Security - Check Permissions

MFDF - Mutual Fund Directors Forum - SEC Issues Enforcement Cooperation Guidelines

Member Login



Request an account

Sample Banner 2

SEC Issues Enforcement Cooperation Guidelines

The SEC has announced a series of measures designed to provide "incentives for individuals and companies to fully and truthfully cooperate and assist with SEC investigations and enforcement actions, and [provide] new tools to help investigators develop first-hand evidence to build the strongest possible cases."

The  measures, laid out in a revised version of the the Division of Enforcement's internal manual, provide new cooperation tools not previously available the the SEC in enforcement matters.

Cooperation Agreements — Formal written agreements in which the Enforcement Division agrees to recommend to the Commission that a cooperator receive credit for cooperating in investigations or related enforcement actions if the cooperator provides substantial assistance such as full and truthful information and testimony.

Deferred Prosecution Agreements — Formal written agreements in which the Commission agrees to forego an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and to comply with express prohibitions and undertakings during a period of deferred prosecution.

Non-prosecution Agreements — Formal written agreements, entered into under limited and appropriate circumstances, in which the Commission agrees not to pursue an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and comply with express undertakings.

 

Witness Immunity -- [T]he SEC [has] streamlined the process for submitting witness immunity requests to the Justice Department for witnesses who have the capacity to assist in its investigations and related enforcement actions.


In addition to these tools, the new cooperation guidelines for the first time lay out the way in which the Division will "evaluate whether, how much, and in what manner to credit cooperation by individuals to ensure that potential cooperation arrangements maximize the Commission's law enforcement interests."  According to the Commission, the Division will consider four factors

 

 



    1. The assistance provided by the cooperating individual.

    1. The importance of the underlying matter in which the individual cooperated.

    1. The societal interest in ensuring the individual is held accountable for his or her misconduct.

    1. The appropriateness of cooperation credit based upon the risk profile of the cooperating individual


According to Robert Khuzami, Director of the Division of Enforcement:

 

 

 

 

This is a potential game-changer for the Division of Enforcement. There is no substitute for the insiders' view into fraud and misconduct that only cooperating witnesses can provide. That type of evidence can expand our ability to conduct our investigations more swiftly, and to act quickly to file charges, freeze assets, and protect investors.


The full text of the Commission's announcement is available at:  http://sec.gov/news/press/2010/2010-6.htm

More details of the Enforcement Cooperation Initiative is available at:  http://sec.gov/spotlight/enfcoopinitiative.shtml