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Over the past several years, the Securities and Exchange Commission (SEC) has increasingly expanded its enforcement agenda to include investigations and enforcement actions against attorneys.
The SEC investigates attorneys that deal in the securities industry or with public companies. The SEC has also recently started investigating attorneys of public companies and the securities industry for engaging in fraudulent activity on behalf of their clients. The SEC investigates for a variety of different frauds, including market manipulation, insider trading, and misappropriation of client funds.
Attorneys Committing Securities Fraud
Attorneys can commit securities fraud in a variety of ways. Securities fraud is defined as the illegal use of manipulative, deceptive, or otherwise fraudulent practices to obtain a financial advantage through the buying or selling of securities. The consequences of being found guilty of securities fraud as an attorney are serious and can include disciplinary action such as disbarment, fines, and even imprisonment.
The SEC is responsible for investigating securities fraud under the Securities Exchange Act of 1934. Under the Act, the SEC has jurisdiction over all U.S. national securities exchanges and broker-dealers, as well as over public companies.
SEC Investigation of Attorneys
The SEC investigates attorneys for a wide variety of potential frauds, including, but not limited to, the manipulation of stock prices, insider trading, and misappropriation of client funds. The SEC uses an expansive view of the term “fraud,” which can include anything from acts of deception or misrepresentation to acts of omission.
When the SEC investigates attorneys, they typically look for evidence of fraud in the attorney’s files, and they may also interview the attorney. The SEC may also look at the attorney’s financial records. If the SEC finds evidence of fraud, they can bring charges against the attorney.
SEC Penalties for Attorneys
The SEC can seek a variety of penalties against attorneys. Civil penalties can include fines and restitution. Criminal penalties can include imprisonment and fines.
The SEC may also seek disciplinary action against attorneys, including disbarment. Disbarment means that the attorney can no longer practice law. The SEC may also initiate injunctions against attorneys to prevent them from engaging in securities fraud.
Protecting Against SEC Investigations
If you are an attorney and you are facing an SEC investigation, it is important to understand how to respond. There are a number of steps that attorneys can take to protect themselves. Hire a defense team that is highly experienced in securities litigation and SEC investigations.
Reduction in pretrial jail population since NJ bail reform implementation.
Source: NJ Judiciary Annual ReportApproval rate for properly filed expungement petitions in NJ.
Source: NJ Courts Statistical ReportCommon Mistakes to Avoid
Actually Stay Silent
Most people know they have the right to remain silent but still talk to police. Anything you say can and will be used against you. Politely decline to answer questions until your attorney is present.
Bail Conditions Are Enforceable
Violating bail conditions, even minor ones, can result in immediate re-arrest and make it much harder to obtain bail again. Follow every condition to the letter.
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"Facing an SEC investigation was terrifying. The Spodek team negotiated a resolution that preserved my career and my reputation. Their knowledge of securities law is unmatched."— David A., SEC Defense Client MORE REVIEWS
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Todd Spodek
Featured on Netflix's "Inventing Anna," Todd Spodek brings decades of high-stakes criminal defense experience to every case.
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Frequently Asked Questions
New Jersey reformed its bail system in 2017. Instead of a cash-based system, judges now use a Public Safety Assessment (PSA) to determine whether a defendant should be released pretrial. Most defendants are released with conditions, while those deemed high-risk may be detained. An experienced attorney can argue for favorable release conditions at your detention hearing.
No. You have the constitutional right to remain silent and to have an attorney present during questioning. Anything you say to police can be used against you in court. Politely invoke your rights by saying "I want to speak with my attorney before answering any questions." This cannot be held against you.
Attorney fees vary based on the complexity of the case, the charges involved, and whether the case goes to trial. At Spodek Law Group, we offer transparent pricing and flexible payment plans. We provide a free initial consultation to discuss your case and give you an honest assessment of costs. Investing in quality representation often saves far more in the long run than choosing the cheapest option.
An arraignment is your first court appearance after being charged with a crime. The judge will read the charges against you, and you'll enter a plea (usually not guilty at this stage). The judge will also set bail or release conditions. Having an attorney at your arraignment is critical, as they can advocate for favorable bail terms and begin building your defense strategy from day one.
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