10 Facts to Consider When the SEC Knocks

As we have repeatedly told you, speaking with an investigator before talking to your attorney is never a good idea regardless of your innocence.

There is a lot at state if you are under investigation for criminal fraud.

Consider the following:

1. Federal criminal investigations are conducted by the U.S. Attorney’s Office and the grand jury.   A Federal criminal investigation may or may not occur simultaneously with an SEC investigation.

2. Generally, you client can assert your Fifth Amendment privilege against self-incrimination during an SEC investigation or litigation. This may not be true with regard to responses to SEC discovery requests.

3. Securities and Exchange Commission (“SEC”) investigations are civil enforcement actions and may result in a civil complaint being filed against you in federal court, subjecting you to possible civil money penalties, and disgorgement of any profit which you allegedly received.

4. Evidence obtained during an SEC investigation or litigation may be used in a criminal prosecution.

5. Any statements made by a person during an SEC investigation or during litigation with the SEC may is fair game for the U.S. Attorney’s Office to use in a criminal prosecution, yet another reason why you should keep your mouth shut.

6. An SEC investigation does not automatically lead to a criminal, grand jury investigation, but you should still seek the advice of an attorney if you are faced wth an SEC investigation.

7. Your attorney will have an opportunity during the SEC’s investigation to argue why you should not be sued by the SEC.

8. An SEC investigation may also result in administrative proceedings against you, which are heard before the SEC’s administrative law judges.

9. In an administrative proceedings, the SEC may seek an order prohibiting you from working in the securities industry if you even participated in an alleged scheme to defraud or to manipulate stock prices.

10. If you serve as a company officer or member of the board of directors the SEC can seek to prohibit you from serving in this capacity if they sue you alleging a fraudulent scheme or scheme to manipulate stock pricing.

By: South Carolina Federal Defense Attorney Pete Strom