The Limits of Mercy

The cost of cooperating with the SEC is high. The cost of not cooperating is even higher.

What happened to the kinder, gentler Securities and Exchange Commission? Less than four years ago, then-chairman Harvey Pitt wanted an agency that favored cooperation over confrontation. The SEC seemed headed in a business-friendlier direction, and critics feared that the agency would grow softer on financial fraud. In particular, they pointed to the precedent-setting case of Seaboard Corp., whose self-reporting of an accounting fraud enabled it to avoid charges and fines in October 2001—just days after the SEC opened its investigation of Enron.

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