Enforcement Self Reports
The Commission encourages self-reports of possible violations, and in many cases, self-reported violations have resulted in closure of the matter without sanctions. In the cases where self-reports did result in enforcement action, the penalties reflected mitigation credit for the self-reporting that substantially lowered the amount. The Commission examines the following factors in determining the credit to be given for self-reporting:
- How did the company uncover the misconduct? Was it through a self-evaluation, internal audit, or internal compliance program? Did the company act immediately when it learned of the misconduct?
- Did the company notify the Commission promptly? Did senior management actively participate and encourage employees to provide information to identify the misconduct?
- Did the company take immediate steps to stop the misconduct? Did it implement or create an adequate response to the misconduct?
- Did the company arrange for individuals with full knowledge of the matter to meet with Commission enforcement staff?
- Did the company present its findings to the Commission and provide all relevant evidence regarding the misconduct, including full disclosure of the scope of the wrongdoing; the identity of all employees involved, including senior executives; the steps taken by the company upon learning of the misconduct; communications among involved employees; documents evidencing the misconduct; and measures taken to remedy the misconduct?
Thorough self-reports are typically in writing and include the following:
- A discussion of all relevant factors from the foregoing list;
- Sufficient information for staff to understand the circumstances of how and why the violation occurred;
- Whether any harm resulted from the violation and, if so the extent of the harm;
- Key personnel involved in the violation;
- Steps taken to cure the violation and to prevent any recurrence; and
- Documents relevant to the matter being reported.
Another important aspect of a self-report is the promptness with which it is made. Companies that discover a violation are encouraged to contact Enforcement staff without delay. Prompt notification contributes to mitigation credit and allows staff to provide guidance as to the matters the company should explore and present in its written report. This may result in a more complete self-report and thus a more rapid conclusion to staff's inquiry.
For more information and statistics concerning how Enforcement handles self-reports, see the Staff Reports on Enforcement located on our Enforcement Resources page.