SEC Subpoenas & Regulatory Investigations
From Jenice's interview for the Masters of the Courtroom series on ReelLawyers.com.
It can be unsettling to receive a subpoena or request for information from any governmental or regulatory authority, such as the SEC. Whether you are an industry participant or just a person in the United States, the SEC can and will subpoena you if you are potentially a witness in or a target of an SEC investigation or complaint. Malecki Law’s team of experienced New York SEC regulatory attorneys are here help anyone who receives an SEC subpoena.
SEC subpoenas are a common part of the securities regulatory landscape. Anyone, anywhere, can be subpoenaed by the SEC if they worked at a company that is under investigation, traded in a stock that may seem to be manipulated, is believed to have traded on inside information and under many other scenarios. The SEC does not only have jurisdiction over the financial world’s employees, but it can also subpoena anyone who is potentially the target of or may have helpful information related to an SEC investigation.
SEC subpoenas also require witnesses to give documents and possibly testimony. If you are served with a subpoena, it will contain the details regarding where and when you need to testify, but the subpoena will not have any detailed information regarding what you are being called to testify about. Prior to giving testimony, you could be asked to submit documents regarding certain businesses, individuals, transactions, etc., and these documents, along with those submitted by others, will potentially come up during the testimony.
Individuals are typically contacted by the SEC for two reasons: 1) You are the subject of its investigation; or 2) They believe you may have valuable information related to its investigation of an entity or someone else. In either case, you may be subpoenaed to provide documents (called a subpoena “duces tecum”) or to testify (called a subpoena “ad testificandum”), or both.
The SEC starts with something called a “Formal Order of Investigation” and Malecki Law gets that document immediately upon engagement. It tells us a little more about what is going on. Then we call the SEC and try to get as much information as possible. Malecki Law will also work with the SEC to narrow the document requests if possible.
You should not talk to other potential witnesses as it can be seen as compromising your testimony, but it is not prohibited for your lawyer to speak with another witnesses lawyer, without compromising your testimony.
In advance of the OTR, you may be required to provide documents related to certain transactions, individuals, businesses, etc. that you will likely be questioned on in your OTR. You also may be questioned on documents or testimony provided by others. You will also be required to fill out a background questionnaire. All these steps really need the caring hand of an experienced New York SEC regulatory attorney, so you can push back where the SEC is too invasive, and properly respond where required.
Most importantly, Malecki Law has extensive experience preparing witnesses to testify. Testimony is not a simple conversation, there are certain testimonial “rules” you need to know. Thorough preparation is the most important thing to do before you testify and if done correctly, could possibly avoid future action by the regulator. Being fully prepared when responding to both subpoenas for documents and/or for testimony is of the utmost importance.
What you say, while typically just ordinary words, takes on a whole new meaning now that you are part of an investigation, and your words could potentially be used against you in civil or criminal proceedings. We carefully determine with allied criminal lawyers whether you should plead your Fifth Amendment rights against self-incrimination. You need to be careful of saying something that might expose you to legal liability, despite your words seemingly harmless nature. Words in a legal proceeding often take on enhanced meaning than in everyday life as you may use them.
It cannot be stated strongly enough that getting securities SEC regulatory lawyers in New York like Malecki Law is infinitely better than trying to “do it yourself.” Lawyers can speak to each other frankly (i.e., Malecki Law’s lawyers and the SEC lawyers) whereas the SEC staff cannot talk to you the same way, i.e., influence a witnesses testimony, give them legal advice or fear that a witness could twist their words. There are unwritten rules of testimony we prepare our clients to be prepared for, so they come off confident, polished, professional and credible.
Bluntly, the SEC is acting through a lawyer, so should you. Malecki Law’s experienced SEC regulatory law firm in New York has the experience to help you through this process, we have the credibility with the SEC, so as to get you the best possible resolution – or to make it go away completely if that is possible under the circumstances. Do not become an “easy mark,” unrepresented by counsel.
Consulting with an experience attorney could be the best move that you make when faced with such a potentially life-changing event. The attorneys at Malecki Law have experience representing individuals in regulatory actions before FINRA as well as the SEC. Having an experienced counsel can greatly determine the outcome in your favor.
After you have answered your subpoena and appeared to testify, the SEC has different courses of action: (1) the SEC may decide not to take any further testimony or action against you; (2) the SEC will allow you to respond to (provide a “Wells Notice”) or settle what they feel is wrongful conduct; or (3) the SEC could bring formal charges. The possibility of civil or criminal legal action (usually via the U.S. Attorney) should be a primary concern of yours. The severity of penalties you could potentially be facing includes possibly losing your securities licenses if you are in the industry, spending a great deal of money on legal defenses and could cost you your job and your livelihood, as well as being encumbered with hefty fines. While you may hope no further actions are taken, you need to be prepared for the worst to obtain the best result.
Malecki Law SEC lawyers aggressively negotiate with the SEC on your behalf and have successfully convinced the SEC not to pursue their clients or obtained favorable results in settlements and hearings. We know the SEC’s required standards, weaknesses and limits to do this, both legally and factually as we leave no stone unturned in your case.
The magnitude of the potential penalties you may be facing can include substantial fines, as well as losing your license and your livelihood. So, from the moment you receive a subpoena, your focus needs to be on protecting yourself, your savings, your reputation, and any license(s) you have. SEC complaints and settlements are high-value web search items and can follow you around forever, so it is best to deal with them skillfully with experienced counsel from the earliest possible time.
For further reading, please check the following blog posts:
- Why should I give the SEC everything they have requested?
- The SEC called me, should I talk to them?
- What is the Difference Between a SEC Subpoena and a FINRA 8210 Request?
- I Received a Subpoena from the SEC – What Will I have to Produce?
- How Long Does The SEC Subpoena Process Take?
- Common Types of SEC Investigations That May Result in You Receiving a Subpoena
- I Just Got An SEC Subpoena: Now What Happens?