Ceresney Pushes Cooperation Agreements, Says Agency Will Use More Reverse Proffers

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By Rob Tricchinelli

May 13 — The Securities and Exchange Commission has entered into more than 80 cooperation agreements with witnesses to help build enforcement cases during the past five years, Enforcement Director Andrew Ceresney said May 13.

Insider trading cases have notably used the agreements, especially ones without parallel criminal proceedings, he said at the University of Texas Law School’s Government Enforcement Institute in Dallas, according to prepared remarks.

The more than 80 cooperation agreements compare to only five deferred-prosecution agreements and five nonprosecution agreements during the same span.

Insider Trading

Ceresney cited a 2012 case involving three North Carolina men who traded on advance knowledge of an upcoming acquisition.

In that case, the cooperator “paid a penalty that reflected an approximately 75-percent discount” from another defendant’s fine, Ceresney said.

He also mentioned a 2014 case in which the SEC charged six people with trading on inside knowledge of eBay Inc.'s impending takeover of a technology company. “Extensive cooperation” allowed the agency to “unravel these tipping chains,” Ceresney said.

Both cases settled. “One of the important benefits we get from cooperators is to develop such strong evidence against potential defendants that we can demand strong settlement terms,” he said.

Reverse Proffers

The agency also will use more reverse proffers in its investigations, Ceresney said.

“When appropriate, we will invite counsel in for a meeting in which we share key documents and expected testimony that will implicate the defendant,” Ceresney said. “This is another practice that is well established among criminal prosecutors and FBI agents but historically has been used less frequently at the SEC.”

If used correctly, the proffers could speed up cases, he added.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

The text of Ceresney's prepared remarks is available at http://www.sec.gov/news/speech/sec-cooperation-program.html.


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