Andrew Ceresney, Director, SEC Division of Enforcement delivered remarks at a conference where he addressed the SEC’s cooperation program. Much of the focus was on the benefits of self-reporting and cooperation in high-stakes FCPA matters. But he went on to say:
“But self-reporting is advisable not just in the FCPA context. Firms need to be giving additional consideration to it in other contexts as well. This includes self-reporting by registered firms of misconduct by associated persons, for example, and misconduct by issuer employees. Where Enforcement staff uncovers such misconduct ourselves, a natural question for us to ask is why the firm didn’t tell us about it. Was it because the firm didn’t know of the misconduct? If so, what does that say about the firm’s supervisory systems, compliance program, and other controls? On the other hand, if the firm did know about it, and the misconduct was significant, why didn’t the firm report it to us? There will be significant consequences in that scenario from the failure to self-report.”
The last sentence seems to be an ominous warning, but not much in the form of guidance to issuers of what matters are expected to be self-reported.
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