and this resolution confirms that the NSD is applying it to sanctions and export control matters. Companies should assess whether their internal reporting and escalation procedures account for potential misconduct across all areas DOJ enforces, recognizing that self-disclosure may earn credit regardless of which component has jurisdiction, while a failure to disclose may result in less favorable treatment.
  • Timely disclosure is key. Extreme Networks cooperated and remediated, but its disclosure under threat of media reporting precluded a declination. Companies should ensure that screening, monitoring, and internal reporting mechanisms are designed to surface potential violations early, and should be prepared to evaluate disclosure promptly once misconduct is identified, before third parties, including the press or whistleblowers, bring the matter to light.
  • A late disclosure may still be valuable. The near-miss NPA shows that missing a declination does not eliminate the benefits of self-disclosure. Where a company identifies misconduct after the window for a timely disclosure may have closed, it should still consider disclosing promptly, particularly where no aggravating circumstances are present and the company is positioned to cooperate fully and remediate.

The NPA is available here, and the DOJ press release announcing the resolution is available here.

State Attorneys General Sue to Challenge FinCEN’s Beneficial Ownership Reporting Rule

On October 27, 2026, the attorneys general of 20 states and the District of Columbia (the States) filed a lawsuit in the U.S. District Court for the District of Oregon challenging the U.S. Department of the Treasury Financial Crimes Enforcement Network’s (FinCEN) final rule eliminating beneficial ownership information (BOI) reporting requirements for U.S. companies and U.S. persons under the Corporate Transparency Act (CTA). The complaint asks the court to vacate FinCEN’s August 2026 final rule (the Final Rule) and the March 2025 interim final rule that preceded it (the IFR), and to halt FinCEN’s planned deletion of BOI previously reported by U.S. companies. The States argue that FinCEN effectively rewrote the CTA through rulemaking.

DOJ’s Fraud Division Launches Fast-Track Whistleblower Awards, With a Focus on Health Care Fraud

On October 20, 2026, the U.S. Department of Justice (DOJ or the Department) and its National Fraud Enforcement Division (the Fraud Division) announced the Fraud Whistleblower Incentive Program (WHIP or the Program). DOJ describes WHIP as the first whistleblower rewards program to pay an “up-front” award of between $10,000 and $30,000 for tips leading to criminal charges. Most existing government whistleblower programs pay only after final resolution of a criminal matter, including forfeiture and appeals. WHIP will instead pay awards once criminal charges are filed. The Program covers federal health care offenses and related crimes, as well as fraud on government programs and benefits administered by eight federal agencies.

WHIP’s focus on health care is particularly notable given the Fraud Division’s recent issuance of its first corporate enforcement directive naming health care as the Division’s top priority and a joint self-disclosure policy with the Department of Health and Human Services (HHS) Office of Inspector General (HHS-OIG) aimed at health care companies. Taken together, these developments indicate that health care is central to the Fraud Division’s broader mandate to address fraud on federal programs. As a result, health care companies may face increased pressure to self-disclose potential misconduct before a whistleblower reports it to the government.

Background: Directive 26-12 and DOJ’s Expanding Whistleblower Toolkit

WHIP implements Directive 26-12, which Assistant Attorney General Colin M. McDonald issued on October 1, 2026. The Directive instructed Fraud Division leadership to develop programs that encourage whistleblowers to come forward with credible information about fraud, and it named health care first among four corporate enforcement priorities, as discussed by Sidley here.

WHIP also builds on the Criminal Division’s Corporate Whistleblower Awards Pilot Program (the Pilot Program), launched in August 2024. DOJ revised the Pilot Program in May 2025 to cover certain health care offenses, and again in July 2026 to eliminate the rule automatically disqualifying whistleblowers who could have been eligible for an award under another government program. A whistleblower is now disqualified only if he or she actually receives another award for reporting the same or substantially the same misconduct, as discussed by Sidley here.

Health care fraud enforcement has also become a top priority within the Department’s reorganized fraud enforcement structure. In June 2026, DOJ’s National Health Care Fraud Takedown charged 455 defendants in alleged schemes involving more than $6.5 billion in false claims. In August 2026, the Fraud Division charged 19 defendants for their involvement in alleged home care schemes in Philadelphia involving more than $4 million in claims to Medicare and Medicaid.

The Fraud Whistleblower Incentive Program

WHIP creates a new Fraud Division award channel for members of the public, built around five components: (i) the misconduct and programs covered; (ii) the timing of awards; (iii) the Program’s priority on health care submissions; (iv) exposure for conduct outside the False Claims Act; and (v) the Program’s interaction with the Fraud Division’s joint self-disclosure policy with HHS-OIG. We discuss each below.

