SEC Should Clarify Path to Cooperation Perks in Cases: Official

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Andrew Ramonas

The SEC should tell securities lawyers and their clients more about how to benefit from cooperating with the commission in an enforcement action, a top enforcement official said Oct. 26.

The Securities and Exchange Commission should be more specific about what a company or an individual did to merit cooperation credit or didn’t do if credit is denied, said Steven Peikin, a co-director of the SEC Enforcement Division. Enforcement targets that cooperate with investigators can receive perks such as reduced sanctions or even no action at all.

The framework for determining cooperation the SEC laid out in its 2001 report of investigation into Seaboard Corp., including self-reporting and remediation, is still in effect, Peikin said. The co-director, a former Sullivan & Cromwell LLP partner, appeared to sympathize with people who are still unsure about the exact benefits of cooperation, however.

“I think we have room for improvement,” said Peikin at Securities Docket’s annual Securities Enforcement Forum in Washington.

On self-reporting, the SEC could do more to emphasize the “carrots” over the “sticks” in obtaining cooperation, former Enforcement directors said during the gathering.

Agencies often decrease penalties for cooperation, but don’t usually drop cases or do lesser charges, said Linda Thomsen, who served as Enforcement director from 2005 to 2009.

“If you take very strict enforcement actions against companies and repeatedly charge them with fraud with big penalties and yet they continue in business, you have to worry about what that message is,” said Thomsen, a partner at Davis Polk & Wardwell LLP in Washington.


Peikin also said at the gathering he supports having companies or individuals that admit wrongdoing to other agencies make similar admissions to the SEC. The “harder piece” is deciding whether to depart from the SEC’s normal neither-admit-nor-deny policy in other matters, he said.

Former SEC Chairman Mary Jo White used more admissions starting in 2013, after the commission almost always settled all enforcement matters on a “no-admit, no-deny” basis.

“When I heard about the admissions policy, it didn’t really knock me down,” Peikin said.

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editor responsible for this story: Phyllis Diamond at

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Securities & Capital Markets on Bloomberg Law