Today begins a new occasional series on self-reporting and cooperation, a critical issue faced by many discovering a possible malfeasance. Almost immediately upon making this discovery the business organization is confronted with critical questions regarding self-reporting, cooperation, privilege waivers and others, all of which can have far reaching and significant consequences. Yet many of these questions must be at least tentatively resolved while the facts and circumstances about the situation are only beginning to unfold.

The Securities and Exchange Commission (“SEC”) and the Department of Justice (“DOJ”) have long encouraged business organizations to self-report conduct which may be a violation of law and fully cooperate with any ensuing law enforcement inquiry. To encourage business organizations to take these steps, the SEC and DOJ offer the prospect cooperation credit in the charging decision in the form of amnesty or some lesser charge or sanction than might otherwise be imposed.

Despite SEC and DOJ encouragement and releases discussing these questions, the issues for the company and its advisors are often ill-defined, guided only by vague standards which reduce decision-making to guessing and projecting the consequences to speculation. In a few instances, there is a clear duty to self report. In others, the legal framework may encourage and virtually compel such a decision. Assessing the potential consequences however, is hazardous in view of virtually open ended organizational liability, broad prosecutorial charging discretion and vague cooperation standards which reserve all discretion to the SEC and DOJ.

Yet, it is critical for any organization confronted with the question of self- reporting to carefully assess its options and the potential consequences prior to making the initial decisions. To analyze the questions a business organization must consider when confronted with questions of self-reporting and cooperation, this series will consider four key points: (1) the obligation to self report; (2) prosecutorial charging and cooperation standards; (3) the potential impact of cooperation credit; and (4) cross currents which undercut offers of cooperation credit. The final segment of the series will analyze the collective impact of these considerations.

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