Two recent settled enforcement proceedings by the Securities and Exchange Commission have provided significant clarification and guidance concerning the SEC’s cooperation initiative announced in January 2010. These actions and the accompanying discussion by the SEC illuminate the potential benefits, but also the limitations, of the SEC’s offer for individuals to cooperate in SEC investigations.
In January 2010, the SEC announced a series of measures the agency asserted would provide incentives for individuals and companies to cooperate with and assist SEC investigations and enforcement proceedings. These measures were modeled on techniques that were long used by the Department of Justice in criminal matters, and reflected the experience of Robert Khuzami, a former prosecutor, who in 2009 was appointed to head the SEC’s Division of Enforcement.
