Client Alert
SEC Implements New Cooperation Program With Historic First Non-Prosecution Agreement
January 28, 2011
Thomas A. Zaccaro & Kai S. Bartolomeo
On December 20, 2010, the Securities and Exchange Commission (SEC or the Commission) announced that it entered into a non-prosecution agreement with childrens clothing marketer Carters, Inc. (Carters) related to allegations that a former Carters executive engaged in financial fraud and insider trading. The Carters non-prosecution agreement is the first of its kind since the SEC announced the creation of new cooperation tools last January designed to encourage individuals and companies to provide greater assistance in SEC investigations and enforcement actions. The SECs decision to enter into the Carters non-prosecution agreement potentially signifies a new trend in rewarding companies for prompt, voluntary, and thorough cooperation with the Commission an option that has long been at the disposal of federal prosecutors, but, until recently, has not been exercised by the SECs Division of Enforcement.