When Should I Hire an SEC Defense Attorney?
In recent years, the Securities and Exchange Commission (SEC) has increased its efforts to detect and prosecute those whom it suspects are violating federal securities law. This means that any persons or entities that are involved in selling or managing securities are under heightened scrutiny. Thus, it is important for anyone involved in the securities market to understand the SEC’s authority, as well as how to respond if they are contacted by the SEC.
The SEC’s Broad Authority
The SEC is the main federal agency tasked with regulating the securities industry. The SEC’s stated mission is “to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” The SEC has jurisdiction over the entire United States and also routinely coordinates with international law enforcement agencies to investigate violations of securities law that span into other countries.
The SEC is an administrative agency, meaning it is part of the executive branch of the United States government. Thus, the SEC is not a law enforcement agency in the traditional sense. However, unlike other regulatory agencies, the SEC has a great deal of power, including the ability to conduct an investigation and to enforce federal securities laws. In fact, the SEC is the only administrative agency that has the ability to initiate an enforcement action. The SEC can initiate an enforcement action in one of the SEC’s own administrative proceedings or in a federal district court.
Because the SEC is not a law enforcement agency, it cannot indict or prosecute anyone for violating federal law. However, if the SEC believes that an individual’s conduct may rise to the level of criminal conduct, it can refer that person’s case to the appropriate law enforcement agency for further action. This is one reason why it is so important for those who are under SEC investigation to take an active role in their own defense. Additionally, there are situations in which an SEC investigation can—and will—result in a criminal prosecution from a federal law enforcement agency, such as the United States Department of Justice.
How Does the SEC Enforce Securities Law?
While the SEC is not a law enforcement agency, it has broad enforcement authority. The SEC can initiate an enforcement action in one of the SEC’s own administrative proceedings or in a federal district court. If the SEC finds that an individual or business violated securities laws, it can impose sanctions in the form of limitations on the ability to trade securities, fines, disgorgement, or the barring of an individual from practicing his or her profession.
One of the most common ways the SEC begins the enforcement process is through the issuance of a subpoena. An SEC subpoena requires an individual or business to produce requested records, documents, or information. Once the SEC receives the requested information, it will review the information in an effort to determine whether the subject of the subpoena violated any securities laws.
However, even before the SEC requests the information, it has already started an investigation into the individual or company. In many cases, the SEC does not notify a subject of its investigation until it sends out a subpoena.
The Risks of an SEC Investigation
Federal securities laws are complex, and the Securities and Exchange Commission has a reputation for moving quickly. This leaves those who are under investigation by the SEC in a precarious position. The consequences of an SEC investigation can be severe. An SEC enforcement action can result in significant fines and cause irreparable damage to a company’s reputation, requiring immediate SEC defense representation.
SEC defense attorneys play a critical role in protecting their client’s rights from the very beginning of the process. Not only can an SEC attorney help a company ensure compliance with all federal securities laws, but they can also represent a person or entity that is under investigation by the SEC. The importance of retaining an experienced SEC defense attorney cannot be understated. This is because there is always the concern that the SEC will refer a matter to the Justice Department for prosecution. However, an experienced SEC defense attorney can monitor a case to ensure that does not happen or, if it does happen, will help determine the best way to move forward.
The SEC Enforcement Process
The SEC enforcement process involves a complex series of events. While an SEC investigation can start from a variety of sources, generally, an SEC investigation begins when the SEC receives a tip, a referral from another government agency, or after the agency notices a red flag. At this point, the SEC will conduct a preliminary inquiry to determine whether further action is necessary.
If the SEC determines that a person or company did not violate any federal securities law, the case will be closed. However, if the SEC believes that there may be evidence of a violation, it can open a formal inquiry. At this point, the SEC has the ability to issue subpoenas and depose witnesses without the involvement of a grand jury.
If the SEC determines that there was a violation, it can issue a civil complaint in federal court or initiate proceedings in one of its administrative courts. Depending on the violation, the SEC can also refer a case to the appropriate law enforcement agency for criminal prosecution.
When Should I Hire an SEC Attorney?
When it comes to SEC enforcement actions, timing is critical. The earlier a person or entity brings in an SEC defense attorney, the more options they have. This is because there is a point in every SEC investigation where the SEC’s approach changes from investigative to prosecutorial. Once the SEC begins to think of a case as needing prosecution, it will be much more challenging to convince the agency to take another approach.
When an SEC investigation begins, the agency will immediately begin to gather evidence. An SEC defense attorney can often intervene before the SEC determines that further action is necessary. For example, an SEC defense lawyer can conduct an internal investigation, which can help to quickly identify problems and minimize the impact of the SEC probe. In some cases, once a company identifies internal issues, it can proactively disclose them to the SEC. By proactively addressing internal issues, companies can avoid further action from the SEC.
Speak with an Attorney About How the SEC Defense Attorneys at Spodek Law Group Can Help Defend You Against an SEC Enforcement Action
If you are under investigation by the SEC, you have no time to waste. The SEC defense attorneys at Spodek Law Group have extensive experience representing clients in federal securities law matters. Our legal team consists of former federal prosecutors and other lawyers with first-hand knowledge of the process. By contacting Spodek Law Group early in the process, we may be able to help you resolve the case before the SEC files a civil complaint or refers the case to the Justice Department for prosecution. To learn more, and to speak with our attorneys about your situation, call us at 212-300-5196. You can also contact us through our secure online contact form, and we will get back to you as soon as possible.
Contact Spodek Law Group Today
If you are facing an SEC investigation or enforcement action, do not wait. Call us at 212-300-5196 or contact us online to schedule a confidential consultation with our legal team.
