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SEC Investigations 101

By Los Angeles Criminal Defense Attorney on August 20, 2022

The SEC investigates various types of cases and charges to ensure optimal functioning of the securities markets. If you are currently being investigated by the SEC, you’ll want an experienced attorney on your side to help you understand and protect your rights.

What Is the SEC and What’s Its Mission?

SEC refers to the Securities and Exchange Commission. The SEC is an independent federal government regulatory agency that protects investors, by ensuring that a fair functioning of the securities markets is maintained. It aims to ensure public transparency and preclude manipulative practices in the Market. The SEC can bring civil actions against lawbreakers and works with the Justice Department on criminal cases.

What Types of Cases/Charges Do They Investigate?

The common violations that the SEC investigates include:

  • Misrepresentation or omission of important information about securities
  • Manipulating the market prices of securities
  • Stealing customer’s funds or securities
  • Violating a broker’s responsibility to treat customers fairly
  • Insider trading (violating a trust relationship by trading on material, nonpublic information about a security)
  • Selling unregistered securities

What Do SEC Investigations Look Like? What Are the Steps?

The SEC obtains evidence of possible violations of the securities laws from many sources. This may include market surveillance activities, investor tips and complaints, other Divisions and Offices of the SEC, self-regulatory organizations and other securities industry sources, and media reports.

SEC investigations are a private undertaking. First, facts are collected to the extent possible through informal inquiry. This includes examining brokerage records, interviewing witnesses, reviewing trading data, and so forth.

When a formal order of investigation is made, witnesses may be compelled by subpoena to testify and produce relevant documents and information. Once an investigation has been conducted, the SEC presents its findings to the commission for review. If the commission approves, the SEC staff can file a case in federal court or may alternatively bring an administrative action. It’s common for the commission and the accused party to settle matters without the need for a trial.

Learn Your Rights While Being Investigated – How Can a Lawyer Help?

 If you or your company are being targeted by the SEC, you must defend yourself, which requires you to understand your rights. The penalties can be substantial and criminal prosecution by the U.S. Department of Justice (DOJ) may lead to long term imprisonment.

Werksman Jackson & Quinn LLP have a wealth of knowledge in criminal matters, including your rights when actions are undertaken by the SEC. It’s essential that you have an expert lawyer on your side. Contact Werksman Jackson & Quinn LLP at (213) 688-0460.

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Posted in: Criminal Law