March 11, 2013 Articles

Meeting SEC and FINRA Expectations about Remediation

Avoiding sanctions helps cut costs, improve efficiency, and safeguard assets

By Jonny Frank

Both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) stress the importance of remediation. The SEC’s Division of Enforcement Manual cites remediation as one of four factors to consider in deciding whether, and to what extent, a company deserves credit for cooperation. The United States Department of Justice (DOJ) and SEC Resource Guide to the U.S. Foreign Corrupt Practices Act (Resource Guide) places a “high premium” on remediation in resolution of cases and is a key factor in deciding whether to impose an independent corporate monitor. Similarly, FINRA Regulatory Notice 08-70 (FINRA Reg. 08-70) instructs that timely and effective remediation is one of four factors that FINRA considers in awarding credit for “extraordinary cooperation.” FINRA Sanction Guidelines explain that disciplinary sanctions are “remedial in nature and should be designed to deter future misconduct.”

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