Publications

The Benefits and Potential Pitfalls of Cooperating with Regulatory Agencies and the Government

How to Navigate the Minefield

Winter 2005
Securities Law Developments - Winter 2005

Conventional wisdom dictates that if you represent a corporate entity (or even a senior corporate official) involved in a securities or other regulatory investigation—whether by the Securities and Exchange Commission, U.S. Department of Justice, U.S. Attorney's Offices, Commodities Futures Trading Commission, New York Stock Exchange, National Association of Securities Dealers or one or more of the state attorneys general or other federal or state regulators—it is important to cooperate fully in the investigation, even if that means "confessing" to corporate wrongdoing. Indeed, there are many benefits to cooperation, such as potentially avoiding criminal prosecution or an enforcement proceeding altogether or negotiating reduced penalties.

But there are important potential pitfalls to cooperating with governmental or self-regulatory investigations, pitfalls that sometimes outweigh the benefits of cooperation.