consider whether the case involves a possibly widespread industry practice that should be addressed, whether the case involves a recidivist, and whether the matter gives SEC an opportunity to be visible in a community that might not otherwise be familiar with SEC or the protections afforded by the securities laws.
For more information about the Enforcement Division’s procedures concerning investigations, enforce- ment actions, and cooperation with other regulators, see the Enforcement Manual at http://www.sec.gov/divisions/
enforce.shtml.
Self-Reporting, Cooperation, and Remedial Efforts
While the conduct underlying any FCPA investiga- tion is obviously a fundamental and threshold consider- ation in deciding what, if any, action to take, both DOJ and SEC place a high premium on self-reporting, along with cooperation and remedial efforts, in determining the
appropriate resolution of FCPA matters.
Criminal Cases
Under DOJ’s Principles of Federal Prosecution of Business Organizations, federal prosecutors consider a company’s cooperation in determining how to resolve a corporate criminal case. Specifically, prosecutors consider whether the company made a voluntary and timely dis- closure as well as the company’s willingness to provide rel- evant information and evidence and identify relevant actors inside and outside the company, including senior execu- tives. In addition, prosecutors may consider a company’s remedial actions, including efforts to improve an existing compliance program or appropriate disciplining of wrong- doers.*? A company’s remedial measures should be mean- ingful and illustrate its recognition of the seriousness of the misconduct, for example, by taking steps to implement the personnel, operational, and organizational changes neces- sary to establish an awareness among employees that crimi- nal conduct will not be tolerated.?*
The Principles of Federal Prosecution similarly provide
that prosecutors may consider an individual’s willingness
Guiding Principles of Enforcement
to cooperate in deciding whether a prosecution should be undertaken and how it should be resolved. Although a willingness to cooperate will not, by itself, generally relieve a person of criminal liability, it may be given “serious con- sideration” in evaluating whether to enter into a plea agree- ment with a defendant, depending on the nature and value of the cooperation offered”
The US. Sentencing Guidelines similarly take into account an individual defendant’s cooperation and volun- tary disclosure. Under § 5K1.1, a defendant’s cooperation, if sufficiently substantial, may justify the government filing a motion for a reduced sentence. And under § 5K2.16, a defendant’s voluntary disclosure of an offense prior to its discovery—if the offense was unlikely to have been discov- ered otherwise—may warrant a downward departure in certain circumstances.
Chapter 8 of the Sentencing Guidelines, which gov- erns the sentencing of organizations, takes into account an organization’s remediation as part of an “effective compli- ance and ethics program.” One of the seven elements of such a program provides that after the detection of crimi- nal conduct, “the organization shall take reasonable steps to respond appropriately to the criminal conduct and to prevent further similar criminal conduct, including mak- ing any necessary modifications to the organization’s compliance and ethics program.” Having an effective compliance and ethics program may lead to a three-point reduction in an organization’s culpability score under § 8C2.5, which affects the fine calculation under the Guidelines. Similarly, an organization’s self-reporting, cooperation, and acceptance of responsibility may lead to fine reductions under § 8C2.5(g) by decreasing the culpa- bility score. Conversely, an organization will not qualify for the compliance program reduction when it unreason-
ably delayed reporting the offense.” Similar to § 5K1.1
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