Under Investigation? Why You Must NOT Talk to the SEC or Government Agents Without a Lawyer

If you or your company receive a subpoena or get a call or visit from the Securities & Exchange Commission (SEC), FBI, or another governmental authority, it’s not likely because they want to help you. Even if you are convinced of your innocence, you need to be very careful in how you respond.

First and foremost: Do not speak to anybody from the government until you’ve first contacted an experienced lawyer.

The Danger of Unprotected Statements

Many potential clients are shocked when the SEC moves forward with an investigation or brings charges after the clients believed they could convince the SEC of their innocence. As the late criminal attorney James Neal famously noted in an episode of the PBS series, Ethics in America, “There are very few deaf and dumb people in the penitentiary.” Indeed, cooperation with the government might be a good strategy, but only if you get the help of an experienced defense attorney.

Your Best Friend: The Fifth Amendment Privilege

The Fifth Amendment to the U.S. Constitution provides that no person “shall be compelled in any criminal case to be a witness against himself.”

• Broad Application: The Fifth Amendment Privilege applies to any government investigation or proceeding where your testimony could potentially expose you to criminal liability like SEC investigations, DOJ inquiries, and federal and state regulatory examinations. It doesn’t matter if your statements are being sought in a routine examination by a civil authority. Your statements can be given to criminal prosecutors who can bring charges against you.
• No Formal Charges Needed: You do not need to be formally charged with a crime to invoke the Fifth Amendment Privilege. The privilege applies whenever there is a reasonable possibility that your statements could be used against you in a future criminal prosecution. You need an attorney to advise you about what kind of criminal charges you could possibly face.
• Securities Cases: Securities investigations almost always raise the possibility of criminal charges. That is because the definition of securities fraud is extremely flexible and broad and the conduct can constitute not just civil securities fraud but also federal criminal securities fraud or wire fraud.

Why Securities Cases Demand Particular Caution

Investigations by the SEC and state securities regulators present significant dangers that make Fifth Amendment Privilege especially important:

• Parallel Proceedings: Securities matters routinely involve simultaneous civil (SEC) and criminal (FBI/DOJ or state) investigations. The SEC discloses in tiny print on its forms and often orally that statements you make and documents you provide to the SEC can be provided to criminal prosecutors. The SEC often seeks to convince criminal prosecutors at the Department of Justice to bring criminal fraud charges based on the evidence they have obtained. Sometimes the SEC is investigating at the same time the DOJ has convened a grand jury to investigate. As a result, without the representation of an experienced attorney, there is no safe way to provide information without risking it being used against you by criminal prosecutors.
• Complex Regulatory Framework: Securities laws are intricate, technical, and often counterintuitive. What seems like an innocent explanation to a layperson may constitute an admission of a material element of a securities violation. People often come to us after having basically admitted to securities fraud. To avoid that, contact an attorney at the beginning of the investigation.
• The Perjury Trap: Once you begin answering questions (whether under oath or not), you create a record. Inconsistent answers create the potential of being charged with perjury (18 USC §§ 1621 and 1623) or a violation of the “false statement” federal statute (18 USC § 1001). These “process crimes” can be easier to prove than the underlying securities violation and carry severe penalties. Remember, Martha Stewart did not go to prison for insider trading, but because she was convicted of making false statements to federal agents in an interview. See also US v. Cohen, No. 25-1746 (7th Cir. Nov. 24, 2025) (sentence of 21 months affirmed for individual who made false statement to U.S. Marshals Service regarding residence of a convicted sex offender).
• No “Talking Your Way Out”: Clients, particularly successful business people, routinely overestimate their skills of persuasion. They are convinced that if they explain their conduct, the government will just drop the case. In reality, investigators frequently have reached a preliminary conclusion about the conduct of the person they contact before they make contact. That means they are not looking for information that will help you, they are looking for information that confirms what they already think. You need a lawyer to help you get them to hear evidence that shows you did not violate the law.

Practical Guidance: Dos and Don’ts

If and when you are contacted by the SEC, DOJ, FBI, or any other government agency, follow these steps without deviation:

Addressing Common Concerns

Your Fifth Amendment Privilege is a fundamental constitutional safeguard. Asserting this right is not an admission of wrongdoing; it is a prudent exercise of the protections our legal system affords. You can invoke the Fifth Amendment Privilege and – with the help of an experienced attorney – still provide information to the government that leads to no civil or criminal charges.

