SEC Enforcement Will Offer Deferred Prosecution to Witnesses Who Cooperate
The SEC has announced new measures that will encourage individuals to report violations about, and testify against, their employers during SEC investigations. Going forward, the Division of Enforcement will employ cooperation, deferred prosecution, and non-prosecution agreements with individuals that cooperate with investigations and enforcement actions. According to the SEC, “similar cooperation tools have been regularly and successfully used by the Justice Department in its criminal investigations and prosecutions.”
OUR TAKE: These measures continue the process of turning SEC Enforcement into a prosecutorial and law enforcement function. Threatening action against individuals and offering a deferred prosecution is a tactic often used to investigate fraud in criminal organizations outside the securities worlds.