FEDERAL CRIMINAL LAWYERS

What Is an SEC Deferred Prosecution Agreement?

You’ve probably heard about deferred prosecution agreements. The SEC offers them to companies that self-report misconduct, cooperate extensively, and demonstrate genuine remediation. Instead of bringing formal charges, the SEC agrees to defer prosecution while you meet certain conditions. If you comply, the case goes away entirely. It’s the holy grail of SEC enforcement outcomes – the ultimate reward for doing everything right.

Welcome to Spodek Law Group. Our goal is to explain what SEC deferred prosecution agreements actually are – and more importantly, whether they still exist. Here’s the uncomfortable truth that nobody wants to acknowledge: the SEC hasn’t entered a single deferred prosecution agreement or non-prosecution agreement in over eight years. Since mid-2016, the count is zero. The tool that’s supposed to reward exemplary cooperation hasn’t been used in nearly a decade.

Here’s what this means for you. Every article you read about SEC DPAs describes a theoretical outcome that the SEC stopped offering before some current law students started college. The cooperation program that launched in 2010 as a “potential game-changer” was effectively abandoned within six years. In the entire fourteen-year history of the program, the SEC used DPAs exactly twice and NPAs exactly three times. Ten total. That’s not a cooperation program. That’s a rounding error. And you’re being encouraged to structure your entire response around earning an outcome that effectively doesn’t exist anymore.

The Definition Everyone Gives You (And Why It No Longer Matters)

Every other website explains SEC deferred prosecution agreements the same way. A DPA is an agreement between the SEC and a company or individual where the SEC agrees not to bring formal charges if the respondent meets certain conditions over a specified period. Typicaly, this involves admitting facts, paying disgorgement, implementing remedial measures, and cooperating with ongoing investigations. If you complete all the conditions successfuly, the case is dismissed. If you breach the agreement, the SEC can prosecute using everything you’ve already admitted.

The difference between a DPA and an NPA is technicaly straightforward. With a deferred prosecution agreement, charges are actualy filed but held in abeyance. With a non-prosecution agreement, charges are never filed in the first place. NPAs are typicaly reserved for the most exceptional cooperation – situations where the company self-reported so quickly and cooperated so completly that formal charges werent warranted at all.

The theoretical benefits are substancial. A DPA or NPA means no formal enforcement action on your record. No press release announcing charges. No settlement agreement describing your violations in permanant government filings. For companies concerned about reputational damage, collateral consequences, or debarment provisions, avoiding formal charges can be worth far more then any monetary savings. Thats why defense attorneys traditionaly viewed DPAs and NPAs as the ultimate prize – the outcome that made all the cooperation worthwhile.

This all sounds reasonable. It makes logical sense. Self-report, cooperate, remediate – and you might avoid the stigma and consequences of formal SEC charges. Thats the theory. Thats what you’ll read everywhere else. And none of it matters becuase the SEC hasnt offered either outcome to anyone in over eight years.

Heres the thing that should immediatly make you suspicious. When you search for SEC deferred prosecution agreements, you’ll find endless articles explaining how they work. You’ll find eligibility requirements. You’ll find case studies from 2011, 2012, 2013. What you wont find is any case study from 2017 or later. Nobody mentions that the last SEC NPA was in mid-2016. Nobody tells you that your researching a tool that was quietly discontinued while the marketing continued. The articles are all writen as if DPAs are still available. There not.

Zero Since 2016: The Extinction Nobody Announced

The SEC’s last non-prosecution agreements were announced in June 2016. Akamai Technologies and Nortek Inc both recieved NPAs for self-reporting FCPA violations involving there Chinese subsidiaries. Akamai paid $652,452 in disgorgement. Nortek paid $291,403. Neither company was formally charged with violations. These were presented as success stories – proof that the cooperation program worked.

That was eight and a half years ago. Since then, nothing.

The SEC has not entered a single DPA or NPA in over eight consecutive years.

Think about what this means. The cooperation program that was supposed to encourage self-reporting has been running for fourteen years. For more then half of that time, the ultimate reward hasnt been offered to anyone. Companies continue to self-report. They continue to cooperate extensively. They continue to implement remediation. And the best possible outcome – the one thats still promoted as achievable – hasnt happened since the summer of 2016.

The SEC never announced they stopped offering DPAs and NPAs. There was no press release. There was no policy statement. There was no explanation. They just stopped. The marketing continued. The eligibility requirements remained on there website. Staff members continued to give speeches about the benefits of cooperation. But the product was discontinued without anyone being told.

I’ve watched clients structure there entire cooperation strategy around earning a DPA. They self-report within days of discovering misconduct. They produce every document requested. They terminate responsible employees. They implement new compliance systems. They spend millions on internal investigations and remediation. They do everything the Seaboard factors suggest. And then they discover that the outcome they were working toward hasnt been available for nearly a decade.

