FOR IMMEDIATE RELEASE                 2001-117


      SEC Issues Report of Investigation and Statement
      Setting Forth Framework For Evaluating Cooperation
            In Exercising Prosecutorial Discretion

            Washington, D.C., October 23, 2001 – The
       Securities and Exchange Commission today issued a
       Report of Investigation and Statement explaining its
       decision not to take enforcement action against a
       company it had investigated for financial statement
       irregularities.  In so doing, the Commission
       articulated a framework for evaluating cooperation
       in determining whether and how to charge violations
       of the federal securities laws.

            The Report identifies four broad measures of a
       company’s cooperation:

            ·    Self-policing prior to the discovery of
                 the misconduct, including establishing
                 effective compliance procedures and an
                 appropriate tone at the top;

            ·    Self-reporting of misconduct when it is
                 discovered, including conducting a
                 thorough review of the nature, extent,
                 origins and consequences of the
                 misconduct, and promptly, completely, and
                 effectively disclosing the misconduct to
                 the public, to regulators, and to self-
                 regulators;

            ·    Remediation, including dismissing or
                 appropriately disciplining wrongdoers,
                 modifying and improving internal controls
                 and procedures to prevent recurrence of
                 the misconduct, and appropriately
                 compensating those adversely affected; and

            ·    Cooperation with law enforcement
                 authorities, including providing the
                 Commission staff with all information
                 relevant to the underlying violations and
                 the company’s remedial efforts.

          The criteria are set forth in greater detail in
     the Report.  Credit for cooperative behavior may range
     from the extraordinary step of taking no enforcement
     action at all to bringing reduced charges, seeking
     lighter sanctions, or including mitigating language in
     documents the Commission uses to announce and resolve
     enforcement actions.


          Stephen M. Cutler, Acting Director of Enforcement,
     said:  “Crediting those who seek out, self-report and
     rectify illegal conduct is critical to achieving the
     Commission’s goal of ‘real-time enforcement.’  We hope
     that, by setting forth a framework for exercising its
     prosecutorial discretion, the Commission will encourage
     companies to address unlawful conduct swiftly and
     meaningfully and to cooperate with law enforcement
     authorities.  The result will be more efficient and
     effective enforcement of the federal securities laws.”

          The Commission welcomes the constructive input of
     all interested persons, who may direct their
     suggestions to the Division of Enforcement.

          For further information, call Stephen M. Cutler at
     202-942-4500.

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