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Aug 12

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First-ever SEC deferred prosecution agreement is hardly a “game changer”

Deferred prosecution agreements have been used by the Department of Justice for criminal matters for years. There, avoiding criminal prosecution, potential imprisonment for employees, and potential effects on licensing or other regulatory requirements make such agreements highly advantageous. But the advantage of a deferred prosecution with the SEC involving civil penalties is less clear. When the Securities and Exchange Commission’s policy on deferred prosecution was announced in January 2010 as an approach to facilitate and reward cooperation in SEC investigations, Robert Khuzami, Director of the Division of Enforcement bragged that the SEC’s new policy “is a potential game-changer for the Division of Enforcement”.

About a year and a half later it is not at all clear that this is the case. The SEC announced its first-ever deferred prosecution agreement with a company who voluntarily reported a violation of the Foreign Corrupt Practices Act.  But based on the deal the defendant received, there appears to be little motivation to follow in this defendant’s footsteps.

Details are summarized in this article.

About the author

David Nolte

I am a founding principal of Fulcrum Inquiry, an accounting and economic consulting firm that performs damage analysis for commercial litigation, forensic accountings, financial investigations, and business valuations. I am a Certified Public Accountant (CPA) and an Accredited Senior Appraiser (ASA), as well as having other professional credentials. I regularly serve as an expert witness involving damages measurement. My litigation-oriented resume is on Fulcrum's website.

Permanent link to this article: http://betweenthenumbers.net/2011/08/first-ever-sec-deferred-prosecution-agreement-is-hardly-a-%e2%80%9cgame-changer%e2%80%9d/

1 comment

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