What Is an SEC Subpoena and Why Did I Get One?

You opened the envelope. Securities and Exchange Commission. Formal Order of Investigation. Your name. A deadline. Maybe seven days, maybe fourteen. Your first thought is probably "I need to cooperate," or "I need to explain this," or "I haven't done anything wrong." Those thoughts will destroy you.

Here's what nobody tells you about SEC subpoenas: You think your in a civil investigationYou'reur actually in two investigations at once. Research shows that 27% of SEC enforcement actions have a criminal component. That means more than one in four times, there's already a prosecutor at the Department of Justice reading every document the SEC obtains from you. The SEC is legally allowed not to tell you this. You answer there questions thinking your defending against fines and penalties. Meanwhile, you're building the government's criminal case.

At Spodek Law Group, we've seen this exact scenario destroy careers, reputations, and lives. Not because people were guilty, but because they misunderstood what was happening in the first 48 hours after that subpoena arrived. Todd Spodek and our team have handled federal securities enforcement cases from both sides. We understand the dual-track system because we've navigated it. Call 212-300-5196 the moment you receive an SEC subpoena. What you do in the next two days determines whether you have a fighting chance or whether you've already lost.

You're In Two Investigations At Once (But They Only Told You About One)

The subpoena says "Securities and Exchange Commission." Civil enforcement. You assume criminal charges aren't involved. That assumption is the trap the system relies on.

Here's how it actually works. The Department of Justice has explicit policy approving "parallel proceedings" to secure the "full range of the government's remedie,s including incarceration, fines, penalties, damages, restitution to victims, asset seizure, civil and criminal forfeiture, and exclusion and debarment." That's from the DOJ's own manual on coordination of parallel criminal, civil, regulatory and administrative proceedings. Thedeliberately y designed the system this wly.

What does parallel mean in practice? It means the SEC investigator traces suspicious trades. They collaborate with FBI agents to build "parallel" civil and criminal cases simultaneously. As the SEC investigation proceeds, they share every document they obtain through civil discovery with prosecutors in the U.S. Attorneys Office. Not sometimes. Not if things escalate. From the beginning.

The statistics reveal the scope. Research analyzing SEC enforcement patterns found that the average SEC enforcement action involves 0.56 criminal filings. That means for every two SEC cases, one person faces criminal charges. The civil label is misdirection. More than one in four cases have a criminal prosecutor involved.

Why don't they tell you? Because they dont have to. The SEC is legally permitted to conduct its civil investigation without disclosing that DOJ is involved. Courts have approved this as "entirely appropriate under the law." The first sign you might get is an SEC staff attorney mentioning that "DOJ has taken an interest." Or the first sign might be an indictment.

Your facing two enforcement tracks, but you were only told about one. The civil investigation your defending against is simultaneously feeding evidence to the criminal investigation you didnt know existed. That's not a breakdown in the system. That's how the system was designed to work.

The Civil Testimony That Becomes Criminal Evidence

There's a formal mechanism for this. It's called an "Access Request." The Department of Justice asks the SEC for copies of documents and information the SEC obtained during its civil investigation. It's not a leak. It's not a violation. It's a designed pipeline from civil discovery to criminal evidence.

Think about what this means. You sit down for an SEC deposition. Your answering questions under oath. Your thinking "this is a civil matter, I need to cooperate to resolve this." What your not thinking is that a criminal prosecutor is going to read the transcript of everything you say.

That transcript gets shared. The prosecutor reviews it. They look for inconsistencies. They compare your testimony to the documents. And then, at your criminal trial, your civil deposition testimony gets read aloud to the jury. The words you spoke trying to resolve a civil matter become the evidence that convicts you criminally.

Martha Stewart learned this the hard way. She didn't go to prison for insider trading. She went to prison for lying to investigators about allegations she was later acquitted of. The underlying insider trading charges? Dropped. The cover-up charges for the conversations with investigators? Those stuck. Five months in federal prison for statements made during the investigation.

The jury heard evidence that Stewart sat at her assistant's desk, found the record of a December 27 phone message from her broker, and altered it. She was trying to cover up a stock sale that avoided $45,673 in losses. The cover-up became the crime. Conspiracy to obstruct justice. False statements. Perjury. Convicted on all counts.

