Cooperation. The word is filled with meaning for enforcement professionals. The U.S. Securities and Exchange Commission and the U.S. Department of Justice profess to weigh it heavily when making charging and sanctioning decisions. Courts claim to balance it carefully when making sentencing decisions. But does cooperating really yield tangible benefits for insider trading defendants? Or does it make sense to “roll the dice” and go to trial? Unsurprisingly, the answer is highly fact-specific. But, our analysis of insider trading cases in 2012 and earlier years provides interesting information that may inform the calculus.

What Does It Mean to Cooperate? -

This is an important gatekeeper question. Despite detailed frameworks for evaluating cooperation, the SEC and DOJ have provided precious few specifics for insider trading defendants. The SEC engages in a four-part analysis to gauge an individual’s cooperation, but at the time of an investigation a potential defendant can control only a single prong: the assistance provided. Here, the SEC factors in both the value and the nature of the cooperation, considering issues like the timeliness and voluntariness of the cooperation and the benefits to the SEC of the cooperation. The DOJ likewise may weigh an individual’s cooperation when making charging and sentencing recommendations. The guidelines, akin to the SEC’s policies, also focus on the timeliness and comprehensiveness of the defendant’s assistance.

Originally published in law 360 on April 4, 2013.