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SEC Investigations: Are There Benefits to Cooperation and Self-Reporting?

Tuesday, December 13, 2016

When fraud is identified or suspected in an organization, companies and their boards are not always aware of what steps to take. Should they conduct a thorough internal investigation, or should they alert the Division of Enforcement at the Securities and Exchange Commission (SEC) about a potential securities law violation? Are there tangible benefits to self-reporting to the SEC? The SEC’s Division of Enforcement’s formal Cooperation Program includes various measures designed to encourage individuals and companies to provide assistance to SEC investigators. Depending on the level of cooperation, benefits may accrue to those who are proactive. What questions should boards and company management be asking of their counsel, their chief compliance officers, chief audit executives, and external auditors? At what point should the SEC be informed of potential misconduct? What are the risks if a company does not self-report?

In this December 13, 2016 webcast from the Anti-Fraud Collaboration, Kara Brockmeyer, SEC Foreign Corrupt Practices Act Chief, shares information on the SEC Cooperation Program, including recent enforcement actions involving cooperation agreements, and how the Commission defines “cooperation.” Other panelists, including an attorney with extensive experience in representing clients who have cooperated with the SEC, a forensic auditor, and a board member, discuss factors for companies that are considering self-reporting a fraud, who needs to be involved, and the role of company management, the audit committee, the auditor, and legal counsel.