October 21, 2021

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Remediation and Cooperation Pay Off in SEC Settlement

The SEC often encourages self-reporting, cooperation, and remediation in speeches and policy statements. In a settled enforcement action announced today, the Commission made clear just how valuable those efforts can be, allowing a company to settle accounting controls and disclosure violations with no financial penalty whatsoever.

According to the SEC’s announcement, from 2012 to early 2016, the former CEO and CFO of Provectus Biopharmaceuticals, Inc. obtained millions of dollars from the company by using insufficient or non-existent expense documentation, causing the company to materially understate their compensation in annual reports and proxy statements. While the SEC order directs Provectus to cease and desist from committing any further accounting controls and disclosure violations, it notably imposes no financial penalty on the company. The SEC’s order states that it took into consideration Provectus’ prompt remedial acts and cooperation with the Commission, including (i) the retention of independent counsel and a forensic accounting firm to conduct an internal investigation; (ii) the replacement of the CFO and CEO accused of wrongdoing; (iii) the decision to hold the former executives accountable through legal process; (iv) the creation of new finance positions; (v) the hiring new auditing and bookkeeping firms; and (vi) the revamping of  internal control measures related to expense reimbursement. The SEC also credits the company for voluntarily sharing the findings of its internal investigation with the Commission, saving the Enforcement staff both time and resources.

The Provectus settlement is a good reminder for companies that prompt, thorough, and independent inquiry into potential wrongdoing, swift remedial action, and transparency with the Commission can substantially mitigate their SEC enforcement exposure in the end.

© Copyright 2021 Squire Patton Boggs (US) LLPNational Law Review, Volume VII, Number 347
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About this Author

Coates Lear Government Investigations Attorney Squire Patton Boggs Denver, CO & Washington DC
Partner

Coates Lear specializes in assisting companies, boards of directors, board committees and individuals in internal investigations, government inquiries and enforcement proceedings. Drawing on his extensive government experience, Coates has particular expertise in matters involving the US Securities and Exchange Commission (SEC). He also helps clients evaluate and improve their compliance programs, and represents clients in complex litigation.

Before joining the firm, Coates was senior counsel in the SEC’s Division of Enforcement, where he worked from 2007 to 2015. While at the SEC,...

303-894-6141
Elizabeth Weil Shaw attorney Squire Patton Boggs
Associate

Elizabeth Weil Shaw assists clients primarily with government enforcement actions and inquiries, as well as internal investigations and compliance reviews. Liz has analyzed matters involving investigations by the US Securities and Exchange Commission, Department of Justice and State Attorneys General. She is a contributor to the firm's Anticorruption Blog.

303-830-6129
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