Todd Spodek tells clients the same thing every time this comes up: dont assume the SEC will offer you something they havent offered anyone in eight years. Your cooperation might help. It might reduce your penalty. It might result in more favorable language in the settlement. But expecting a DPA or NPA is like expecting a product that was discontinued before you walked into the store.

Ten Total in Fourteen Years: A Tool That Barely Existed

Even when DPAs and NPAs were theoretically available, the SEC barely used them. In the entire history of the cooperation program – from January 2010 when it launched through today – the SEC has entered exactly five deferred prosecution agreements and five non-prosecution agreements. Ten total. In fourteen years.

Think about that number for a moment. The SEC brings hundreds of enforcement actions every year. In fiscal year 2024 alone, they filed 583 enforcement actions and obtained $8.2 billion in financial remedies. Ten DPAs and NPAs in fourteen years isnt a program. Its a footnote.

Contrast this with the broader cooperation program. During the same period, the SEC signed over 80 cooperation agreements with individuals and companies. These agreements formalize cooperation obligations but dont defer prosecution – they just document what your agreeing to do. Eighty cooperation agreements versus ten DPAs and NPAs. The ratio tells you everything you need to know about what the SEC actualy offers versus what it promotes.

Heres another way to think about it. The SEC announced the cooperation program in January 2010. Robert Khuzami, Director of Enforcement at the time, called DPAs and NPAs “a potential game-changer for the Division of Enforcement.” Game-changer. Those were his words. Six years later, the SEC stopped using them entirely. The game-changer became a ghost within half a decade.

The SEC used its first DPA in 2011 with Tenaris. The second DPA came in 2012 with Amish Helping Fund. The first NPA was in 2010 with Carter’s. Then Akamai and Nortek in 2016. A few others scattered between. And then nothing. For eight years and counting.

Heres the uncomfortable question nobody asks: was the cooperation program ever real? Or was it always a marketing tool designed to encourage behavior the SEC wanted without actualy delivering the promissed rewards? The numbers suggest the latter. Ten outcomes in fourteen years. Thats less then one per year on average. And nothing at all for the last eight. If this were a product, wed call it vaporware – something that was announced, promoted, but never actualy delivered at scale.

The companies that did recieve DPAs or NPAs – Tenaris, Carter’s, Akamai, Nortek – were held up as proof the program worked. But they were exceptions so rare they basicaly proved the rule. For every company that got a DPA, hundreds cooperated fully and got charged anyway.

DOJ’s 2024 DPAs vs SEC’s Eight-Year Drought

The contrast with the Department of Justice makes the SEC’s abandonment even more puzzling. While the SEC hasnt entered a single DPA or NPA since 2016, the DOJ enters them constantley. In 2024 alone, DOJ entered DPAs with SAP, TD Securities, Telefónica Venezolana, and Raytheon. Thats four major DPAs in one year from one agency. The SEC has entered zero in eight years.

These are often parallel cases. When DOJ and SEC investigate the same conduct, DOJ offers a DPA while the SEC offers a standard settlement. Same misconduct. Same company. Same cooperation. Different tools used by different agencies.

Take the SAP case from January 2024. SAP entered into a three-year deferred prosecution agreement with DOJ and agreed to pay over $220 million. The SEC announced a separate settlement in the same matter. No DPA from the SEC – just a standard enforcement action with cooperation credited in the language.

This tells you something important. DPAs arent impossible. There not impractical. DOJ uses them regularly. The SEC simply chose to stop. This wasnt a legal constraint or an administrative barrier. It was a policy decision made without explanation.

Its impossible to know exactly why the SEC abandoned DPAs while DOJ expanded them. The agencies have different missions. DOJ handles criminal matters where deferred prosecution has a longer history. The SEC handles civil enforcement where the tool was always newer. But the divergence is striking. Two federal agencies, similar misconduct, completly opposite approaches to the same resolution mechanism.

The Eligibility Requirements for an Outcome That Dosent Exist

Heres were things get truly absurd. The SEC still publishes eligibility requirements for DPAs and NPAs. There website still explains what you need to do to qualify. There speeches still reference self-reporting as a prerequisite. The eligibility criteria exist for an outcome the SEC hasnt offered in eight years.

According to SEC guidance, to be eligible for a DPA or NPA in FCPA cases, a company must self-report misconduct. Not just cooperate – actively self-report before the SEC discovers the problem. This is a significant commitment. Self-reporting means voluntarily telling the government about violations they might never have found. It means creating a paper trail of admissions. It means starting down a path you cant easily reverse.

And all of this – the self-reporting, the eligibility, the cooperation requirements – is for an outcome that dosent exist anymore.

You must self-report to be eligible for something the SEC stopped offering in 2016.

Let that sink in. Companies are still being told to self-report to maximize there chances of favorable treatment. The most favorable treatment – DPAs and NPAs – hasnt been available for nearly a decade. But the eligibility requirements remain. The guidance remains. The implication that self-reporting might lead to these outcomes remains.