The core rule is: Do not speak to anybody from the government until you’ve first contacted an experienced lawyer.

If you are contacted by any government agent or investigator, please contact us immediately. We will navigate this matter together, strategically and with your rights fully protected.

Photo by Chris Linnett on Unsplash

The Financial Industry Regulatory Authority (FINRA) is a private, self-regulatory organization that regulates member brokerage firms and exchange markets. Just because you receive a Rule 8210 letter does not mean FINRA will charge you with violation of its rules or violation of securities laws. Nevertheless, the way you respond to a Rule 8210 letter can have a significant effect on whether FINRA brings charges against you. Many financial advisors respond to FINRA requests on their own or with the help of their firm’s compliance personnel only to discover that they made mistakes that could have been avoided. If you become involved in a FINRA investigation, you should get the advice of a FINRA investigations lawyer early.

What is FINRA?

FINRA regulates the activities of broker-dealers (also called brokerage firms), their employees, and agents. FINRA operates under the supervision of the Securities and Exchange Commission (SEC) and has the legal authority to order registered broker-dealers and broker-dealer representatives ( a/k/a registered representatives or financial advisors) to provide testimony or to produce documents. FINRA oversees more than 3,500 brokerage firms, 150,000 branch offices, and 600,000 registered securities representatives.

What Would Cause You to Get an 8210 Letter?

Receiving a Rule 8210 letter does not necessarily mean that you are personally under investigation by FINRA. However, you need to be careful to avoid creating problems because you do not understand how FINRA might view the information you provide.

FINRA may send you a Rule 8210 letter for reasons that include but are not limited to:

•  a customer’s complaint
•  the findings of a different investigation
•  an arbitration filing
•  items in U4 and U5 disclosures
•  trading activity that appears unusual
• FINRA could be seeking information about another employee or about your firm. Nevertheless, you should not assume that FINRA will not be looking into your own conduct as it investigates the conduct of others.

What Can FINRA Ask You About?

If you are the recipient of a Rule 8210 letter, FINRA is probably asking you for information, documents, or testimony about a possible violation of FINRA rules by a broker-dealer or by someone who is associated with or registered with a broker-dealer. FINRA has the ability to ask about activities that extend beyond your work for a particular broker-dealer.

FINRA has the right to ask you almost anything. In 2013, FINRA clarified Rule 8210 by stating that “all aspects of the relationship between a broker-dealer and its associated persons are potentially the subject of a Rule 8210 request.” Specifically, FINRA can ask you about your outside business activities, even those that have been fully disclosed to your employer. FINRA can also ask you about private securities transactions for clients of a broker-dealer and for non-clients. If you are an owned-and-operated broker-dealer, FINRA can inspect almost any book or record that you maintain or that you have maintained for you by outside contractors.

FINRA can ask about the many items contained in the annual attestations that financial advisors complete every year. For that reason, financial advisors should obtain and keep a copy of each of those attestations for their own records. Often a financial advisor no longer works for the broker-dealer and cannot obtain copies of those attestations to see what answers they provided.

When Should You Contact an Attorney?

Whether you know why you received a Rule 8210 letter or whether you are a target, you should get the assistance of an experienced FINRA investigations attorney. The SEC gives FINRA wide-ranging powers, and a failure to respond adequately to a FINRA investigation could put you in serious legal trouble. FINRA can compel you to make documents available, to respond to questions in writing, or to appear personally to answer questions.

What Should Be Your Response to a Rule 8210 Letter?

While you may be able to answer all the questions and provide the information requested by FINRA, it is important to understand how FINRA could use that information against you before providing it. An attorney with experience in FINRA investigations can assist you in communicating with FINRA and in preparing a proper response.

It is important to decide early whether to cooperate with FINRA. Sometimes the rule violations FINRA investigates could also constitute violations of criminal laws such as anti-fraud securities laws or mail and wire fraud. Although there are situations where the best course of action is to refuse to provide any response to FINRA, the cost of doing so is high. If you do not cooperate with a FINRA investigation, you could be barred from working in the securities industry.

What Happens After You Respond?

What happens after you respond to a Rule 8210 letter from FINRA? There are several possibilities:

1. You could receive additional Rule 8210 letters asking for more information.
2. You could receive a letter from FINRA asking you to answer questions in person.
3. You could receive a letter from FINRA telling you the investigation has been closed.

What if FINRA Decides to Bring Charges Against You?

