Focusing on Deterrence to Combat Financial Fraud and Protect Investors
Michael H. Hurwitz; 75(1): 1519-1550 (Winter 2019-2020)
This article discusses the harm to the economy and to investors caused by financial fraud and proposes concrete steps to combat such fraud through a credible policy of deterrence. The author notes that criminal prosecutions against the perpetrators of financial fraud has declined over the past decade or more and argues that this has weakened the ability of the government to deter those contemplating the commission of such crimes.
The Evolution and 2020 Status of Cooperation in SEC Enforcement Investigations
Dixie L. Johnson, Carmen J. Lawrence, and Jamie Stinson 75(4): 2427-2466 (Fall 2020)
When facing potential enforcement action from the Securities and Exchange Commission (“SEC”), companies often seek to mitigate the consequences by cooperating with the SEC in one or more of the following ways: self-policing, self-reporting, remediation, and cooperation. While a 2001 SEC report of investigation known as the Seaboard Report provides a roadmap for what steps to take in order to earn cooperation credit and describes generally the potential benefits to be received, no such report or guidance exists that details exactly what tangible benefits a company will receive in return for the earned credit and how it will be determined. In addition, outside of narrow exceptions where the SEC engages in self-reporting initiatives, companies looking for publicly available guidance on how best to cooperate face a lack of consistency in the SEC’s settlement documentation describing cooperation factors and what benefits may be earned.