SEC Announces New Sanction Guidelines
In an effort to bring clarity to SEC enforcement, SEC Chairman Christopher Cox has announced a new set of guidelines the Commission will follow for fining companies for fraudulent conduct. Announced Jan. 4., the new SEC guidelines outline a number of factors the commission will take into consideration when determining...
January 06, 2006 at 09:15 AM
2 minute read
The original version of this story was published on Law.com
In an effort to bring clarity to SEC enforcement, SEC Chairman Christopher Cox has announced a new set of guidelines the Commission will follow for fining companies for fraudulent conduct. Announced Jan. 4., the new SEC guidelines outline a number of factors the commission will take into consideration when determining whether and how much to penalize corporations that commit securities law violations.
Under the new guidelines, the SEC will take into account, “the presence or absence of a direct benefit to the corporation as a result of the violation.” The more likely shareholders improperly benefited from an act of fraud, the more likely the commission is to fine the company. According to another provision, if sanctions would only harm innocent shareholders, the commission is unlikely to levy a fine.
The SEC also will take into consideration whether bad conduct was widespread throughout the corporation, the level of intent of the perpetrators, the degree of difficulty in detecting the offense and the amount of cooperation the company provides during an investigation.
In an effort to bring clarity to SEC enforcement, SEC Chairman Christopher Cox has announced a new set of guidelines the Commission will follow for fining companies for fraudulent conduct. Announced Jan. 4., the new SEC guidelines outline a number of factors the commission will take into consideration when determining whether and how much to penalize corporations that commit securities law violations.
Under the new guidelines, the SEC will take into account, “the presence or absence of a direct benefit to the corporation as a result of the violation.” The more likely shareholders improperly benefited from an act of fraud, the more likely the commission is to fine the company. According to another provision, if sanctions would only harm innocent shareholders, the commission is unlikely to levy a fine.
The SEC also will take into consideration whether bad conduct was widespread throughout the corporation, the level of intent of the perpetrators, the degree of difficulty in detecting the offense and the amount of cooperation the company provides during an investigation.
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