When an investigation by FINRA determines that a securities professional or a securities firm has violated FINRA rules, FINRA may impose considerable penalties and fines. FINRA has the authority to permanently bar a broker-dealer or financial advisor from the industry. Before filing those charges, however, you will have a chance to reach a settlement with FINRA. Most of FINRA’s investigations are either closed with no charges or resolved through settlement. Those settlements are called AWCs, which is an abbreviation for Acceptance Waiver and Consent. FINRA investigations can also be resolved through less formal “cautionary” action that remains confidential and does not constitute a formal disciplinary action.

We aggressively protect our client’s rights, whether they’re businesses, investors, financial professionals, or whistleblowers. The tools of our trade are federal and state laws that regulate the securities industry and protect those who may be abused by it. Other laws or legal doctrines may also apply to participants in the securities industry. They include state common law doctrines of negligence and fraud, state statutes prohibiting elder financial exploitation, and unfair trade practices.  

In general, the federal system of regulation of investments is a disclosure system. The U.S. Securities & Exchange Commission (SEC) does not verify that securities offered to investors are valid, much less good investments. Most states and territories also have their own securities laws and commissioners who seek to ensure that securities offered by or to its residents comply with state/territorial and federal laws. 

The SEC and most state/territorial securities regulators seek to ensure that investors are provided with certain information that they can assess to determine whether to invest. They also seek to ensure that participants in the securities industry – like brokerage firms, individual brokers, investment advisory firms, and individual investment advisers – are complying with the law. 

There are a host of “self-regulatory organizations” like the Financial Industry Regulatory Authority (FINRA) that regulate certain participants in the securities industry. Those “SROs” have their own sets of rules with which regulated entities and individuals must comply.  Many of these laws and rules are virtually identical, but they give the government the ability to bring multiple, distinct claims based on the same conduct and also to seek additional relief like penalties.  FINRA also operates a dispute resolution forum that brokerage firms and their clients are required to use to resolve claims and disputes. 

Investment advisers are not regulated by FINRA or subject to any SRO rules, but they are required to fulfill common law fiduciary duties to their customers and comply with the Investment Adviser Act of 1940. The fiduciary duties of investment advisers historically were determined by courts of law, derived in part from cases filed in those courts. In recent years, however, investment advisory firms have often required that their customers consent to mandatory arbitration. This is usually buried in the fine print of account opening documents. 

Those arbitrations sometimes are with FINRA but often are with other more costly arbitration forums like the American Arbitration Association (AAA) and JAMS, another private arbitration provider. The filing fees and arbitrator costs in AAA and JAMS can easily reach tens of thousands of dollars. When investor losses are in the tens or even low hundreds of thousands of dollars, that can mean the investor has no practical way to vindicate their rights. 

Securities Act of 1933

The Securities Act of 1933 requires that issuers and others who are involved in the offer and sale of securities provide certain information when those securities are publicly offered and provide truthful information whether the offering is public or not. The SEC views this statute as having two objectives:

• Requiring that investors get specific financial and business information about securities offered for public sale, and
• Prohibiting and preventing fraud, misrepresentation, and deceit in connection with the sale of securities, whether those securities are publicly offered or not

For securities (like stocks and bonds) offered to the public, this law mandates that the offeror file a registration statement with the SEC. That registration statement is reviewed by the SEC, but that does not provide investors with assurance that the information is accurate or complete. 

A company offering securities to the public is required to disclose certain important facts in a registration form, like:

• The company’s business and properties
• A description of the security to be sold (like common stock, preferred stock, bond)
• Information on the company’s management
• Financial statements that are certified by independent accountants

Registration statements and prospectuses are made available to the public shortly after filing via the SEC’s Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system.  While the SEC Staff examines registration statements, the SEC does not verify the accuracy of the information that is disclosed. Investors must do that themselves.

Companies and others involved in offerings may be charged by the SEC with failing to correct previously disclosed information in registration statements that is no longer accurate. They also may be charged with failing to timely disclose material information they learn to investors. 

This information is made available to permit investors to make informed decisions about whether to buy a company’s securities. Investors purchasing securities and later suffering losses have recovery rights if they prove essential disclosures were incomplete or inaccurate.

There are many securities offerings that are not required to be registered with the SEC. Those offerings are made under certain exemptions included in the law. Those exemptions include private offerings to a limited number of institutions or people and intrastate offerings. 

Companies making offerings under the exemptions are not required to file a public registration statement and are not required to disclose the specific information that a public offeror would have to disclose. The law still prohibits those offerings from being fraudulent, containing misrepresentations, or failing to include material information. 

