Will SEC Investigation Become Public?

Table of Contents

• What is the SEC?
• What is an SEC Investigation?
• What is a Formal SEC Investigation?
• Are SEC Investigations Confidential?
• Are SEC Investigations Public?
• Are SEC Disclosures Public?
• How Can We Help You Protect Your Reputation?
• Contact Us Today

Experienced SEC Defense Team

The SEC has broad discretion to investigate individuals and companies suspected of violating securities laws and regulations.

The SEC also has broad discretion to make those investigations public through the issuance of subpoenas, when requesting testimony, and when publishing the investigation online.

Because of the significant costs associated with being a target of an SEC investigation and the possibility of the investigation becoming public, it is important to retain experienced SEC defense counsel as soon as you are contacted by the SEC or believe you may be under investigation.

At Spodek Law Group, our SEC defense attorneys understand the importance of protecting and defending our clients’ reputations during an SEC investigation. Our legal team is available to discuss your concerns and help protect your reputation.

Do not wait for the investigation to become public. Call our SEC defense team at 908-643-7005 or email us today.

Put Spodek Law Group on your side to fight for your reputation.

What is the SEC?

The U.S. Securities and Exchange Commission (“SEC”) is an independent regulatory agency whose mission is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.

The SEC was created after the Securities Exchange Act was passed in 1934—making the SEC one of the oldest regulatory agencies in the United States.

The SEC is charged with overseeing the securities industry including stock exchanges, broker-dealers, investment advisors, investment managers, and investment funds among others.

The SEC is comprised of five Commissioners with the ability to delegate duties and administer its rules and regulations through other divisions. It has three primary functions: rulemaking, enforcement and examinations, and investor education.

What is an SEC Investigation?

The SEC is charged with enforcing the securities laws of the United States. It has broad authority to investigate any suspected violations of the federal securities laws by any persons or entities. These suspected violations include insider trading, accounting fraud, and providing false or misleading statements about securities to investors and the public.

As part of this authority, the SEC can open an informal investigation into these alleged violations. An informal investigation is a confidential, non-public investigation conducted by an SEC staff member.

The informal investigation commences the process of collecting information and evidence regarding a suspected violation of a federal securities law and whether the suspected violation rises to the level of a possible securities fraud.

The SEC staff can initiate an informal investigation without the approval of the SEC and can conduct it at the SEC staff’s discretion.

What is a Formal SEC Investigation?

A formal investigation is the next stage of the investigation process initiated only after the informal investigation phase is complete. A formal investigation is also a non-public investigation but is conducted only after the SEC staff obtains a formal order from the SEC.

The formal order is known as the Formal Order of Private Investigation. It is the process the SEC staff undertakes to obtain more information regarding the nature of the alleged violation and possible individuals who may have knowledge of the alleged violation.

The formal order typically authorizes the staff to administer oaths and affirmations, subpoena witnesses, and require production of records and testimony as part of its evidence collection process.

If the SEC staff discovers evidence of a securities fraud violation during the investigation, the SEC staff can recommend the initiation of a civil enforcement action, which can be conducted either through a civil action in federal court or through an administrative proceeding.

If a violation is suspected, the SEC will often attempt to settle the matter with the individual or entity prior to proceeding with the initiation of a civil action.

If a settlement is not possible, the SEC will typically file a complaint in federal court seeking injunctive relief, civil monetary penalties, and/or disgorgement of profits, among other remedies.

Are SEC Investigations Confidential?

The SEC has broad discretion to make its investigations public or to keep them confidential. This discretion is not only granted to the SEC through the statutes it enforces but also through the SEC’s own internal rules.

Rule 5(b) of the SEC’s Rules Relating to Investigations state: “Unless otherwise ordered by the Commission, no information or documents obtained pursuant to any subpoena or other written request for information shall be made available to anyone other than the Commission, any officer, employee or agent of the Commission, and any other person as permitted by law.”

This provision makes it clear that the SEC can publicize its investigations. However, it is more likely that the SEC will maintain the confidentiality of the investigations, particularly during the initial phases of the investigation.

As noted above, the SEC staff can also attempt to settle the investigation with the individual or entity prior to proceeding with a formal action. Even during this stage, the SEC will typically seek to keep the investigation confidential.

Are SEC Investigations Public?

If the SEC does decide to initiate a formal action, the SEC has broad discretion to publicize the investigation. The SEC can disclose the investigation through the issuance of subpoenas, requesting testimony, and publishing the investigation online.

For instance, the SEC can issue subpoenas to third parties, such as a company’s auditors, investment managers, partners, investment funds, and other individuals or entities.

The SEC has the authority to subpoena any person or entity that it believes may have information relevant to the investigation. The SEC can also request testimony from a party suspected of violating the federal securities laws or even those parties that may have relevant information.

Lastly, the SEC can disclose the investigation online. The SEC has the authority to publish the investigation online on its website, sec.gov, as well as through press releases announcing the investigation, which are also available on its website.

Are SEC Disclosures Public?

Yes, the SEC does disclose investigations to the public. This is particularly evident in the SEC’s publication of investigations and press releases announcing the investigation on its website. These investigations and press releases are available to the public.

If you are the target of an SEC investigation, you are likely concerned that the investigation will become public. That is one of the costs of doing business. There is nothing you can do to stop the SEC from making the investigation public.

However, there are ways to mitigate the damage to your reputation.

First, you can hire an attorney experienced in defending against SEC investigations. The attorney can help protect your reputation and defend you against the investigation.

Second, you can be proactive and take steps to protect your reputation. For instance, you can take steps to ensure your company has proper internal controls in place to prevent future violations of the federal securities laws. You can also create a plan for how to respond to an SEC investigation and make sure your company has a plan in place for responding to such an investigation.

How Can We Help You Protect Your Reputation?

If you are a target of an SEC investigation, the last thing you want is for the investigation to become public. It will likely have a devastating effect on your reputation and the reputation of your company.

To protect your reputation and to defend yourself against the investigation, you need to hire an experienced SEC defense attorney as soon as possible. The SEC defense attorneys at Spodek Law Group have experience dealing with the SEC and are available to discuss your concerns.

Our legal team is experienced with handling SEC matters in the following ways:

• We can help you understand the scope and purpose of the SEC’s investigation;
• We can help you respond to SEC requests;
• We can help you respond to SEC subpoenas;
• We can help you protect your reputation and defend against the investigation;
• We can advise you against responding to SEC requests if doing so would implicate your Fifth Amendment rights;
• We can help you negotiate settlements with the SEC if necessary;
• We can help you prepare for SEC enforcement actions if necessary; and
• We can help you avoid criminal liability if necessary.

Contact Us Today

If you are under investigation by the SEC or believe you may become under investigation, call 908-643-7005 or email us today for a free and confidential consultation.

Do not wait until the last minute. The SEC has broad discretion to investigate and prosecute securities law violations and to publicize its investigations. Do not give the SEC the upper hand. Take action today.

The SEC defense attorneys at Spodek Law Group are available to discuss your SEC investigation and concerns about the investigation becoming public. Call us today at 908-643-7005.

Todd Spodek, founder of Spodek Law Group, focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.