February Addendum

SEC Enforcement Division Reorganizes
And, no, we’re not talking college football here!

The Securities and Exchange Commission (SEC) announced a series of measures to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency's investigations and enforcement actions. For the first time, the SEC will use formal cooperation agreements to further encourage those with information to provide it to the staff in its investigation. Going a step further, the commission will also enter into deferred and non-prosecution agreements with those who substantially assist investigations, thereby avoiding or mitigating any penalty from a violation.

A new method of gaining cooperation
These types of agreements are commonly used in criminal prosecutions, and became the accepted method to use in prosecuting corporate cases particularly after the collapse of the Arthur Andersen accounting firm in 2002. In the past, resolving a criminal case usually meant agreeing to an SEC injunction and penalty, but companies and individuals may now be able to secure an agreement to forgo any punishment on the civil side, a move that is expected will encourage increased cooperation.

The SEC amended its rules to allow the director of its enforcement division to seek authorization for an order of immunity from the Justice Department without having to get approval from the five commissioners in advance. Cutting the red tape as a means of seeking immunity for a witness can help speed up the investigative process.

Specialized units mirror U.S. Attorneys’ offices
An additional change in the agency's reorganization of the enforcement division is the creation of specialized units that focus on particular types of transactions and investments, such as: asset management, market abuses, structured and new products, the Foreign Corrupt Practices Act, and municipal securities and public pensions. Now, the enforcement division will mirror how a U.S. Attorney's office is organized (e.g., units to handle drugs, public corruption, child abuse and terrorism). Such reorganization allows SEC staff to spot trends in the markets and possible connections among cases. This was the very problem that caused the SEC to miss the Ponzi scheme organized by Bernard Madoff. The agency has also set up an Office of Market Intelligence to analyze the hundreds of thousands of tips and complaints received by the agency each year.

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February December October Archives
SEC Enforcement Division Reorganizes And, no, we’re not talking college football here! The Securities and Exchange Commission (SEC) announced a series of measures to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency's investigations and enforcement actions. For the first time, the SEC will use formal cooperation agreements to further encourage those with information to provide it to the staff in its investigation. Going a step further, the commission will also enter into deferred and non-prosecution agreements with those who substantially assist investigations, thereby avoiding or mitigating any penalty from a violation. *A new method of gaining cooperation* These types of agreements are commonly used in criminal prosecutions, and became the accepted method to use in prosecuting corporate cases particularly after the collapse of the Arthur Andersen accounting firm in 2002. In the past, resolving a criminal case usually meant agreeing to an SEC injunction and penalty, but companies and individuals may now be able to secure an agreement to forgo any punishment on the civil side, a move that is expected will encourage increased cooperation. The SEC amended its rules to allow the director of its enforcement division to seek authorization for an order of immunity from the Justice Department without having to get approval from the five commissioners in advance. Cutting the red tape as a means of seeking immunity for a witness can help speed up the investigative process. *Specialized units mirror U.S. Attorneys’ offices* An additional change in the agency's reorganization of the enforcement division is the creation of specialized units that focus on particular types of transactions and investments, such as: asset management, market abuses, structured and new products, the Foreign Corrupt Practices Act, and municipal securities and public pensions. Now, the enforcement division will mirror how a U.S. Attorney's office is organized (e.g., units to handle drugs, public corruption, child abuse and terrorism). Such reorganization allows SEC staff to spot trends in the markets and possible connections among cases. This was the very problem that caused the SEC to miss the Ponzi scheme organized by Bernard Madoff. The agency has also set up an Office of Market Intelligence to analyze the hundreds of thousands of tips and complaints received by the agency each year. « Previous \| Home \| Next »
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