19 January 2010. Two notices.
[Federal Register: January 19, 2010 (Volume 75, Number 11)]
[Rules and Regulations]
[Page 3121-3122]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ja10-9]
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Part V
Securities and Exchange Commission
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17 CFR Parts 200 and 202
Delegations of Authority to the Director of Its Division of Enforcement
and Policy Statement Concerning Cooperation by Individuals in Its
Investigations and Related Enforcement Actions; Final Rules
[[Page 3122]]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 200
[Release No. 34-61339]
Delegations of Authority to the Director of Its Division of
Enforcement
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
amending its rules to delegate authority to the Director of the
Division of Enforcement (``Division'') to submit witness immunity order
requests to the Department of Justice for witnesses who have provided
or have the potential to provide substantial assistance in the
Commission's investigations and related enforcement actions. This
delegation is intended to conserve Commission resources, enhance the
Division's ability to detect violations of the federal securities laws,
increase the effectiveness and efficiency of the Division's
investigations, and improve the success of the Commission's enforcement
actions.
DATES: Effective Date: January 19, 2010.
FOR FURTHER INFORMATION CONTACT: Joan McKown, Chief Counsel, (202) 551-
4933; or Jordan A. Thomas, Assistant Chief Litigation Counsel, (202)
551-4475.
SUPPLEMENTARY INFORMATION: The Commission today is amending its rules
governing delegations of authority to the Director of the Division of
Enforcement. The amendment to Rule 30-4 (17 CFR 200.30-4) authorizes
the Director of the Division of Enforcement (``Director'') to submit
witness immunity order requests to the Department of Justice for
witnesses who have provided or have the potential to provide
substantial assistance in the Commission's investigations and related
enforcement actions. This delegation is intended to conserve Commission
resources, enhance the Division's ability to detect violations of the
federal securities laws, increase the effectiveness and efficiency of
the Division's investigations, and improve the success of the
Commission's enforcement actions.
Nevertheless, the Division may submit matters to the Commission for
consideration, as it deems appropriate.
The Commission finds, in accordance with the Administrative
Procedure Act (``APA'') (5 U.S.C. 553(b)(3)(A)), that this revision
relates solely to agency organization, procedures, or practices. It is
therefore not subject to the provisions of the APA requiring notice and
opportunity for comment. Accordingly, it is effective January 19, 2010.
List of Subjects in 17 CFR Part 200
Administrative practice and procedure, Authority delegations
(Government agencies).
Text of Amendment
0
For the reasons set out in the preamble, Title 17, Chapter II of the
Code of Federal Regulations is amended as follows:
PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND
REQUESTS
0
1. The authority citation for Part 200, Subpart A, continues to read in
part as follows:
Authority: 15 U.S.C. 77o, 77s, 77sss, 77d, 78d-1, 78d-2, 78w,
78ll(d), 78mm, 80a-37, 80b-11, and 7202, unless otherwise noted.
* * * * *
0
2. Section 200.30-4 is amended by adding paragraph (a)(14) to read as
follows:
Sec. 200.30-4 Delegation of authority to Director of Division of
Enforcement.
* * * * *
(a) * * *
(14) To submit witness immunity requests to the U.S. Attorney
General for approval to seek an order compelling an individual to give
testimony or provide other information pursuant to a subpoena that may
be necessary to the public interest in connection with investigations
and related enforcement actions pursuant to section 22(b) of the
Securities Act of 1933 (15 U.S.C. 77v(b)), section 21(c) of the
Securities Exchange Act of 1934 (15 U.S.C. 78u(c)), section 42(c) of
the Investment Company Act of 1940 (15 U.S.C. 80a-41(c)) and section
209(c) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-9(c)).
* * * * *
By the Commission.
Dated: January 13, 2010.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-842 Filed 1-15-10; 8:45 am]
BILLING CODE 8011-01-P
[Federal Register: January 19, 2010 (Volume 75, Number 11)]
[Rules and Regulations]
[Page 3122-3124]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ja10-10]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 202
[Release No. 34-61340]
Policy Statement Concerning Cooperation by Individuals in Its
Investigations and Related Enforcement Actions
AGENCY: Securities and Exchange Commission.
ACTION: Policy statement.
