They say that confession is good for the soul. In the same vein, “confessing” securities violations by self-reporting them to the SEC may be good for fund managers – at least in some circumstances. If a fund manager comes clean to the SEC about any violations it has committed, thoroughly investigates those violations internally, fully cooperates with any external investigation and takes appropriate remedial steps to prevent similar violations in the future, it may reduce any penalties imposed on it – and perhaps avoid penalties entirely. Self-reporting can also have negative consequences, however. The resulting governmental investigation into the reported violations may be costly and reveal additional misconduct, as well as generate significant negative press. This two-part series explores why fund managers should self-report violations to the SEC, when they should do so and how they should self-report. This first article discusses the SEC’s Cooperation Program; the pros and cons of self-reporting violations to the SEC; and the factors fund managers should consider when deciding whether to self-report. The second article will address the timing and logistics of self-reporting; ways managers can put themselves in the best position possible when self-reporting; and things managers should do if they ultimately decide not to self-report violations. For an example of an enforcement action in which an investment adviser self-reported violations, see “SEC Sanctions Investment Adviser and Principals for Using Fund Assets to Help an Affiliate and for Using Improper Valuation Adjustments to Boost Returns” (Nov. 8, 2018).