Attorney-Client Privilege in SEC Investigations

When the Securities and Exchange Commission comes knocking, everything changes. Suddenly, you are living in a world where every email, every phone call, every conversation with your lawyer could become ammunition in a federal enforcement action. At Spodek Law Group, we have represented executives and companies through some of the most complex SEC investigations imaginable. We understand the terror of that moment when you realize federal regulators have your company in their crosshairs.

The privilege between you and your attorney is supposed to be sacred. That is what they teach in law school. That is what most people believe. But in the high-stakes world of SEC enforcement, attorney-client privilege operates nothing like what you were told. It is fragile. It can be destroyed in ways you never anticipated. And once its gone, there is no getting it back.

Todd Spodek has spent his career fighting for clients facing federal investigations. What we have learned is that the biggest danger to your privilege is not the SEC itself. It is the well-meaning cooperation strategies that actually expose you to catastrophic liability. Let us walk you through what you actually need to know.

What Attorney-Client Privilege Actually Protects In SEC Matters

Heres the thing most people get wrong about privilege. They think it covers everything there lawyer tells them. They think its some kind of force field that keeps the government out. Thats not how it works. Not even close.

Attorney-client privilege protects confidential communications between you and your attorney made for the purpose of obtaining legal advice. Thats it. Nothing more. It dosent cover business advice dressed up as legal advice. It dosent protect documents just because you copied your lawyer on them. And it definitely doesn't protect facts just because you told them to an attorney.

Look, the SEC knows this better then you do. These investigators are trained to find the gaps in your privilege claims. There looking for any angle to get at the communications you want to protect. And heres were it gets really uncomfortable - the burden is on you to prove privilege applies. Not on them to prove it doesn't.

In October 2025, the Sixth Circuit issued a major decision that actualy helped defendants for once. The court reversed a trial judge and held that internal investigation materials are protected when legal advice was the primary purpose. But notice that word - primary. If your investigation was basicly conducted because your auditor demanded it, or because the board wanted to know what happened, the privilege may not apply at all.

Read that again. The reason you conducted the investigation determines wheather its protected. Not what you call it. Not who ran it. The actual purpose.

And theres another thing that trips people up constantly. The privilege only covers communications - not the underlying facts. If you witnessed something, the SEC can still make you testify about what you saw. The fact that you told your lawyer about it dosent make the underlying facts privileged. Your lawyer cant turn facts into secrets just by listening to them.

This distinction destroys more privilege claims then almost anything else. People think "I told my lawyer, so its protected." No. What you told your lawyer is protected. The thing you told them about is not. The SEC can still ask you directly what happened - they just cant ask what you said to your attorney about it.

The Three Ways Privilege Dies In SEC Investigations

There are three ways your privilege gets destroyed in SEC matters. Three paths to having every confidential conversation with your lawyer become part of the public record. And your probly more vulnerable then you realize to all of them.

First: Voluntary Waiver

This is the most common and the most tragic. You waive privilege when you disclose protected communications to anyone outside the attorney-client relationship. That includes sharing interview memos with your auditor. That includes giving detailed oral summaries to SEC staff during cooperation discussions. That includes letting anyone who isnt your lawyer or your lawyers team see privileged documents.

Heres the kicker - courts have held that providing detailed oral summaries of privileged interviews is the same as handing over the documents themselves. One court found waiver when a law firm gave detailed oral summaries that were "equivalent to disclosing the lawyers memoranda and notes." So even if you never hand over a single document, you can still destroy your privilege by talking to much.

Second: Inadvertent Disclosure

When your producing hundreds of thousands of documents under an SEC subpoena, mistakes happen. A privileged email slips threw review. An attorney memo gets included in a production. And once its out there, you have a limited window to claw it back.

Federal Rule of Evidence 502 says inadvertent disclosure wont waive privilege if you took reasonable steps to prevent it and promptly tried to fix the error. But "promptly" means promptly. Courts have found waiver after delays of two months. Five months. A year and a half. The clock starts when you should have known about the disclosure, not when you actualy discovered it.

And heres what really matters - a clawback agreement wont save you if your document review was reckless. Courts have held that "a clawback arrangement might not be enough to protect against waiver when a court deems the production of privileged docs to be reckless." So you cant just agree to clawback and then do a sloppy review.

Third: Subject Matter Waiver

This one is the real killer. Once you waive privilege on one communication, you may have waived it on all communications about the same subject matter. Disclose one email about the internal investigation? You may have just opened up every email about that investigation.

The theory is that you shouldn't be able to use privilege as both a sword and a shield. You cant disclose favorable communications while hiding unfavorable ones. So if you share anything, you might be sharing everything related to it.

Once gone, its gone forever. There is no undo button.

Think about what that means in practical terms. You share one document with the SEC thinking your being cooperative, thinking your getting credit, thinking its just between you and the regulator. But that single disclosure can open up an entire category of documents. Every email in that thread. Every memo on that topic. Every communication, even tangentially related to the subject matter you disclosed.