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SUMMARY: The Securities and Exchange Commission is issuing a policy
statement announcing the analytical framework it uses to evaluate
cooperation by individuals.
DATES: Effective Date: January 19, 2010.
FOR FURTHER INFORMATION CONTACT: Joan McKown, Chief Counsel, (202) 551-
4933; or Jordan A. Thomas, Assistant Chief Litigation Counsel, (202)
551-4475.
SUPPLEMENTARY INFORMATION: The Securities and Exchange Commission is
issuing a policy statement announcing the analytical framework it uses
to evaluate cooperation by individuals. This framework serves two
important purposes: it promotes the fair and effective exercise of
discretion by the Commission, and it enhances confidence on the part of
the public and cooperating individuals that decisions regarding
cooperation in the Commission's investigations and related enforcement
actions will be made in an appropriate and consistent manner.
The provisions of the Administrative Procedure Act (``APA''), 5
U.S.C. 553, regarding notice of proposed rulemaking, opportunities for
public comment, and prior publication are not applicable to general
statements of policy, such as this policy statement. Similarly, the
provisions of the Regulatory Flexibility Act, 5 U.S.C. 601-602, apply
only when notice and comment are required by the APA or another statute
and are therefore not applicable.
List of Subjects in 17 CFR Part 202
Administrative practice and procedure.
Text of Amendment
0
For the reasons set out in the preamble, Title 17, Chapter II of the
Code of Federal Regulations is amended as follows:
[[Page 3123]]
PART 202--INFORMAL AND OTHER PROCEDURES
1. The authority citation for Part 202 continues to read, in part,
as follows:
Authority: 15 U.S.C. 77s, 77t, 77sss, 77uuu, 78d-1, 78u, 78w,
78ll(d), 80a-37, 80a-41, 80b-9, 80b-11, 7202 and 7211 et seq.,
unless otherwise noted.
* * * * *
0
2. Add Sec. 202.12 to read as follows:
Sec. 202.12 Policy statement concerning cooperation by individuals in
its investigations and related enforcement actions.
Cooperation by individuals and entities in the Commission's
investigations and related enforcement actions can contribute
significantly to the success of the agency's mission. Cooperation can
enhance the Commission's ability to detect violations of the federal
securities laws, increase the effectiveness and efficiency of the
Commission's investigations, and provide important evidence for the
Commission's enforcement actions. There is a wide spectrum of tools
available to the Commission and its staff for facilitating and
rewarding cooperation by individuals, ranging from taking no
enforcement action to pursuing reduced charges and sanctions in
connection with enforcement actions. As with any cooperation program,
there exists some tension between the objectives of holding individuals
fully accountable for their misconduct and providing incentives for
individuals to cooperate with law enforcement authorities. This policy
statement sets forth the analytical framework employed by the
Commission and its staff for resolving this tension in a manner that
ensures that potential cooperation arrangements maximize the
Commission's law enforcement interests. Although the evaluation of
cooperation requires a case-by-case analysis of the specific
circumstances presented, as described in greater detail below, the
Commission's general approach is to determine whether, how much, and in
what manner to credit cooperation by individuals by evaluating four
considerations: the assistance provided by the cooperating individual
in the Commission's investigation or related enforcement actions
(``Investigation''); the importance of the underlying matter in which
the individual cooperated; the societal interest in ensuring that the
cooperating individual is held accountable for his or her misconduct;
and the appropriateness of cooperation credit based upon the profile of
the cooperating individual. In the end, the goal of the Commission's
analysis is to protect the investing public by determining whether the
public interest in facilitating and rewarding an individual's
cooperation in order to advance the Commission's law enforcement
interests justifies the credit awarded to the individual for his or her
cooperation.
(a) Assistance provided by the individual. The Commission assesses
the assistance provided by the cooperating individual in the
Investigation by considering, among other things:
(1) The value of the individual's cooperation to the Investigation
including, but not limited to:
(i) Whether the individual's cooperation resulted in substantial
assistance to the Investigation;
(ii) The timeliness of the individual's cooperation, including
whether the individual was first to report the misconduct to the
Commission or to offer his or her cooperation in the Investigation, and
whether the cooperation was provided before he or she had any knowledge
of a pending investigation or related action;
(iii) Whether the Investigation was initiated based on information
or other cooperation provided by the individual;
(iv) The quality of cooperation provided by the individual,
including whether the cooperation was truthful, complete, and reliable;
and
(v) The time and resources conserved as a result of the
individual's cooperation in the Investigation.
