The SEC's Enforcement Division named leaders of national specialized units it has established in five priority areas dedicated to particular highly specialized and complex areas of securities law. The division also created a new Office of Market Intelligence that will be responsible for the collection, analysis, and monitoring of the tips, complaints and referrals received by the agency. In addition, the Commission announced a series of measures to further strengthen its enforcement program by encouraging greater cooperation from individuals and companies in the agency's investigations and enforcement actions.
The new Office of Market Intelligence will be led by Thomas A. Sporkin. This office will analyze tips according to internally-developed risk criteria as well as SEC priorities, and will utilize the expertise of the SEC's other Divisions and of the specialized units to help analyze the tips and identify wrongdoing.
The five specialty units within the division are:
Asset Management. This unit will be led by Bruce Karpati and Robert B. Kaplan and will focus on investigations involving investment advisors, investment companies, hedge funds, and private equity funds.
Market Abuse. This unit will be led by Daniel M. Hawke, and will focus on investigations involving large-scale market abuses and complex manipulation schemes by institutional traders, market professionals and others.
Structured and New Products. This unit will be led by Kenneth R. Lench and will focus on complex derivatives and financial products, including credit default swaps, collateralized debt obligations and securitized products.
Foreign Corrupt Practices. This unit will be led by Cheryl J. Scarboro and will focus on violations of the Foreign Corrupt Practice Act, which prohibits U.S. companies from bribing foreign officials for government contracts and other business.
Municipal Securities and Public Pensions. This unit will be led by Elaine C. Greenberg and will focus on misconduct in the large municipal securities market and in connection with public pension funds including: offering and disclosure fraud; tax or arbitrage-driven fraud; pay-to-play and public corruption violations; public pension accounting and disclosure violations; and valuation and pricing fraud.
The Division of Enforcement has authorizing the staff to use various tools to encourage individuals and companies to report violations and provide assistance to the agency. The new tools are described in a revised version of the division's enforcement manual in a new section entitled "Fostering Cooperation." These include:
Cooperation Agreements.These are formal written agreements in which the Enforcement Division agrees 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. These are formal written agreements in which the Commission agrees 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. These are formal written agreements, entered into under limited and appropriate circumstances, in which the Commission agrees 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.
The Commission also streamlined the process for submitting witness immunity requests to the Justice Department for witnesses who have the capacity to assist in its investigations and related enforcement actions.
The Commission has also set out, for the first time, 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.
In the newly issued policy statement, the SEC identifies four general considerations:
1) The assistance provided by the cooperating individual;
2) The importance of the underlying matter in which the individual cooperated;
3) The societal interest in ensuring the individual is held accountable for his or her misconduct; and
4) The appropriateness of cooperation credit based upon the risk profile of the cooperating individual.
More information is available here and here.
.