Category: Cooperation


SEC Affirms Commitment to FCPA Enforcement Actions

Andrew J. Ceresney, Director of the Division of Enforcement, reaffirmed the SEC’s focus on FCPA enforcement actions at the International Conference on the Foreign Corrupt Practices Act. Mr. Ceresney’s speech focused on companies’ need to self-report violations.

Mr. Ceresney stated that the SEC uses “a carrot and stick approach to encouraging cooperation,” where self-reporting companies can receive reduced charges and deferred prosecution and non-prosecution agreements, while companies that do no self-report do not receive any reduction in penalties. Mr. Ceresney warned that “companies are gambling if they fail to self-report FCPA misconduct.”

Mr. Ceresney gave examples of how this policy has benefited companies recently. Mr. Ceresney highlighted the SEC’s decision not to bring charges against the Harris Corporation after it self-reported violations and mentioned to examples where the SEC entered into non-prosecution agreements as a result of self-reporting.

Mr. Cerseney stated that the … Read More »


Department of Justice Obtains Its Second Spoofing Conviction and Its Novel Cooperation Agreement.

Posted on November 21st, by and in Cooperation, Spoofing. Comments Off on Department of Justice Obtains Its Second Spoofing Conviction and Its Novel Cooperation Agreement.

On the heels of its successful prosecution of Michael Coscia for spoofing, the Department of Justice (“DOJ”) recently secured a guilty plea and cooperation agreement in another high-profile “spoofing” case. By way of background, spoofing is the illegal practice of placing trades on the bid or offer side of a market with the intent to cancel them before execution in order to manipulate prices for personal gain. On November 9, 2016, Londoner Navinder Singh Sarao pleaded guilty to two criminal charges after losing his battle against extradition from the UK.  Despite being charged with 22 counts, including wire fraud, commodities fraud, and spoofing, Mr. Sarao pleaded guilty to just two counts—one count of wire fraud, 18 U.S.C. § 1343 (which carries a maximum of 20 years’ imprisonment and a fine of $250,000) and one count of spoofing, 7 U.S.C. § … Read More »


SEC Levies Disgorgement and Civil Penalties for Violations of the Consumer Protection Rule and the Dodd-Frank Whistleblower Protection Rule

Posted on June 27th, by and in Civil Penalties, Consumer Protection Rule, Cooperation, Self-Reporting, Settlements, Whistleblower. Comments Off on SEC Levies Disgorgement and Civil Penalties for Violations of the Consumer Protection Rule and the Dodd-Frank Whistleblower Protection Rule

On June 23, 2016, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp. (collectively, “Merrill Lynch”) agreed to pay $415 million and admit wrongdoing to settle charges of rules based violations, including Exchange Act Rule 15c3-3, the Consumer Protection Rule (the “Consumer Protection Rule”) and Exchange Act Rule 21F-17 (“Rule 21F-17”), which prohibits any action impeding an individual from communicating directly with Commission staff about possible securities laws violations. See Release No. 78141.

Exchange Act Rule 15c3-3, known as the Consumer Protection Rule, was enacted to “protect broker-dealer customers in the event a broker dealer becomes insolvent” by eliminating the “use by broker-dealers of customer funds and securities to finance firm overhead and such firm activities a trading and underwriting through the separation of customer related activities from other broker-dealer operations.” To safeguard assets, the Consumer Protection … Read More »


Two Companies Avoid FCPA Charges through NPAs that Underscore the Value of Self-Reporting and Cooperation with the SEC

Posted on June 9th, by in Cooperation, Foreign Corrupt Practices Act (FCPA), Non-prosecution Agreements. Comments Off on Two Companies Avoid FCPA Charges through NPAs that Underscore the Value of Self-Reporting and Cooperation with the SEC

The SEC announced two non-prosecution agreements on June 7, 2016 that companies entered into to avoid charges related to the payment of bribes to Chinese officials by their foreign subsidiaries. Press Rel. No. 2016-109. Pursuant to the NPAs, each company will forfeit gains related to the bribes, but the NPAs stipulate that the companies are not charged with violations of the FCPA and will not pay additional monetary penalties.

The SEC’s announcement of the NPAs emphasizes the value the staff put on the companies’ promptly self-reporting the misconduct, cooperating with the SEC, and quickly taking corrective action. The NPAs identified several actions taken by each company that weighed in their favor, including: (i) reporting to the SEC during their internal investigations; (ii) sharing detailed findings of the investigations and updating enforcement staff regarding new information; (iii) providing summaries of witness interviews … Read More »


SEC Enters Into First NPA With An Individual

Posted on May 13th, by and in Cooperation, Deferred Prosecution Agreements, Insider Trading, Non-prosecution Agreements. Comments Off on SEC Enters Into First NPA With An Individual

In 2010, the SEC implemented a Cooperation Initiative designed to encourage individuals and companies to cooperate with SEC investigations. See SEC Announces Initiative to Encourage Individuals and Companies to Cooperate and Assist in Investigations, SEC Press Release No. 2010-6 (Jan. 13, 2010). Although the Division of Enforcement authorized SEC staff to “use various tools to encourage individuals and companies to report violations and provide assistance to the agency,” including cooperation agreements, deferred prosecution agreements (“DPA”), and non-prosecution agreements (“NPA”), the staff has made limited use of the cooperation tools with individuals.

In fact, in April, the SEC announced its first NPA with an individual in connection with an insider trading case involving GSI Commerce Inc.’s (“GSIC”) merger with eBay. See SEC v. Saridakis,Civil Action No. 14-2397 (E.D. Pa.). According to the SEC, prior to GSIC’s public announcement of its merger with … Read More »


The SEC’s Municipalities Continuing Disclosure Cooperation Initiative: Carrot for Issuers & Underwriters, Stick for Individuals

Posted on April 22nd, by and in Cooperation, Individual Liability, Municipal Securities, SEC Guidance, Settlements. Comments Off on The SEC’s Municipalities Continuing Disclosure Cooperation Initiative: Carrot for Issuers & Underwriters, Stick for Individuals

It’s no secret that the SEC is stepping up its enforcement efforts in the estimated $3.7 trillion municipal securities market. In 2012, the Commission published a 165-page report calling for Congress to give it more authority to improve disclosures in municipal bond offerings. See SEC’s Report on the Municipal Securities Market (July 31, 2012). In the last year, the Commission has filed a number of enforcement actions against municipal bond issuers and underwriters based on alleged misstatements or omissions concerning various topics, including: compliance with tax exemption requirements, continuing disclosure obligations, and debt limitations and property values.

Most recently, in March 2014, the SEC launched a new cooperation initiative designed to encourage issuers and underwriters of municipal securities to self-report certain violations of federal securities laws. Under the Municipalities Continuing Disclosure Cooperation Initiative (“MCDC Initiative”), SEC staff will recommend favorable settlement terms … Read More »




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