Corporate Governance

The SEC Implements Cooperation Incentives

By Tamar Weinrib

In an ongoing effort to stem the tide of corporate misconduct, the SEC has announced a policy shift that would allow its Enforcement Division to act more like a criminal prosecutor in procuring information from informants and companies.  On January 13, 2010, the SEC empowered its Enforcement staff with several new policies designed to encourage individuals (and companies) to assist in investigations and revealed new standards for weighing cooperation credit.  The new rules would place certain tools at SEC enforcement attorneys' disposal which would facilitate the gathering and uncovering of information.  These tools include: 1) the use of cooperation agreements, which grants the source credit for information provided; 2) deferred prosecution agreements, which would allow the SEC to hold off on pursuing charge against a corporation if they cooperate; 3) non-prosecution agreements where the SEC agrees not to pursue charges at all if a company or individual provides valuable information; and 4) proffer agreements, which prevent the SEC from using the cooperating individual or corporation's statements in a different proceeding except to obtain more evidence. All of these tools will depend largely on the value of the information.  To learn more about the new rules, click here.

Full post as published by PomTalk on January 19, 2010 (boomark / email).