- Can a State Investigate Me as a Registered Representative, an Investment Adviser or an Insurance Salesperson?
- Are Parallel Investigations a Possibility?
- Can I Be Investigated by Multiple States at Once?
- Can I Be Investigated by State(s) Contemporaneous With an SEC Investigation?
- Can a State Regulator Refer My Case to the SEC?
- If I Am an Investment Adviser, When Might a State Have Jurisdiction Over Me?
- What Are Some Reasons a State Regulator May Investigate Me?
- What Happens if a State Sends Me a Subpoena?
- What Should I Do if I Receive a Subpoena From a State Regulator?
States can regulate you through their respective regulators in the securities and insurance industries. For example, New York State’s securities regulator is the Department of Financial Services (DFS) and New Jersey’s securities regulator is the NJ Bureau of Securities. Both also have divisions exclusively dedicated to insurance and other consumer issues.
Yes. In fact, you could be regulated by civil and criminal Federal regulators, the SEC, FINRA and various states. The likelihood that they would all get involved in the same matter is often a question of the size of the issue and whether they want to coordinate their investigations or not.
Yes, this is a possibility that if you conduct business in multiple states, if you have an issue in one state, another may be tipped off and investigate similar issues in another state.
Yes. However, if you are an investment adviser, the answer is dependent on your assets under management (AUM), unless an exception applies.
Yes, the SEC may receive referrals from various sources, including state regulators, (as well as SROs, like FINRA).
If your AUM is under the $100 million threshold, you generally must be registered with your state, which empowers that state to assert authority over you regarding securities law violations. If you do not register, you may have issues for failing to register.
State regulators may investigate a financial advisor for various reasons, including but not limited to selling securities without a license, acting as an unregistered broker/dealer, failure to register as an investment advisor, violations of Blue Sky Laws, insider trading, market manipulation, and disclosure or reporting failures.
A subpoena is a document that contains specific requests for documents and information, as well as can be for testimony. It is important to respond to subpoenas or the consequences for default can escalate to a bar in the state and/or civil and criminal penalties.
You should contact a securities lawyer, like the lawyers at Malecki Law, to understand what is being asked of you and to avoid saying the wrong thing so to speak. You do not want to cause more issues for yourself. A well-versed lawyer in the financial industry will first help by reviewing, interpreting, and explaining the requests to you. Then, the lawyer will draft responses to the regulator’s requests. You will likely need to find/obtain responsive documents that will be produced. The lawyer will then compile and organize these documents and then will ultimately produce them to the state regulator, on your behalf.