Can the SEC Disbar an Attorney?
SEC Attorney Disbarment and Disciplinary Proceedings
Last Updated: 01-10-2026
The U.S. Securities and Exchange Commission (SEC) has the authority to sanction, or “disbar,” attorneys who practice before the Commission and its staff attorneys. The SEC’s rules authorize several forms of sanctions. If the SEC has initiated an investigation into your practice of law or the legal advice you have provided to a client, it is important that you engage experienced SEC defense counsel promptly.
Why Is the SEC Investigating You?
Attorney disbarment proceedings can arise out of SEC formal investigations or SEC enforcement actions focused on a client’s potential violations of federal securities laws. In many cases, the SEC’s Enforcement Division investigates the attorney’s professional conduct as part of an investigation into the client’s possible securities law violations.
When the SEC is investigating a client and this investigation involves the attorney’s professional conduct, there are two possible outcomes: (i) the SEC concludes that the attorney did not engage in improper conduct, or (ii) the SEC determines that the attorney is also culpable and initiates its own enforcement action against the attorney. In either scenario, the SEC may decide to pursue attorney disbarment.
Unlike attorney disbarment proceedings at the state level, the SEC is not limited to pursuing disbarment as a sanction for a criminal conviction. Instead, the SEC’s rules authorize it to pursue disciplinary action against attorneys for a wide range of misconduct, and the SEC’s Enforcement Division utilizes this power widely. The same is true with regard to other professionals—including accountants and auditors—who practice before the SEC as well.
When Can the SEC Disbar an Attorney?
Under Rule 102(e), the SEC can pursue attorney disbarment proceedings under three general circumstances. Specifically, the SEC can pursue disbarment against attorneys who:
- Have been convicted of a felony or misdemeanor involving “moral turpitude”;
- Have been suspended or disbarred for professional misconduct by a state bar or other licensing authority; or,
- Have engaged in “unethical or improper professional conduct.”
Most of the time, the SEC initiates disbarment proceedings based on allegations of “unethical or improper professional conduct.” Rule 102(e) breaks down this type of misconduct into three categories:
- “Intentional or knowing conduct, including reckless conduct, that results in a violation of applicable professional standards;”
- “A single instance of highly unreasonable conduct that results in a violation of applicable professional standards in circumstances in which an attorney . . . knows, or should know, that heightened scrutiny is warranted;” or,
- “A pattern of conduct that results in violations of applicable professional standards in circumstances in which [the attorney] knows, or should know, that heightened scrutiny is warranted.”
As the SEC explains in an archived FAQ, the Commission can (and does) use Rule 102(e) to pursue disciplinary proceedings against attorneys based on a wide range of alleged forms of misconduct. Some of the most common allegations against attorneys under Rule 102(e) include:
- Assisting clients in violating federal securities laws (such as by drafting misleading SEC filings or agreements)
- Bribery of public officials and SEC personnel
- Filing false statements with the SEC on a client’s behalf
- Failing to perform adequate due diligence on behalf of a client
- Fraud
- Misappropriation of client funds
- Misrepresenting or omitting material information in oral or written statements
- Preparing false statements to be included in a client’s SEC filings
- Obstruction of justice (such as by concealing or destroying documents or providing false statements to SEC investigators)
- Perjury
Importantly, the SEC can also pursue disciplinary proceedings against attorneys (and other professionals) based on “failure to supervise” allegations. As the SEC explains, “[a] supervisor may be disciplined for failure to supervise if he or she failed to establish or enforce appropriate internal procedures, or failed to follow established policies, that would have prevented the violation.” The SEC can (and does) pursue disciplinary proceedings against attorneys based on allegations of “failure to supervise” under Rule 102(e) even in circumstances in which the attorney did not actually perform the acts at issue.
What Are the Potential Consequences of an SEC Disciplinary Proceeding?
