SEC SEEKS TO ENCOURAGE ASSISTANCE WITH INVESTIGATIONS AND ENFORCEMENT

On January 13, 2010, the SEC announced initiatives it is putting in place to encourage individuals and companies to assist in the agency's investigations and enforcement actions. The developments announced are the latest in the most significant reorganization of the Enforcement Division in more than 30 years.

The SEC approved the following measures:

First, the Division of Enforcement will have tools to encourage individuals and companies to report violations. These tools include:

• Cooperation Agreements — the Enforcement Division will agree to recommend to the Commission that a cooperator receive credit for cooperating in investigations or related enforcement actions if the cooperator provides substantial assistance such as full and truthful information and testimony.

• Deferred Prosecution Agreements — the Commission will agree to forego an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and to comply with express prohibitions and undertakings during a period of deferred prosecution.

• Non-prosecution Agreements — only in limited circumstances the Commission will agree not to pursue an enforcement action against a cooperator if the individual or company agrees, among other things, to cooperate fully and truthfully and comply with express undertakings.

Second, witness immunity requests to the Justice Department have been made more efficient for witnesses who have the capacity to assist in its investigations and related enforcement actions.

Third, the Commission has formalized the way in which it will evaluate whether, how much, and in what manner to credit cooperation by individuals to ensure that potential cooperation arrangements maximize the Commission's law enforcement interests.

This announcement, along with the information the SEC will make available regarding these topics in the coming months, is intended to provide guidance and encouragement to those third parties who have knowledge which will lead to and assist with actions taken by the Enforcement Division. A copy of the SEC's press release disclosing this information can be found here.