presented to: acc compliance & ethics committee june 15, 2010

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Seaboard for Individuals: The SEC Announces Cooperation Incentives for Individuals in Fraud Investigations. Presented to: ACC Compliance & Ethics Committee June 15, 2010. #416457. The SEC Announces Initiative to Encourage Individuals and Companies to Cooperate and Assist in Investigations. - PowerPoint PPT Presentation

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Seaboard for Individuals: The SEC Announces Cooperation Incentives for Individuals in Fraud Investigations
Presented to:
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
The SEC Announces Initiative to Encourage Individuals and Companies to Cooperate and Assist in Investigations
January 10, 2010, the SEC announces further changes to enforcement program
New changes designed to encourage early cooperation and “substantial assistance”
New changes designed to improve the quality, quantity, and timeliness of information and assistance
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
The SEC versus The DOJ
The SEC has civil authority
The “Commission” or “SEC” v. “Division of Enforcement” or the “SEC staff” – not one and the same
The DOJ has criminal authority
The new SEC cooperation initiative essentially is an attempt to adopt the criminal prosecutor’s tool kit
SEC Enforcement Director Robert Khuzami is a former federal prosecutor
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Four Policy Factors the SEC Will Consider in Granting Cooperation Credit to Individuals
Assistance provided
Importance of the case to the SEC
The societal interest in ensuring the individual is held accountable for his or her misconduct
Individual’s history and acceptance of responsibility
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Assistance Provided
Timely
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Assistance Provided
Nature of the Cooperation
Voluntarily provided or pursuant to agreement with another agency (e.g., the DOJ)
Presumably, cooperation benefit with the SEC is not available if one is compelled to cooperate with the SEC pursuant to a DOJ plea agreement.
Type of assistance offered
Whether individual provide information that otherwise might not have been discovered
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Importance of the Case to the SEC
Cooperation in investigations that involve priority matters or serious, ongoing, or widespread violations will be viewed most favorably
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Interest in Holding Individual Accountable
(a counterbalancing factor)
Individual’s knowledge, education, training, experience, and position of responsibility
Degree to which individual allowed improper conduct to occur or continue, attempts to remediate or disclose
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Profile of Individual
History of lawfulness
Acceptance of responsibility
Cooperation Tools
Proffer Agreement
(Queen-for-a-Day letters)
Written agreements that statements made at meeting between individual and SEC staff cannot be used against individual
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Cooperation Tools
Oral Assurances
Staff may orally inform individual or company that the Division of Enforcement does not anticipate recommending an enforcement action based upon evidence currently known to staff
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Cooperation Tools
Cooperation Agreement
Written agreement between the Division of Enforcement and cooperating individual wherein individual agrees to provide “substantial assistance” in exchange for a recommendation of leniency (i.e., credit for cooperation and a possible specific settlement recommendation)
Note: agreement with Division of Enforcement, not the SEC
Deviating from standard agreement requires Office of Chief Counsel or Chief of Litigation Counsel involvement
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Cooperation Tools
Deferred Prosecution
Written agreement between the Division of Enforcement and cooperating individual in which the SEC grants some form of amnesty in exchange for individual’s promise to cooperate and to fulfill certain reformation requirements
Under certain circumstances, the individual may agree either to admit or not to contest underlying facts that the SEC could assert
Cooperating individual generally remains under supervision for some period of time in exchange for ultimate dismissal of charges
If agreement is violated during the deferred period, the SEC staff may recommend an enforcement action to the Commission
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Cooperation Tools
Non-Prosecution Agreement
Written agreement between the Division of Enforcement and cooperating individual stating that the SEC will not pursue an enforcement action against the individual provided that the individual cooperates truthfully and fully in the SEC’s investigation and related enforcement actions
If agreement is violated, the SEC staff retains the ability to recommend an enforcement action to the Commission
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Cooperation Tools
Termination Notice
If the Division of Enforcement determines not to recommend to the Commission an enforcement action against a cooperating individual, staff supervisors may, and in some cases are required to, provide a letter informing the individual that the investigation has been terminated
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Cooperation Tools
Immunity Requests
In response to an individual asserting his Fifth Amendment privilege against self-incrimination in an enforcement proceeding, the SEC staff may seek statutory immunity or letter immunity in order to obtain the testimony and/or cooperation of that individual
Statutory Immunity: The SEC staff seeks a court order compelling the individual to provide information as necessary to the public interest, provided the request is approved by the U.S. Attorney General
Letter Immunity: Conferred by agreement between the individual and the U.S. Attorney’s Office
Note: Neither statutory immunity nor letter immunity precludes the SEC staff from using the information provided by the cooperating individual in its enforcement actions, including the enforcement action against the cooperating individual for whom the immunity was issued
© COPYRIGHT 2010. DICKSTEIN SHAPIRO LLP. ALL RIGHTS RESERVED.
Questions or Comments?
For additional Information:
Mauro M. Wolfe

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