Here's the paradox that destroys people: Cooperating with the SEC to resolve the civil matter faster actually builds the DOJ's criminal case stronger. The more helpful you are without proper counsel, the worse your criminal exposure becomes. Normal world logic says cooperation shows good faith and reduces penalties. SEC world reality is that cooperation without an attorney is the fastest route to a criminal conviction.

The SEC investigator wants to build the strongest possible case. If that case has criminal potential, they want DOJ to prosecute because it makes there enforcement numbers look better. Your cooperating with an agency whose success is measured partly by how many of there cases result in criminal charges. There job is enforcement. Your job is survival.

Why The 7-Day Deadline Is Theater

The subpoena arrives. The deadline: seven days. Your first reaction is panic. How are you supposed to gather years of emails, trading records, text messages in seven days?

Here's what practitioners know: The aggressive deadline exists to separate people who panic from people who immediately hire counsel. Extensions are almost always granted. The SEC intentionally sets deadlines they know are impossible to meet. The deadline is theater. It creates urgency. It makes targets start gathering documents immediately, before talking to a lawyer. That's when mistakes happen.

SEC subpoenas are not self-enforcing. The SEC must go into federal district court to compel your compliance. The subpoena is a request backed by potential court enforcement. It's not a court order yet.

Panicked people make mistakes. They start producing documents without privilege review. They hand over attorney-client communications. They include emails that weren't even requested. They try to be "helpful." And everything they produce goes into the SEC's file and gets shared with DOJ through Access Requests.

But here's the timeline reality. The whole investigation from subpoena to resolution typically takes 2-5 years. The document production phase alone takes 2 to 6 months. The testimony phase: 3 to 12 months.

You think your facing a seven-day crisis. Your actually at the beginning of a multi-year process. The seven-day deadline creates artificial urgency to make you act without thinking. Extensions are routinely granted because the SEC would rather have a complete production a few weeks late than an incomplete production that creates spoliation arguments later.

The deadline is the first test. Do you panic and start producing? Or do you immediately retain counsel who knows that extensions are standard practice? That choice often determines whether you have any leverage left when the investigation enters its second or third year.

The Fifth Amendment Choice That Destroys Your Career

You have a constitutional right to remain silent. Fifth Amendment protection against self-incrimination. Seems straightforward. Invoke it, protect yourself, done. Except in the SEC context, invoking the Fifth Amendment loses you the civil case automatically and destroys your career permanently.

Here's how it works. In civil cases, courts are permitted to instruct juries that they may draw an "adverse inference" when someone invokes the Fifth Amendment. The Supreme Court approved this in Baxter v. Palmigiano. The Fifth Amendment "does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them."

What does "adverse inference" mean in practice? The judge tells the jury: "You may assume that if this person had answered the question, the answer would have been against there interest." In other words, you may assume they're guilty.

So you have an impossible choice. Testify, and your civil testimony gets shared with DOJ and becomes criminal evidence. Invoke the Fifth, and you lose the civil case automatically.

Lose the civil case, and what happens? If your in the securities industry, FINRA can impose an industry bar. That bar appears on BrokerCheck, which is FINRAs public database. Anyone can search it. Potential employers. Clients. Journalists. Competitors. There's no expungement process. There's no way to seal the records. There's no way to make it dissapear.

The adverse inference cascade:

• Invoke Fifth Amendment to protect against criminal exposure
• Court instructs civil jury to assume your guilty
• Lose a civil case by default
• SEC wins
• FINRA industry bar
• BrokerCheck record forever
• Career destroyed
• And you're still facing potential criminal charges

You protected yourself from criminal prosecution that might never come. You destroyed your career to do it. You'll spend mid-seven-figure legal bills defending against both tracks. Eight-figure bills are "not out of the question," according to practitioners. You can do everything right and still face financial ruin from the defense costs alone.

The system creates a trap with no clean exit. Testify, and you hand prosecutors the evidence they need. Invoke the Fifth, and you lose your career. There is no good option. There is only damage control, and the quality of that damage control depends entirely on whether you had experienced counsel in place before you made the choice.

What Happens When You Ignore It (U.S. Marshals Showed Up)

Some people think "maybe if I ignore this, it'll go away." Anthony Coronati thought that. U.S. Marshals arrested him.

