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The Securities and Exchange Commission (SEC) is responsible for enforcing federal securities laws and protecting investors from fraud and misconduct in the financial market. SEC violations occur when individuals, businesses, brokers, executives, or investment professionals fail to comply with these laws and regulations. While many SEC matters begin as civil investigations, some can ultimately lead to criminal prosecution by the Department of Justice (DOJ).
If you are contacted by the SEC or become the subject of an investigation, understanding the process and obtaining guidance from an experienced SEC Violation Lawyer can be critical to protecting your future.
The Most Common SEC Violations
The SEC receives thousands of reports each year. Here are the most common violations it pursues:
- Insider Trading: This occurs when an individual with information that is not available to the public buys or sells a security, giving them an unfair advantage in the market. Insider trading applies to corporate officers, employees, attorneys, accountants, and anyone who receives confidential information, even unintentionally.
- Accounting Fraud: This involves the manipulation of financial statements to deceive investors, such as inflating revenues, concealing expenses, or misrepresenting assets. These actions undermine the integrity of financial markets.
- Ponzi Schemes: These fraudulent investment schemes promise high returns but use funds from newer investors to pay earlier ones rather than generating legitimate profits. These cases are prosecuted at the federal level with virtually unlimited government resources.
- Market Manipulation: This involves artificially inflating or deflating the price of a security for personal gain, such as “pump and dump” schemes or concealing financial information about a company.
- Investment Fraud: Any scheme that promises high returns but fails to deliver, including misrepresentations to investors, improper use of offshore accounts, and false press releases.
What Are the Consequences of an SEC Violation?
If the SEC concludes that a violation occurred, it may file an action in federal district court or pursue an administrative proceeding. The district court may order severe monetary penalties, disgorgement of ill-gotten gains, injunctive relief that shuts down business activities, and a ban on serving as an officer or director of a public company. In fiscal year 2019 alone, the SEC obtained judgments totaling more than $4.3 billion in disgorgement and penalties.
While the SEC primarily pursues civil enforcement, it can, and regularly does, refer cases to the U.S. Department of Justice (DOJ) for criminal prosecution. A criminal conviction can result in overwhelming fines and decades in federal prison. If you are under investigation, you need an experienced SEC Violation Lawyer in your corner from day one.
How the SEC Investigation Process Works
Many SEC investigations begin informally. SEC investigators may solicit statements and documents or conduct on-site visits. If they believe federal securities laws may have been violated, they apply for a formal order of investigation, which grants the SEC authority to issue subpoenas for documents and sworn testimony. Average investigations span two to four years and involve confidential proceedings. Near the conclusion, if enforcement staff believe evidence supports charges, they issue a Wells Notice informing the target that an enforcement action is being recommended.
Important: Most federal securities criminal prosecutions begin as SEC enforcement actions. This is why every SEC investigation must be treated as potentially criminal from the very start. If SEC investigators have approached you, contact a federal criminal defense lawyer immediately.
Possible Defenses in SEC Cases
Securities laws are extraordinarily complex. A skilled defense attorney can argue that the accused had no criminal intent, that they honestly tried to comply with a labyrinth of regulations, and that any violation was an innocent mistake, not fraud. Another applicable defense is that the statute of limitations has expired: the statute of limitations on securities fraud crimes is five years from the completion of the crime. An experienced Criminal Fraud Attorney can also challenge the government’s evidence, raise constitutional violations, highlight weaknesses in the prosecution’s case, and negotiate strategically for the most favorable outcome possible.
Contact The Fast Law Firm Today
When you are facing an SEC investigation or securities fraud charges, everything you have worked for hangs in the balance. At The Fast Law Firm, we understand what is at stake. Our experienced defense team has the knowledge of complex federal regulations and the tenacity to stand up to the government.
Whether you need a federal criminal defense lawyer, an SEC Violation Lawyer, or a Criminal Fraud Attorney, our team is ready to evaluate your case, explain your options, and fight for the best possible outcome. Don’t face the system alone.
Call us today to schedule a confidential consultation with The Fast Law Firm.
Frequently Asked Questions About SEC Violations
What triggers an SEC investigation?
The SEC receives more than 20,000 tips, complaints, and referrals each year from whistleblowers, investor complaints, market surveillance, FINRA, and news reports. Unusual trading patterns, discrepancies in public filings, and evidence of intentional misconduct are among the most common triggers.
Can the SEC bring criminal charges against me?
The SEC itself pursues civil enforcement actions, but it regularly refers cases to the DOJ, which can pursue criminal prosecution. Criminal securities fraud convictions can result in long-term imprisonment. This is why having a Criminal Fraud Attorney early in the process is so important.
What should I do if the SEC contacts me?
Do not speak with SEC investigators without legal counsel. Contact an experienced SEC Violation Lawyer immediately. The way you respond in the early stages of an investigation can significantly affect the outcome of your case.
