Informative Points For Criminal Fraud Investigation and Related Securities Enforcement Investigations
Things to Know When Your Client Is Under Investigation
- Federal criminal investigations are conducted by the U.S. Attorney’s Office and the grand jury, and may or may not occur simultaneously with an SEC investigation.
- As in a criminal case, generally, your client can assert the Fifth Amendment privilege against self-incrimination as to his/her statements in an SEC investigation or litigation. This may not be true with regard to responses to SEC discovery requests.
- Securities and Exchange Commission (“SEC”) investigations are civil enforcement actions and may result in a civil Complaint being filed in federal court.
- Although SEC suits are enforcement actions, they are civil in nature and usually seek injunctive relief, disgorgement of ill-gotten gains, and civil money penalties.
- Evidence obtained during an SEC investigation or litigation may be used in a criminal prosecution.
- Statements made by a person during an SEC investigation or during litigation with the SEC may be utilized by the U.S. Attorney’s Office for a criminal prosecution.
- An SEC investigation does not automatically lead to a criminal, grand jury investigation.
- You have an opportunity during the SEC’s investigation to present reasons why your client should not be sued by the SEC.
- An SEC investigation may also result in proceedings instituted administratively, which are heard before the SEC’s administrative law judges.
- In its administrative proceedings, the SEC sometimes seeks an order barring a client from working in the securities industry, e.g. broker-dealers, stock promoters, or other clients, who have participated in an alleged scheme to defraud or to manipulate stock prices.
- The SEC can seek to bar company officers and members of boards of directors from serving in such capacity when filing suit against them based upon a fraudulent scheme or scheme to manipulate stock pricing.