Coronati received SEC subpoenas demanding documents and testimony. He decided not to comply. The SEC went to federal court under 15 U.S.C. Section 78u(c) and obtained an order compelling him to cooperate. November 2013. He still didn't comply.

On January 17, 2014, the court found him in civil contempt. U.S. Marshals showed up and took him into custody. Actual federal officers. Actual arrest. He had to post a $50,000 bond just to get released. His travel was restricted to only the Southern and Eastern Districts of New York. The court ordered him to reimburse the SEC $4,812 for their costs.

That's civil contempt. The fines accumulate until you comply. Typically $1,000 or more per day. Sixty days equals $60,000. Ninety days equals $90,000. These fines don't pause on weekends. They don't stop for holidays.

But if the court believes your non-compliance is willful, your looking at criminal contempt under 18 U.S.C. Section 401. That's up to six months in jail.

And it gets worse. If you destroyed documents or intentionally obstructed the investigation, obstruction of justice charges carry up to five years in federal prison under 18 U.S.C. Section 1512. What started as ignoring a subpoena becomes a seperate federal crime with its own penalties.

Ignoring an SEC subpoena doesn't make it go away. It escalates. The SEC petitions the court. The court issues an order. You become subject to contempt findings. The fines accumulate. The criminal contempt possibility appears. The obstruction charges get added. And depending on how badly you've obstructed, U.S. Marshals might show up at your door.

The moment you receive the subpoena, you have a legal obligation to preserve all potentially relevant documents. Emails, text messages, Slack messages, phone records, trading records, everything. Deleting anything, even accidentally, can result in obstruction charges. What started as a civil subpoena becomes criminal charges for the deletion itself, separate from whatever the SEC was originally investigating.

The Mistake Martha Stewart Made (And Your About To Make It Too)

The mistake isn't insider trading. The mistake is talking.

Martha Stewart went to prison for lying to investigators about conduct she was later acquitted of. The insider trading charges were dropped. She was convicted of conspiracy to obstruct justice, false statements, and perjury. Five months in federal prison. Not for the underlying conduct. For the cover-up.

She altered a phone message from her broker, then quickly asked her assistant to restore it. She tried to cover up a stock sale that avoided $45,673 in losses. The jury heard that her broker pressured his assistant to get "on the same page" and tell the "same story." Coordinating stories. Obstructing the investigation. That became the crime.

Most people facing an SEC subpoena make the exact same mistake. They think they can explain there way out of it. They think cooperation means talking. They think being helpful shows good faith.

Your first instinct is to call the SEC staff attorney whose name is on the letter. You want to ask questions. You want to explain. That phone call destroys cases.

Anything you say to the SEC may be used against you by the SEC and by other regulatory and law enforcement agencies, including criminal prosecutors. Let your attorney do all of the talking to the SEC so that nothing you say gets taken out of context. That's not a suggestion. That's the difference between people who survive these investigations and people who go to prison.

Lying to the SEC is a basis for felony charges under 18 U.S.C. Section 1001. Making false statements to a federal agency. Youdon'tt even have to be under oath. Just talking to them and saying something incorrect can become a federal charge if the government decides you "knowingly and willfully" made a false statement.

Todd Spodek has seen this pattern repeatedly. Clients who try to "clear things up" before retaining counsel. By the time they hire an attorney, they've already given statements that become the basis for obstruction or false statements charges. The conversation they thought would help became the evidence that convicts them.

Do not discuss with SEC investigators what documents you may have or what you may know that is pertinent ttheirre investigation. Everything you say can and will be used. Not in the criminal context you expect. In the dual-track system, both civil and criminal prosecutors are building cases simultaneously.

The First 48 Hours Determine Everything

The subpoena arrives. What you do in the next 48 hours determines whether you have any leverage left or whether you've already destroyed your case before it began.

First 4 hours: Stop. Do not contact the SEC. Do not start gathering documents. Do not talk to colleagues about what happened. Do not delete anything. Every one of those instincts will make things worse.

Next 8 hours: You need to decide if your going to treat this as the serious federal investigation it is or if your going to try handling it yourself. If you think you can explain this away, you've already lost. If you think your company's general counsel can handle this, you've misunderstood the conflict of interest. Corporate lawyers protect the company. When enforcement agencies start asking questions, the company's interest and your personal interest diverge. You need your own counsel.

