As children, we all experienced the inevitable dilemma after breaking “the rules:” do you hope no one finds out, or do you go to your parents, disclose your mistake and hope for leniency? The decision you made as a child was probably formed in large part by how you expected your parents to react and whether they would ultimately find out anyway. As adults in the corporate world the dilemma is the same; only the parties and the consequences have changed.
It is clear that government agencies such as the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) have been steadily ramping up enforcement efforts over the past year. As a part of that effort, they have also increased calls for voluntary disclosure and increased cooperation by their corporate targets. These financial watchdogs are hoping to convince corporations that choosing to disclose their mistakes is the better option, which might be true depending on the specific facts of the case.
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