Professionals in the financial industry must navigate a series of complex and nuanced laws and regulations, many of which appear to shift or change shape with relative frequency. It can be challenging to keep up with the latest developments and updated regulations, and you may find yourself named as the subject of an investigation by the Securities and Exchange Commission (SEC) or other regulatory body. Whatever the specifics of your situation may be, it’s natural to feel anxious and intimidated in the face of such serious allegations of securities fraud or other forms of securities noncompliance. The SEC investigation process can be time-consuming and slow-moving, so it’s important to understand what to expect during the weeks and months ahead. The SEC’s Enforcement Division works with the Commission to determine whether to “bring civil actions in federal court or before an administrative judge.” In some cases, the Commission may decide to initiate both proceedings. As daunting as these accusations may be, it’s essential to recognize that you have legal rights and options during the SEC investigation process. Enlisting the guidance and trusted legal counsel of an experienced SEC compliance attorney is the best way for you to make informed decisions with greater certainty and confidence. This post will provide a general overview of the SEC investigation process and some of the steps you can take in the face of accusations of securities fraud or allegations of securities noncompliance to maximize your chances of obtaining a fair and favorable outcome.
Understanding the SEC Investigation Process
The SEC, along with a few other regulatory bodies like the Financial Industry Regulatory Authority (FINRA), aim to “protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” To this end, the SEC looks for any violations that could harm or compromise investors, such as: “Misrepresentation or omission of important information about securities; manipulating the market prices of securities; stealing customers’ funds or securities; violating broker-dealers’ responsibility to treat customers fairly; insider trading (violating a trust relationship by trading on material, non-public information about a security; or, selling unregistered securities.” According to the SEC, all investigations are conducted privately. The Enforcement Division gathers facts and evidence, which may include witness interviews, documents and records, trading data, or information gathered by subpoena. Once the Enforcement Division has completed the investigation, it will present its findings to the Commission to review. The Commission then decides whether to file a case in federal court, bring an administrative action, or pursue both actions. Depending on the proceedings, the subject of the SEC investigation may be ordered to pay civil monetary penalties, forfeit their position as a corporate officer or director, or forfeit their broker-dealer or investment advisor registrations, among other consequences. However, as worried as you may feel at the start of an SEC investigation, you do not have to navigate this process alone. Working with a dedicated and experienced SEC compliance lawyer can give you the support and reassurance you need to move through each step of the process with greater confidence.
What to do When Under Investigation by the SEC
There’s no way around it—receiving a phone call or letter informing you that the SEC is launching an investigation into allegations of securities noncompliance or other accusations of wrongdoing can be disorienting and concerning. Suddenly, your professional future and reputation become vulnerable, and you may wonder, “what are my rights when under SEC investigation?” Before you assume the worst-case scenario, take some time to focus on some concrete actions you can take to face the upcoming days, weeks, and months with greater poise and equanimity.
Contact an Experienced Securities Law Attorney Right Away
The most important step you can take as soon as you become aware of a pending SEC investigation into allegations of wrongdoing on your part is to contact a seasoned securities law attorney to work alongside you at every step of this process. While it may be tempting to attempt to explain your way out of the accusations on your own, consulting with your attorney can prevent the investigators from using any statements you make to further support their case against you. Your attorney will assess the specifics of your situation and develop a sound legal strategy that protects your best interests as strongly and effectively as possible. An experienced and knowledgeable SEC compliance lawyer understands how to handle requests from regulators, object to inappropriate questions, and negotiate with regulators on your behalf. With a dedicated attorney by your side, you can rest assured that your future and reputation remain in good and safe hands.
Recognize That an Investigation is Not an Enforcement Action
Learning that the SEC is investigating you can lead you to assume the worst. However, an investigation is just that—an inquiry process that does not necessarily lead to formal civil or administrative proceedings. In some cases, the investigation ends because of insufficient evidence. You may receive a warning, which concludes the entire matter. However, it’s also important to prepare for the investigation to lead to further proceedings for enforcement actions. It’s helpful to work with your SEC compliance attorney to prepare for how to navigate the potential outcomes of your situation.
Stay Organized and Focused on the Task at Hand
The SEC investigation process can take a considerable amount of time to move forward. One of the most difficult aspects of this process is the uncertainty it brings. It’s important to find sources of support to help you cope with uncertainty more effectively, such as practicing mindfulness or discussing your concerns with a mental health therapist. Moreover, your trusted and experienced securities law attorney will remain by your side to answer your questions, address your concerns, and guide you through every phase of the investigation process.
If you have just learned that the SEC is investigating you or your business, you need reliable and effective legal counsel as soon as possible to start understanding and defending your rights. Contact Judex Law, LLC, today at (303) 523-4022 to discuss your options with a highly qualified and experienced securities law attorney who will advocate for your best interests at every opportunity.