This isnt just misleading. Its a system that extracts maximum cooperation while offering no guarantee of the outcomes it promotes. You self-report becuase you think it might lead to a DPA. It wont. But you’ve already self-reported. The SEC has your admissions. The information flows in one direction.

What Happens Instead: No-Penalty Settlements Without DPAs

If DPAs and NPAs dont exist anymore, what do cooperating companies actualy get?

In fiscal year 2024, 15% of defendants settled with no monetary penalty – the highest since 2013. Companies like Cloopen, GTT Communications, and View Inc all recieved no-penalty outcomes in 2023 and 2024. These werent DPAs. They were standard settlements where the SEC simply chose not to impose civil penalties.

Cloopen self-reported accounting violations within days of starting an internal investigation. They produced documents, translated materials from Chinese, and identified key witnesses. They fired responsable employees and strengthened there accounting controls. The result: no civil penalty. But also no DPA. GTT Communications had a similar experience – self-reported promptley, cooperated extensivley, implemented remediation. No penalty imposed. But they were still formaly charged with violations. The enforcement action still happened. It just happened without financial consequences.

This raises an interesting question. If companies can get no-penalty outcomes without DPAs, what were DPAs for in the first place?

The answer is structure and certainty. A DPA creates formal conditions and monitoring. It specifies exactley what the company must do over a defined period. It creates consequenses for breach. Most importantley, it provides a clear path to dismissal if you comply. A no-penalty settlement is just… a settlement. No ongoing obligations beyond the order. No probationary period. No formal conditions. And no path to having the enforcement action go away. Your still charged. Your still on record as having violated securities laws. You just didnt pay anything.

The SEC apparantly decided that formal structure wasnt necessary. They can achieve cooperation through the promise of favorable treatment without creating binding DPA conditions. The carrot works without the stick ever materializing.

But this creates there own problems. Without DPAs, theres no graduated response. You either get charged or you dont. The middle ground – formal probation with a path to dismissal – has vanished. And the companies that might have benefited from that middle ground are left with binary outcomes. The nuance is gone. The proportionality is gone. Everything is all-or-nothing now.

Why the SEC Stopped Without Telling Anyone

Theres something deeply cynical about promoting an outcome you stopped offering eight years ago. The SEC’s cooperation program still references DPAs and NPAs. Staff still give speeches about the benefits of self-reporting. The Seaboard factors still guide cooperation strategy. But the ultimate reward has been quietly discontinued.

Why?

The most likely explanation is administrative convenience. DPAs require ongoing monitoring. They create conditions that must be tracked. They involve SEC staff time over years, not just at settlement. Standard settlements are simpler. You negotiate, you sign, you’re done.

Another explanation is that DPAs werent producing better outcomes for the SEC. If companies cooperate just as fully for vague “cooperation credit” as they would for explicit DPA eligibility, why bother with the DPA structure? The SEC discovered they could get the same behavior without offering the same rewards.

A third explanation is institutional skepticism about deferred prosecution generally. DPAs have been criticized for being too lenient – essentially letting companies buy there way out of consequences. The SEC may have decided that formal enforcement actions, even with cooperation credit, better serve the deterrence mission.

We may never know the internal calculation. The SEC hasnt explained why they stopped. They havent announced a policy change. They havent updated there guidance to reflect reality. The program just quietly died while the marketing continued.

Ive watched this pattern repeat for years now. A company discovers misconduct. There lawyers tell them to self-report becuase it might lead to a DPA or NPA. The company spends months or years cooperating extensivley, producing documents, facilitating interviews, implementing remediation. At the end, they get charged anyway. Maybe with cooperation credit noted in the order. Maybe with a reduced penalty. But charged. The DPA they were promissed was never actualy available.

What matters for you is understanding that the landscape has changed dramaticaly. Whatever you read about DPAs – including this article explaining what they theoreticaly are – describes a tool that isnt available anymore. Your cooperation strategy should be based on what the SEC actualy offers in 2024, not what they offered in 2012. Dont let anyone tell you that exceptional cooperation might result in a DPA. It wont. That hasnt happened in nearly a decade.

At Spodek Law Group, we see clients who structured everything around earning a DPA. They did everything right. They followed every recommendation. They met every eligibility requirement. And they got charged anyway – with cooperation credit, with favorable language, with maybe a reduced penalty. But charged nonetheless. The DPA they were working toward was never on the table. It was a ghost from 2016 that nobody told them about.

Call Spodek Law Group at 212-300-5196 before you structure any cooperation strategy around outcomes that dont exist. The consultation is free. Understanding what the SEC actualy offers – versus what they promote – might be the most important investment you make.

We put this information on our website becuase most people have no idea that DPAs have been extinct for eight years. Every other article explains how they work. Every other website treats them like there still available. We’re telling you they dont work anymore – becuase the SEC stopped using them without telling anyone.

The question isnt how to get a DPA. The question is what your actualy going to get instead. Make sure you know the answer before you self-report. Your future depends on understanding what the SEC actualy offers – not what there cooperation program website still claims is possible.