PR: </td> <td nowrap>Oct. 23, 2001</td> <td>Fee Rate Advisory #3</td></tr> <tr valign=top> <td nowrap>
he...@sec.gov
FOR IMMEDIATE RELEASE 2001-117
SEC Issues Report of Investigation and Statement
Setting Forth Framework For Evaluating Cooperation
In Exercising Prosecutorial Discretion
Washington, D.C., October 23, 2001 The
Securities and Exchange Commission today issued a
Report of Investigation and Statement explaining its
decision not to take enforcement action against a
company it had investigated for financial statement
irregularities. In so doing, the Commission
articulated a framework for evaluating cooperation
in determining whether and how to charge violations
of the federal securities laws.
The Report identifies four broad measures of a
companys cooperation:
· Self-policing prior to the discovery of
the misconduct, including establishing
effective compliance procedures and an
appropriate tone at the top;
· Self-reporting of misconduct when it is
discovered, including conducting a
thorough review of the nature, extent,
origins and consequences of the
misconduct, and promptly, completely, and
effectively disclosing the misconduct to
the public, to regulators, and to self-
regulators;
· Remediation, including dismissing or
appropriately disciplining wrongdoers,
modifying and improving internal controls
and procedures to prevent recurrence of
the misconduct, and appropriately
compensating those adversely affected; and
· Cooperation with law enforcement
authorities, including providing the
Commission staff with all information
relevant to the underlying violations and
the companys remedial efforts.
The criteria are set forth in greater detail in
the Report. Credit for cooperative behavior may range
from the extraordinary step of taking no enforcement
action at all to bringing reduced charges, seeking
lighter sanctions, or including mitigating language in
documents the Commission uses to announce and resolve
enforcement actions.
Stephen M. Cutler, Acting Director of Enforcement,
said: Crediting those who seek out, self-report and
rectify illegal conduct is critical to achieving the
Commissions goal of real-time enforcement. We hope
that, by setting forth a framework for exercising its
prosecutorial discretion, the Commission will encourage
companies to address unlawful conduct swiftly and
meaningfully and to cooperate with law enforcement
authorities. The result will be more efficient and
effective enforcement of the federal securities laws.
The Commission welcomes the constructive input of
all interested persons, who may direct their
suggestions to the Division of Enforcement.
For further information, call Stephen M. Cutler at
202-942-4500.
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