Next 36 hours: Your calling attorneys who specialize in SEC enforcement defense. Not securities lawyers who do corporate work. Lawyers who have handled these dual-track investigations from both sides. Who understand how SEC and DOJ coordinate.

At Spodek Law Group, we've handled SEC investigations at every stage. We understand the dual-track system because we've navigated it from both the enforcement side and the defense side. We know how Access Requests work. We know when parallel criminal investigations are likely. We know which choices in the first 48 hours preserve your options and which choices eliminate them.

Document preservation is critical. The moment you receive the subpoena, your under a legal obligation to preserve everything potentially relevant. Emails, text messages, trading records, everything. Failure to preserve creates spoliation issues. Spoliation creates obstruction charges. Obstruction charges carry up to five years in federal prison, separate from whatever the SEC was originally investigating.

Every document must be reviewed for privilege before production. Attorney-client communications. Work product. If you produce privileged documents, you've waived the privilege. You cant get them back. And they get shared with DOJ through Access Requests.

Who talks to the SEC? Your attorney. Not you. Who talks to DOJ if they make contact? Your attorney. Not you. The SEC will try to contact you directly. They'll send you follow-up letters. They'll call. Your attorney handles all of it.

This is not a sprint. The average SEC investigation takes 2-5 years from subpoena to resolution. The document production phase alone takes 2-6 months. You need counsel who can handle a multi-year engagement, not someone who's going to bill you into bankruptcy in the first six months.

Why Your Company Lawyer Cant Represent You

Your employer has in-house counsel. You think: "I'll just use the company lawyers. They know the business. They can handle this." That thinking will destroy you.

Corporate counsel has a conflict of interest. There job is to protect the company. When the SEC starts investigating, the company's interest and your personal interest diverge immediately. The company wants to cooperate, identify the problem, fix it, and move on. If that means identifying you as the problem, they will.

Here's how it plays out. The SEC is investigating trading activity. Your employer receives subpoenas. The company's lawyers conduct an internal investigation. They prepare a report. That report gets shared with the SEC as part of the company's cooperation. If the report identifies you as the person responsible, your employer just handed the SEC there case.

The company lawyer can't give you advice that conflicts with the company's interest. If your best strategy is to invoke the Fifth Amendment, but the company's best strategy is to cooperate fully, the company lawyercan'tt advise you to take the Fifth.

The company might advance legal fees under indemnification agreements. But they can stop advancing fees if they determine your interests are adverse to the company's interests. You build your defense relying on company-funded counsel, then six months into a multi-year investigation, the company cuts off funding because your defense theory conflicts wittheirre cooperation strategy.

At Spodek Law Group, we represent individuals, not companies. When the SEC comes calling, we understand that your interest and your employer's interest are not aligned. We've seen companies throw employees under the bus to secure favorable settlement terms. We position your defense independently, based on your interests, irrespective of what the company is doing.

The enforcement statistics reveal the incentive structure. SEC investigator career advancement is measured partly by criminal referrals. The DOJ wants high-profile convictions to maintain there 93% conviction rate. Your employer wants to resolve the matter quickly. Nobody in this system has an incentive to protect you individually except your own attorney.

Call 212-300-5196 if you've received an SEC subpoena. The consultation is confidential. The advice is independent. And the strategy is based on your interests, not your employer's, not the SEC's, not the DOJ's. Just yours.

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About Spodek Law Group

Spodek Law Group handles federal securities enforcement matters, SEC investigations, and parallel criminal proceedings. We understand the dual-track system because we've handled these cases from both sides of the table. When you receive an SEC subpoena, you need counsel who knows how civil discovery becomes criminal evidence, how Access Requests work, and how to navigate investigations that can last 2-5 years.

Our mission is to provide strategic, experienced representation for individuals facing federal securities investigations. We know what your up against because we've been in these investigations. We know the mistakes that destroy cases in the first 48 hours. And we know the defense strategies that actually work when your facing both civil and criminal exposure simultaneously.

Contact us immediately if you've received an SEC subpoena: 212-300-5196. The first 48 hours determine everything.