(Dow Jones) Weighing the risks and rewards of voluntarily reporting compliance lapses to the Securities and Exchange Commission is a tricky issue for investment advisors.

Gene Gohlke, associate director of the SEC's Office of Compliance Inspections and Examinations, recently tried to ease advisors' concerns about self-reporting violations that their compliance programs catch, such as certain trading errors.

"If there were material compliance issues and the staff resolved it, why not give the local SEC office a call?" he asked the audience during a panel discussion at the Investment Advisor Compliance Forum in Arlington, Va., Friday. It was a rhetorical question: His advice was to let the agency know what happened, how it was detected and what was done to prevent a recurrence.

"More than likely, we're not going to refer it to enforcement. We'll say they have an effective compliance program; they caught it and fixed it," he said.

Regulators often cite the self-reporting of violations as an example of "extraordinary cooperation" that could mean less serious consequences for some advisors. Those who self-report may be eligible for credits when the SEC considers possible penalties and fines for regulatory violations.

The SEC's enforcement division launched a cooperation initiative in January that includes a formal framework for determining the extent of an advisor's cooperation. Enforcement staff consider such criteria as whether the advisor encouraged others to help in an investigation.

The Office of Compliance Inspections and Examinations, however, doesn't have such a bright-line framework, according to Richard Marshall, a lawyer for Ropes & Gray in New York. "It would be nice if the inspection program did what the enforcement program did and said here is the reward," he told Dow Jones Newswires.

Marshall, who also spoke on Friday's panel, told the audience that deciding whether to self-report remains "a vexing issue."

The decision often isn't straightforward, he said, and advisors should weigh several variables before making the call. One consideration is whether the SEC is already examining the advisor and likely to detect the problem anyway. Advisors who would still have to disclose the problem are better to "be a millisecond ahead" and self-report, he said.

Another consideration is whether the advisor is prepared for an array of possible consequences. "You need to follow the SEC down the road," he said. That could mean a valued team member could be barred or suspended, or an outside business associate could face other legal troubles, he said.

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