Lawyers sometimes call this "opening the door." Once you open it, you cant close it again. And the SEC knows exactley how to make you open it wider then you intended.

Crime-Fraud Exception: When The SEC Pierces Your Shield

This is the one everyone forgets until its to late. Even if you did everything right, even if you never waived privilege, the SEC can still get your privileged communications if they invoke the crime-fraud exception.

The crime-fraud exception says attorney-client privilege dosent protect communications made for the purpose of committing or furthering a crime or fraud. And here is what makes it so dangerous in SEC cases - the SEC dosent have to prove you committed fraud to invoke it. They just need probable cause to believe the communications were made in furtherance of fraudulent conduct.

Thats the standard from US v. Zolin - the Supreme Court case that governs this. Probable cause. Not proof beyond a reasonable doubt. Not even preponderance of the evidence. Just a "factual basis adequate to support a good faith belief" that privilege was used to further wrongdoing.

Heres were it gets personal. The attorney dosent have to know there advice was being sought to further fraud. Under the exception, "the attorney need not be aware that his advice was sought in furtherance of such an improper purpose." So even if your lawyer was completly innocent, even if they had no idea what was happening, there communications with you can still be exposed.

In February 2025, the Second Circuit applied the crime-fraud exception to prevent a former CEO of a public company from blocking his outside lawyers testimony to a grand jury. The communications between the CEO and his lawyer were exposed - not because the lawyer did anything wrong, but because the client allegedly used those conversations to further ongoing fraud.

The SEC does not need your permission to pierce privilege this way. Probable cause. Thats all it takes.

And once the crime-fraud exception is invoked, the exposure can be massive. Its not just about the specific communications the SEC claims were used to further fraud. Courts have allowed extensive discovery into related communications once the exception applies. The protection you thought you had crumbles, and suddenly, your entire attorney-client relationship is under scrutiny.

What makes this especially dangerous in SEC matters is the nature of securities investigations. The SEC is almost always alleging some form of fraud or deception. Thats what securities violations usualy involve. So the crime-fraud exception is always lurking in the background, waiting to be invoked if the SEC decides your privilege claims are getting in there way.

The Cooperation Trap Nobody Warned You About

OK so heres were everything changes. Heres the thing that most defense attorneys still havent figured out, even though the SEC said it explicitly in 2025.

For years, the conventional wisdom was that you had to waive privilege to get cooperation credit from the SEC. You had to share your internal investigation findings. You had to give them the interview memos. You had to help them build there case against you in order to get leniency. That was just how it worked.

Except it wasn't ever actually true. And now the SEC has said so publicly.

At the SEC Speaks conference in May 2025, the Division of Enforcement announced a policy change that should have made headlines. The Division stated it "will not give cooperation credit for waiver of the attorney-client privilege." This was described as providing "renewed respect for the importance of the advice of counsel and the attorney-client privilege."

Let that sink in for a moment. The SEC is saying they wont reward you for waiving privilege. Waiver is not required for cooperation credit. It never was, technically, but now they are being explicit about it.

So why are companies still waiving privilege to cooperate with the SEC? Because the old mindset persists. Because defense attorneys havent updated there playbooks. Because everyone assumes the SEC still implicitly favors companies that share more.

And heres the real trap - even if waiving privilege got you nothing from the SEC, it exposes you to everyone else.

Selective waiver is dead. Multiple courts have rejected the idea that you can share privileged materials with one party while keeping them from others. When you give something to the SEC, your not giving it just to the SEC. Your giving it to every plaintiff attorney, every shareholder class action, every derivative suit that comes after.

One court specifically addressed this when a company shared investigation materials with both the SEC and the US Attorneys Office. When former employees sued and demanded the same documents, the court rejected selective waiver and ordered production. The court said the company cant have it both ways.

Every plaintiff attorney in the country can demand what you gave the SEC. Thats the reality. And there is nothing your lawyers can do about it after the fact.

The consequence chain looks like this: Share interview memo with SEC for cooperation credit. Plaintiff attorney subpoenas it in shareholder litigation. Court orders production. Your internal investigation becomes there roadmap to liability. Every employee statement becomes deposition evidence against you.

This is why the 2025 policy change matters so much. The old calculus was brutally simple - waive privilege and get SEC leniency, or protect privilege and face harsher treatment. Companies chose to waive because they calculated that SEC cooperation was worth more then civil litigation protection.

But that calculus was wrong. It was always wrong. And now the SEC has confirmed it. You dont get extra credit for waiving privilege. You just get extra exposure to everyone else who wants what you gave the SEC. The old way of thinking was destroying companies for nothing.

Privilege Logs And Document Production Landmines

And it gets worse. Even the process of protecting privilege creates risks of its own.

When you respond to an SEC subpoena, you have to identify every document your withholding on privilege grounds. Thats your privilege log. The log has to describe the nature of the withheld documents in enough detail that the SEC can assess your privilege claim - but without revealing privileged information itself.