The potential consequences of an SEC disciplinary proceeding depend on a variety of factors. These include, but are not limited to:
- The specific nature of the allegations against the attorney
- Whether the attorney previously has been subject to discipline by the SEC or a state bar
- Whether the allegations allege intentional, reckless, or negligent professional misconduct
- Whether the SEC previously has sanctioned another attorney for the same (or similar) alleged misconduct
The SEC can sanction attorneys (as well as accountants and auditors) for unethical or improper professional conduct in one of four ways:
- Censure
- Temporary suspension from practicing before the SEC
- Disbarment from practicing before the SEC (with or without permission to reapply for readmission)
- Disbarment from practicing before the SEC with a permanent ban on reapplication for readmission
When facing an SEC disciplinary proceeding, it is critical to defend against both a finding of liability and the imposition of sanctions. Even a censure can have significant professional and financial ramifications, and avoiding disbarment entirely is critical for attorneys who practice before the SEC to any degree.
What Are Your Options for Avoiding Disbarment by the SEC?
When facing an SEC disciplinary proceeding under Rule 102(e), there are two primary ways to avoid disbarment. These involve: (i) defending against the allegations on their merits, and (ii) negotiating a settlement with the SEC’s Enforcement Division.
Defending Against SEC Disbarment Proceedings on the Merits
Like the SEC’s other enforcement proceedings, disciplinary proceedings under Rule 102(e) are administrative in nature. While this means that the rules of evidence that apply in federal court do not necessarily apply, it also means that there are significant opportunities to resolve these proceedings before they go to trial. From submitting a Wells Notice in response to a Wells Letter to negotiating with SEC attorneys to resolve the allegations informally, there are several ways to pursue a favorable resolution without going to trial.
But, if it is necessary to go to trial, experienced defense lawyers will still be able to present a strong defense in front of the administrative law judge (ALJ). Attorneys who practice before the Commission have strong defenses available, and they can work with their defense counsel to clearly demonstrate why the SEC’s Enforcement Division’s assertions of unethical or improper professional conduct are misguided or unfounded.
Negotiating a Settlement with the SEC’s Enforcement Division
In appropriate cases, negotiating a settlement with the SEC’s Enforcement Division will be the best way to move forward. Often, the Enforcement Division will be willing to negotiate a settlement that ultimately results in less of a sanction than an attorney could realistically expect to receive at trial. But, even if it is clear that an attorney’s decision to settle is warranted, the outcome of the settlement negotiations will be heavily dependent on the attorney’s choice of defense counsel. When facing disciplinary proceedings before the SEC’s Enforcement Division, it is critical to work with experienced federal defense counsel who have a proven record of success in these types of matters.
FAQs: Defending Against SEC Disciplinary Proceedings
How Serious are SEC Disciplinary Proceedings Against Attorneys?
SEC disciplinary proceedings against attorneys can be extremely serious. The SEC can (and does) initiate these proceedings based on a wide range of allegations; and, as a result, attorneys can face discipline for failing to take adequate steps to protect their clients. For attorneys whose practice areas involve representing clients before the SEC, disciplinary proceedings under Rule 102(e) can result in censure or temporary suspension or permanent disbarment.
What Are the Potential Consequences of an SEC Disciplinary Proceeding?
The potential consequences of an SEC disciplinary proceeding depend on a variety of factors. These include, but are not limited to: The specific nature of the allegations against the attorney Whether the attorney previously has been subject to discipline by the SEC or a state bar Whether the allegations allege intentional, reckless, or negligent professional misconduct Whether the SEC previously has sanctioned another attorney for the same (or similar) alleged misconduct
Is Disbarment by the SEC the Same as Disbarment by the State Bar?
Disbarment by the SEC and disbarment by the state bar are two separate (albeit related) consequences that can result from unethical or improper professional conduct. If the SEC finds cause to disbar an attorney, it will impose a ban on the attorney’s ability to practice before the Commission. Along with representing clients, this also includes providing legal advice on SEC compliance matters. The SEC will also refer the matter to the attorney’s state bar for appropriate discipline—which could include state disbarment as well.
What Are the Potential Consequences of an SEC Disciplinary Proceeding?
When facing an SEC disciplinary proceeding, it is critical to defend against both a finding of liability and the imposition of sanctions. Even a censure can have significant professional and financial ramifications, and avoiding disbarment entirely is critical for attorneys who practice before the SEC to any degree.
