Getting called by the SEC can be a frightening experience for anyone. Such a call is especially serious for financial professionals including those that trade in stock or work for public companies or companies which had stock that sold in private offerings. The SEC can oblige any American citizen to comply with any demands for information that could assist in their enforcement of federal securities laws. One of the more frequently asked questions that our securities regulatory law team answers in our free consultations is: “Should I respond to the SEC’s phone call?” The answer is yes, but only after retaining an experienced securities regulatory attorney to represent you in the process and be your intermediary. The contacted party should take down the SEC caller’s name and information to call back later.
Our securities regulatory attorneys advise individuals not to respond immediately and without a lawyer to mitigate risks. Through this course of action, contacted parties are more protected from unwarranted charges and other risks that arise when speaking with the SEC unprepared. The SEC may tell you that you are not a target, but they will not make any enforceable promises in that regard. It is up to you to make sure that you do not become a target. Remember, the English language can be tricky, and lawyers’ use of it is different from that of the average layperson. A point to keep in mind is that when the SEC calls, it has an agenda that prioritizes their mission and not your specific interests.
The SEC reaches out to people to gather facts to determine whether any provisions of federal securities laws or rules have been violated. Thus, financial professionals contacted by the SEC are either the target of an investigation or believed to have related knowledge. The SEC may use the information you provide in the testimony to pursue civil charges through administrative or court proceedings. Additionally, the SEC may provide information to other agencies for their own separate federal, state, local or foreign administrative, civil or criminal proceedings. Individuals contacted by the SEC must respond fully, truthfully, and honestly or risk receiving fines and even possibly terms of imprisonment. In certain cases, it may be in your best interest to asset your fifth amendment rights and not testify at all.
There is significant value in having a third party in a situation as stressful as speaking to the SEC in an investigation. Even if you are innocent, you could end up presenting yourself in a poor manner that results in other violations. Hiring a securities regulatory attorney is a smart and custom practice that is actually expected by SEC officials. Doing so is not frowned upon, and you get no “extra credit” for being unrepresented. In fact, the SEC even offers parties the opportunity to adjourn providing testimony to seek a lawyer beforehand.
A securities regulatory attorney can speak to the SEC to get a feel for the circumstances and your involvement. The SEC will not speak to the person they want to question in the same way. A lawyer can easily get the Formal Order of Investigation under which the subpoena was issued to help adequately prepare their clients for witness preparation and go over their protections under the law. Our securities regulatory attorneys sit down with our clients to thoroughly go through expectations when speaking with the SEC, simulate what it will be like, practice answering questions and provide rules about how to be a good witness. Following preparation, a securities regulatory attorney can participate in your communication with the SEC and make sure it does not get off track.
As mentioned above, attorneys are attuned to the language of the law and can communicate more effectively amongst each other. Whereas the SEC does not have to relinquish details regarding the scope of their investigation or charges, an experienced regulatory attorney may be able to obtain more information. A securities regulatory attorney may be able to find out the scope and subjects of the investigation by asking the right questions using the right words. The reality is that lawyers speak in a different less protected style than that of the average person. A securities regulatory attorney can pick up on any litigation techniques the SEC may use to get the questioned party to make an admission.
When speaking with the SEC, financial professionals are usually too preoccupied with providing the perfect response, instead of assessing the question. A securities regulatory attorney would be able to help analyze the room to provide a more objective review of the question, as well as make sure it is a proper question comprehensible to the client. Clients would receive advice on when they do not have to provide an answer and more. Even the SEC has multiple lawyers and/or investigators in the room. It would help if you had someone on your side.
A competent securities regulatory lawyer will be able to take notes on your behalf for your review to ensure that your words throughout the communication stay consistent. When the interview goes south, the best securities regulatory attorney would know when to object to questions, clear up the record or end the conversation.
In short, a securities regulatory attorney is the key to ensure that your communications with the SEC go well. Therefore, finding the best securities regulatory attorney to represent you is of utmost importance. Malecki Law’s securities attorneys have served hundreds of clients before the SEC, FINRA, the DOJ, and other agencies. Before contacting the SEC back, contact one of our NYC securities regulatory attorneys for a free consultation.