Thats an impossible line to walk. Describe to little and the SEC will challenge your claims. Describe to much and you might waive privilege by revealing the substance of the communications. The compliance mechanism becomes the destruction mechanism.

I have seen this destroy cases. A privilege log that was to detailed. An entry that described to much about what the document contained. And suddenly the privilege is gone - not because the document was produced, but because the log revealed to much.

The SEC Enforcement Manual adresses privilege log requirements specificaly. But the rules can vary depending on wheather your a party or a non-party to the proceeding. Non-parties sometimes get more flexibility in how they substantiate privilege claims. But failure to properly document your privilege assertions can result in waiver.

Here's what makes SEC document productions especially dangerous. The typical investigation involves a "broad-based request for documents" with "circumspect" time frames. Your producing potentially millions of pages under tight deadlines. The task of sorting those materials, identifying whats responsive, and excluding privileged documents is "daunting" - thats the SECs own word for it.

One mistake. Thats all it takes. Miss one document in your privilege review and it goes out. Fail to claw it back fast enough and its waived. Create a sloppy privilege log and you might waive anyway.

The clock is already running.

And lets talk about what happens when the SEC challenges your privilege log. They can - and they do - contest your privilege claims document by document. If they think your log is insufficent, they can ask the court to compel production. If they think your claims are overbroad, they can seek in camera review where a judge actualy looks at your supposedly privileged documents.

That in camera review is terrifying. A federal judge, reading your confidential attorney communications, decides whether you really deserve protection. And if the judge disagrees with your privilege claim? Those documents go straight to the SEC. No appeals, no second chances, no protection.

Protecting Privilege Without Sacrificing Cooperation Credit

Heres the good news finaly. You can protect privilege and still get full cooperation credit from the SEC. The two are not in conflict - not anymore, if they ever were.

The 2025 policy shift from the SEC Division of Enforcement confirms what smart practitioners always knew. You dont have to waive privilege to cooperate. You dont have to share interview memos. You dont have to destroy your protection against civil litigation to get leniency from the regulator.

So what can you do?

Provide factual information without legal analysis. You can tell the SEC what happened without telling them what your lawyers think about it. Facts are not privileged. The underlying events are not privileged. Only the confidential communications seeking or providing legal advice are protected.

Share high-level conclusions, not detailed summaries. Courts have indicated that providing "high-level conclusions or impressions" from interviews would not result in work product waiver. Its the detailed oral summaries that create problems. Stay at the conclusion level.

Negotiate document production carefully. The SEC and your counsel can work together to narrow production scope, exclude potentialy privileged categories upfront, and minimize the burden of privilege claims. The party issuing a subpoena "should seek to minimize the burden of privilege claims on the non-party."

Get clawback protections in place early. Before any document production, negotiate a clawback agreement and seek a Rule 502(b) protective order. This provides additional protection against inadvertent disclosure - though its not a substitute for careful review.

Conduct internal investigations with privilege in mind from day one. The Sixth Circuit decision makes clear that investigations protected by privilege are those conducted primarily for legal advice purposes. Make sure thats documented. Make sure non-lawyers are not running the show. Make sure the purpose is clear.

This is what they dont tell you - you can be fullycooperative while holding firm on privilege. The SEC said it themselves. In 2025. No waiver required for full cooperation credit.

When Privilege Is Already Compromised - Damage Control

Maybe its already to late for prevention. Maybe you already shared information with the SEC. Maybe privileged documents already went out in production. Maybe your reading this article and realizing mistakes were made.

Heres were Spodek Law Group can help.

Look, we have seen this before. We have represented clients who came to us after privilege was already compromised. The situation is never hopeless, but every day you wait makes it worse.

If inadvertent disclosure happened, the first step is immediate action to claw back the documents. Federal Rule of Evidence 502 may protect you - but only if you act promptly and can show you took reasonable steps to prevent disclosure. Document everything. Notify the SEC immediately. Demand return of the privileged materials.

If you waived privilege to the SEC, the damage control is more complex. You need to assess the full scope of waiver - what else might be covered by subject matter waiver. You need to prepare for the civil litigation that will inevitabley seek those same materials. You need to develop a litigation strategy that accounts for what opponents now have access to.

If the crime-fraud exception is being invoked against you, thats a whole other level of fight. You need counsel who understands how to challenge the showing of probable cause, how to limit the scope of any exception finding, and how to protect what can still be protected.

At Spodek Law Group, we handle SEC enforcement matters at the highest levels. We understand privilege protection not just as a legal doctrine but as a practicle reality in federal investigations. We know how the SEC operates, what there staff is looking for, and how to protect our clients interests while maintaining credibility with regulators.

If your facing an SEC investigation and worried about privilege - or if privilege has already been compromised - call us at 212-300-5196. Every day you wait makes it worse.

The privilege you lose today cannot be recovered tomorrow.

Do not let cooperation destroy what protection you have left.