SEC Enforcement Chief Wants to Use Deferred Prosecution Agreements
The Securities and Exchange Commission hopes to take a cue from the Justice Department by entering into deferred prosecution agreements to resolve cases.
The idea is to reward extraordinary cooperation, SEC enforcement director Robert Khuzami said in a speech Wednesday to the New York City Bar Association. The Wall Street Journal (sub. req.) covered Khuzami’s comments.
Under such agreements, prosecution is deferred while a company is monitored and institutes internal reforms. Critics have said such agreements encourage risky behavior by corporations since their chances of deferred cooperation are good.
Khuzami said the proposed change is one of several new tools the SEC plans to give its lawyers to speed up investigations and encourage cooperation, the story says. The agency hopes to encourage whistle-blowers to come forward with a new policy outlining what factors need to be satisfied for a whistle-blower to obtain leniency.
Khuzami said he will have more power to approve formal orders of investigation and will also delegate that authority to senior enforcement lawyers. The agency is also hiring additional staffers and creating five specialized units, according to the Wall Street Journal story.
They units will focus on: asset-management companies such as hedge funds, market abuse such as insider trading, new structured products such as credit-default swaps, bribery of foreign officials, and municipal securities and public pension funds.