1.      Programs Covered

WHIP applies to reports of federal health care offenses and related crimes. It also applies to reports of fraud on programs and benefits administered by the Department of Agriculture, the Department of Labor, HHS, the Department of Housing and Urban Development, the Department of Education, the Department of Veterans Affairs, the Department of War, and the Small Business Administration. The Program therefore reaches a broad range of federally funded activity, from health care reimbursement to housing, education, veterans, and small business programs. Alongside its announcement of the Program, DOJ also announced WHIP’s first award: a $10,000 payment for allegations about federally subsidized childcare centers in Minnesota.

2.      Early Awards Tied to Criminal Charges

Awards become available once criminal charges are filed, rather than after the matter is finally resolved. DOJ explains that this approach gives whistleblowers greater certainty about the amount and timing of payment, while leaving them eligible for larger rewards if their information leads to significant financial penalties or forfeiture. Participants may also seek awards under other programs, including the Pilot Program. A single tip could therefore produce an initial WHIP payment at charging and a larger award later under another program. DOJ will make awards in its sole discretion, and the Department of the Treasury has committed $25 million to the Program.

3.      A Focus on Health Care Fraud

The Program continues the Fraud Division’s emphasis on health care. For health care offenses, DOJ has stated that WHIP will prioritize submissions involving hospice, home health care, day care, and special services fraud. These categories may reach adult day care and other Medicaid-funded community services, as illustrated by the Fraud Division’s recent Philadelphia charges, where the defendants allegedly billed Medicaid for home health aide services that were not provided.

4.      Exposure Beyond the FCA

WHIP may bring to DOJ’s attention conduct that would not previously have surfaced through qui tam actions under the False Claims Act (FCA). Administration officials stated at the Program’s launch that most of the fraud the administration is identifying falls outside the FCA, and WHIP reaches criminal offenses that may not support an FCA claim. Reporting under WHIP is also simpler than filing a qui tam complaint in court, and any member of the public may submit a tip. These features may draw reports from patients, family members, lower-level employees, and competitors who would not have pursued an FCA action. For providers and suppliers whose services and items are reimbursed by federal programs, the Program could therefore increase the volume and variety of allegations reaching the Fraud Division.

5.      Interaction With the Joint Self-Disclosure Policy

WHIP should be read together with the self-disclosure policy the Fraud Division and HHS-OIG announced on October 15, 2026, as discussed by Sidley here. That policy directs companies self-disclosing potential criminal health care matters to the Fraud Division’s Health Care Fraud Section. Qualifying disclosures receive credit under both DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) and HHS-OIG’s Self-Disclosure Protocol. A qualifying disclosure must involve conduct DOJ did not already know about and must be made before disclosure or a government investigation is imminent. A disclosure made only to HHS-OIG does not qualify.

WHIP makes the timing of disclosure more important, because a fast-paying tip program for outsiders increases the risk that a whistleblower reaches the Department first. Under the CEP’s safe harbor, a company may still qualify for a declination if it self-reports within 120 days of receiving an internal whistleblower report, even if the whistleblower has already reported to DOJ. DOJ has not indicated how that safe harbor would apply where a patient, competitor, or other outsider reports through WHIP without using a company’s internal channels.

As discussed by Sidley here, DOJ’s July 2026 declination for Campus Eye Management was the first health care declination under the Department-wide CEP and only the second under any DOJ self-disclosure policy. WHIP may increase the number of matters in which DOJ learns of potential misconduct before a company has completed its own review.

Key Takeaways

  • Health care companies should anticipate more tips. Hospice, home health, day care, and special services providers are expressly prioritized. These companies should assess whether their billing, eligibility, and service documentation would withstand scrutiny prompted by outside complaints.
  • Strengthen internal reporting channels and response times. The CEP’s 120-day safe harbor depends on the company having received the report internally. An internal report starts that clock and gives the company the first opportunity to investigate and disclose. Companies should confirm that credible allegations are escalated and investigated promptly.
  • Make disclosure decisions early. Credit for voluntary self-disclosure generally depends on the company reporting before DOJ learns of the conduct. A company that identifies potentially criminal conduct affecting a federal health care program should promptly evaluate a disclosure to the Fraud Division rather than rely on a submission to HHS-OIG alone.
  • Prepare for parallel exposure. In health care, a single set of facts often gives rise to overlapping criminal, civil, and administrative matters, and the joint self-disclosure policy does not address FCA liability. Companies should coordinate their criminal, civil, and regulatory strategies from the outset.

DOJ’s press release announcing WHIP is available here, and the Program’s terms and conditions are available here. Directive 26-12 is available here.