The SEC's New Cooperation Guidelines: Progress, and Some Possible Pitfalls

Over the years, SEC Commissioners and staff have given many a speech that talked in general terms about the virtues of cooperation with the Commission’s full-disclosure and law enforcement missions. In a recent Section 21(a) Report (Exchange Act Rel. No. 44969, AAER No. 1470 (Oct. 23, 2001)), the SEC seems – for the first time since the illegal payments investigations of the late 1970s – to be prepared to do something about the issue by outlining in relatively precise terms what it means when it speaks of “cooperation” by publicly-traded issuers, and what an issuer may hope to gain by doing so. We believe that the 21(a) Report is an excellent policy statement, and stands as a tangible sign of Chairman Pitt’s intention to forge a more cooperative, and less confrontational, relationship with corporate issuers. Nevertheless, it contains some significant ambiguities, and its true value to issuers and their counsel will lie not simply in its articulation, but in its implementation over the coming months and years.

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