Corporations eager to avoid Securities and Exchange Commission (SEC) penalties for legal missteps should aim to surpass legal obligations rather than merely meet them, according to Gurbir Grewal, director of the Division of Enforcement at the SEC. Speaking at a recent assembly of defense attorneys and in-house counsels in Palo Alto, California, Grewal regularly fields inquiries about the benefits of effective cooperation with the SEC. Companies want to understand how to optimally cooperate with the regulator to sidestep potential future penalties. Grewal’s comments send a clear message: It’s no longer a matter of questioning if a violation will be discovered, but rather when.
Although corporations might be hesitant to involve regulators at the early stages of a potential violation, Gurewal encouraged firms to engage with the SEC early and candidly. “You don’t need to conduct a complete internal investigation before coming in and speaking with us. The key here is to be upfront,” said the SEC enforcement head. This advice comes amid an evolving regulatory environment where organizational transparency might mean the difference between leniency and hard penalties.