(2) The nature of the individual's cooperation in the Investigation
including, but not limited to:
(i) Whether the individual's cooperation was voluntary or required
by the terms of an agreement with another law enforcement or regulatory
organization;
(ii) The types of assistance the individual provided to the
Commission;
(iii) Whether the individual provided non-privileged information,
which information was not requested by the staff or otherwise might not
have been discovered;
(iv) Whether the individual encouraged or authorized others to
assist the staff who might not have otherwise participated in the
Investigation; and
(v) Any unique circumstances in which the individual provided the
cooperation.
(b) Importance of the underlying matter. The Commission assesses
the importance of the Investigation in which the individual cooperated
by considering, among other things:
(1) The character of the Investigation including, but not limited
to:
(i) Whether the subject matter of the Investigation is a Commission
priority;
(ii) The type of securities violations;
(iii) The age and duration of the misconduct;
(iv) The number of violations; and
(v) The isolated or repetitive nature of the violations.
(2) The dangers to investors or others presented by the underlying
violations involved in the Investigation including, but not limited to:
(i) The amount of harm or potential harm caused by the underlying
violations;
(ii) The type of harm resulting from or threatened by the
underlying violations; and
(iii) The number of individuals or entities harmed.\1\
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\1\ Cooperation in Investigations that involve priority matters
or serious, ongoing, or widespread violations will be viewed most
favorably.
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(c) Interest in holding the individual accountable. The Commission
assesses the societal interest in holding the cooperating individual
fully accountable for his or her misconduct by considering, among other
things:
(1) The severity of the individual's misconduct assessed by the
nature of the violations and in the context of the individual's
knowledge, education, training, experience, and position of
responsibility at the time the violations occurred;
(2) The culpability of the individual, including, but not limited
to, whether the individual acted with scienter, both generally and in
relation to others who participated in the misconduct;
(3) The degree to which the individual tolerated illegal activity
including, but not limited to, whether he or she took steps to prevent
the violations from occurring or continuing, such as notifying the
Commission or other appropriate law enforcement agency of the
misconduct or, in the case of a violation involving a business
organization, by notifying members of management not involved in the
misconduct, the board of directors or the equivalent body not involved
in the misconduct, or the auditors of such business organization of the
misconduct;
(4) The efforts undertaken by the individual to remediate the harm
caused by the violations including, but not limited to, whether he or
she paid or agreed to pay disgorgement to injured investors and other
victims or assisted these victims and the authorities in the recovery
of the fruits and instrumentalities of the violations; and
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(5) The sanctions imposed on the individual by other federal or
state authorities and industry organizations for the violations
involved in the Investigation.
(d) Profile of the individual. The Commission assesses whether, how
much, and in what manner it is in the public interest to award credit
for cooperation, in part, based upon the cooperating individual's
personal and professional profile by considering, among other things:
(1) The individual's history of lawfulness, including complying
with securities laws or regulations;
(2) The degree to which the individual has demonstrated an
acceptance of responsibility for his or her past misconduct; and
(3) The degree to which the individual will have an opportunity to
commit future violations of the federal securities laws in light of his
or her occupation--including, but not limited to, whether he or she
serves as: A licensed individual, such as an attorney or accountant; an
associated person of a regulated entity, such as a broker or dealer; a
fiduciary for other individuals or entities regarding financial
matters; an officer or director of public companies; or a member of
senior management--together with any existing or proposed safeguards
based upon the individual's particular circumstances.
Note to Sec. 202.12. Before the Commission evaluates an
individual's cooperation, it analyzes the unique facts and
circumstances of the case. The above principles are not listed in
order of importance nor are they intended to be all-inclusive or to
require a specific determination in any particular case.
Furthermore, depending upon the facts and circumstances of each
case, some of the principles may not be applicable or may deserve
greater weight than others. Finally, neither this statement, nor the
principles set forth herein creates or recognizes any legally
enforceable rights for any person.
Dated: January 13, 2010.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-843 Filed 1-15-10; 8:45 am]
BILLING CODE 8011-01-P
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