To compel you to provide testimonial and documentary evidence involving an investigation, then the commission needs to tell its staff to issue subpoenas through a formal order of investigation. Keep in mind that a formal order of investigation outlines the form of an investigation authorized by the commission. It usually states publicly available information about the entities and people involved in the investigation, identifies the relevant statutes and rules that you may have violated, and many more.
The federal securities laws allow the SEC to give the subpoena to force you to give testimony or documents. An SEC subpoena can be issued to you to provide records that are considered to be relevant to the investigation. This article discusses the best way to handle an SEC subpoena.
Find out why the SEC has issued a subpoena
Many people can receive subpoenas from the SEC if you are under investigation by the SEC or the SEC believes you may have valuable information associated with the ongoing investigation. In most cases, it can be confusing when you receive the SEC subpoena, leaving you wondering why the SEC is looking for you.
Therefore, you need to find out if you are either the target of this investigation or there is someone else. Also, check if it’s a company you worked for that they are investigating. The title of the subpoena can tell you the focus of the investigation. This can sometimes be vague but it may give you a clue. Ideally, you need to think about any connection you have with the activity or entity listed.
Contact an experienced attorney
The subpoena that you get from the SEC can be the first one. Therefore, if you have never received one before, it can be hard to know all the protections available for you. This applies to the protection available when you are testifying and producing documents. Because of this, it’s quite easy to get into more trouble when you attempt to handle the situation yourself.
While you can deal with an SEC subpoena yourself, it’s a good idea to consult an experienced lawyer. You should remember that the SEC can speak more freely and candidly with a lawyer than someone who is a target or witness. The SEC usually makes sure that they are not accused of being misquoted or tampering with a witness. Having a lawyer can also be a great way to get more information from the onset rather than handling it yourself and lose sleep.
Prepare your response
The SEC can subpoena you so that you can testify or hand over documents or even both. Regardless of the kind of subpoena you get from the SEC, you need to understand the documents that you receive. When the SEC asks you to testify, it’s usually called on the record interview.
Subpoenas for this type of testimony can inform you where and when you will need to appear to testify. In rare situations will they give you any specific details about the questions they will ask you. You may need to hand over the documents specific to certain deals, entities, people, security transactions, and many more which will be relevant to the questions you will be asked.
There is also a good chance that they may ask you questions about the documents other individuals produced or even the testimony that other individuals gave to the SEC. The good news is that subpoenas for documents can be straightforward and show the specific kinds of documents that you need to avail to the SEC by a specific date.
It’s also important to remember that the documents the SEC requests you can already contain several of the requested documents, though others may not. This is because the SEC has a wide range of subpoena power. Just because you fail to give them some of the documents, it doesn’t mean they cannot get them. Likewise, the SEC may cover a broad range of requests, so this request may later need to be narrowed.
The formal order of investigation
it is necessary to have a copy of the formal order of investigation as this will give you more information about the investigation. This formal order of investigation can include what and who is the main target.
You can usually request this in writing from the SEC. The information placed in the formal order can be useful in figuring out whether or not you are being targeted or you are a potential target or just a witness.
Comply with the subpoena
To comply with the subpoena, you need to hand over all the documents asked for, appear for the on-record interview at the place and time indicated, or even both. When testifying or producing documents, you must avoid testifying about things that are protected or privileged. A common privilege refers to the lawyer-client privilege.
So under this privilege, there are certain communications between you and the attorney that can be protected as confidential and cannot be given to the SEC. There can also be others depending on your situation that may or may not apply.
Find out if there are charges
When you respond to the subpoena or appeared at your on-record interview, the SEC can decide to charge you through a securities law violation or they can decide to drop the charges against you. Not pursuing the charges can be a better thing for you because charging you is usually pretty serious. They can pursue you criminally or civilly. While the SEC deals with civil actions, criminal charges are usually handled by the United States Attorney’s Office.
Quite often, the SEC usually pursues civilly for many individuals in an official proceeding but before an administrative law judge or they can do it in court. If they are pursuing civilly, it means the SEC is looking for a license suspension or money from you.
On the other hand, if they are pursuing criminally, you can face several criminal punishments, like jail time. So when they tell you that you are facing criminal charges, make sure that you get a criminal defense attorney.