Securities Litigation and White Collar Defense Alert: Khuzami Announces Initiative To Encourage Cooperation by Individuals and Companies with SEC Investigations


On January 13, 2010, Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami announced new tools that the SEC will be using to secure cooperation from individuals and companies in order to enhance its investigative and case efforts. The SEC has authorized its staff to use cooperation, deferred prosecution, and non-prosecution agreements, which have long been in use by the U.S. Department of Justice (DOJ). The SEC has also set forth the way in which it will evaluate a witness’s cooperation, with substantial assistance—another key DOJ concept—being central. Additionally, the SEC streamlined the process for obtaining immunity for witnesses.

Khuzami is continuing his implementation of initiatives announced early in his tenure at a speech given to the City Bar in New York. This cooperation initiative highlights that he is remaking the Enforcement Division in the image of a prosecutor’s office. Khuzami expects that this step will further facilitate swift and comprehensive steps against securities fraud as it unfolds, thus better protecting investors. One aspect is that the SEC will be able to more easily pursue a company and its high-level officers by entering into these agreements with lower level employees.

Please see full alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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