Cooperating with NYSE Member Reviews

The twin themes of cooperation and disclosure have become the standards by which federal and state prosecutors and regulators now judge a corporation's response to instances of corporate misbehavior. Following the Holder Memor-andum, the SEC, in October 2001, issued the so-called “Seabord Report,” which established require-ments for “self-policing, self-reporting, remediation and cooperation” for publicly traded corporations hoping to avoid or minimize regulatory sanctions. In 2003, following the formation of the federal Corporate Fraud Task Force, then-Deputy Attorney General Larry Thompson revised the Holder Me-morandum to increase “emphasis on and scrutiny of the authenticity of a corporation's cooperation.” The Thompson Memorandum openly targeted companies that, “while purporting to cooperate,” engage in “conduct that impedes the investigation (whether or not rising to the level of criminal obstruction).”

This September, the New York Stock Exchange (NYSE) detailed in an Information Memorandum its own framework for assessing the response of NYSE Members and Member Firms to allegations of wrongdoing. The Information Memorandum appears to raise the bar for cooperation and disclosure beyond levels previously required by DOJ and the SEC. Indeed, the memorandum suggests that those seeking leniency should “partner” with the NYSE to “ferret out related industry wrongdoing.”