The Champion

September-October 2012 , Page 18 

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The SEC’s Cooperation Initiative — Nearly Three Years Later, What’s the Deal?

By William A. Haddad

On January 13, 2010, Robert Khuzami, the Securities and Exchange Commission’s (SEC) Director of Enforcement, enthusiastically announced the SEC’s new Cooperation Initiative (the Initiative), stating:

For the first time, [the SEC] will have a formal framework of incentives — incentives to secure the cooperation of persons who saw, heard and witnessed securities fraud first-hand — and who can walk into a courtroom, raise their right hand and tell their story to the world.1 

The policy and tools available under the Initiative are set forth in Section 6 of the SEC’s Enforcement Manual (the Manual).2 If some of it looks familiar, that is because it was modeled on the Department of Justice’s (DOJ) decade-old cooperation regime, pursuant to which hundreds, if not thousands, of criminal matters have been resolved by way of deferred prosecution and nonprosecution agreements without the reputational and business harm that an indictment can inflict on a company.3 In addition, in the cas

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