Securities Exchange Act of 1934

Congress created the SEC with this law which empowers it with broad authority over the securities industry. The agency can regulate, register, and oversee transfer agents, brokerage firms, clearing agencies, and SROs like FINRA.  The SEC used its authority under this law to enact its antifraud rule, called Rule 10b-5. 

This law prohibits some types of market conduct and equips the SEC with disciplinary powers over regulated entities and people connected to them. Under this law, the SEC can also require companies with publicly traded securities to report information periodically (quarterly, annually). The law permits the SEC and individuals to file legal actions. 

This law prohibits fraud in connection with the offer, purchase, or sale of securities. The SEC often brings charges under the antifraud provisions of this act as well as the provisions prohibiting the sale of unregistered securities (that are not subject to a valid exemption) and to persons or entities acting as unregistered broker-dealers. SEC charges of unlawful insider trading are generally brought under the antifraud provisions of the act.  

The federal securities laws are periodically revised or amended by Act of Congress. They include the Sarbanes-Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and the Jump Start Our Business Startups (JOBS) Act of 2012. 

Illinois Securities Law of 1953

Federal laws get more attention than state statutes regulating securities, and state agencies don’t have the resources of the SEC and the Department of Justice. Still, they may be helpful in your situation because state law may cover securities that federal laws do not. For example, Illinois has a state statute that is enforced by the Illinois Securities Department of the Secretary of State’s office.

The Illinois Securities Law of 1953 prohibits: 

• Selling unregistered securities
• Making false or misleading material statements in reports filed under the law
• Obtaining money or property by selling securities based on an untrue statement
• Circulating a prospectus while knowing it contains material, false statements 

Other states have similar laws, but each has its own idiosyncrasies. Under Illinois law, a securities purchaser who suffers harm because the law was violated may seek a rescission of the sale. If successful, the seller must take back the security, refund the purchase price, and pay interest. Part of the process involves giving notice to responsible parties within six months of learning of the legal violation. 

FINRA Rules

FINRA has general and specific conduct rules. Brokerage firms and their registered representatives, as well as other individuals associated with brokerage firms, are regulated by FINRA. It has its own enforcement staff to investigate potential violations of its rules and of federal securities laws and regulations. 

Generally, those investigations are brought under FINRA Rule 8210, which permits FINRA to compel those it regulates to produce documents, answer questions, and appear to provide on-the-record testimony. FINRA has general and specific conduct rules. 

• Rule 2010 is a general conduct rule, which requires that a member (brokerage firm) observe high standards of commercial honor and just and equitable principles of trade
• Rule 2111 is a more specific conduct rule, which requires that any recommendation of a transaction or investment strategy involving securities be “suitable” for the investor

FINRA issues notices to clarify what its rules mean. 

Schedule a Free Consultation With Bragança Law Today

Whether you’re involved in an SEC/FINRA investigation, an investor seeking recovery of losses, or a whistleblower punished for doing the right thing, Lisa Bragança at Bragança Law can help. Your case’s outcome could affect you and your family for the rest of your life, which is why Lisa works tirelessly to get the best possible results for her clients.

Lisa Bragança works with clients nationwide, as well as those living in Chicago and its suburbs. Her office is about 26 miles from the Chicago Midway International Airport (MDW) and approximately 13 miles from the O’Hare International Airport (ORD). To schedule your free consultation, call Bragança Law at (847) 906-3460 or fill out our website’s contact form.

This January 25, 2022 Court decision shows how corrupt FINRA’s dispute resolution process is. We don’t see this kind of a decision often because FINRA arbitrations are conducted behind closed doors, by arbitrators selected through an opaque process, by arbitrators who have virtually unfettered authority to determine the law and facts to apply, and with extreme deference by reviewing courts under the Federal Arbitration Act and state arbitration acts. But the law says the process cannot be a fraud. Thankfully these investor lawyers were successful in showing how corrupt the process was. 

In this case, the investors argued to a Georgia state court that an award denying their claims and assessing costs and fees to them must be vacated on the following grounds:  

• the arbitrator selection process was corrupt
• the arbitrators improperly refused to grant a postponement when the broker/firm produced documents days before the beginning of the hearing
• the arbitrators refused to hear relevant evidence from witnesses proffered by the investors to rebut evidence presented by the broker/firm.
• the award was procured by fraud – perjured testimony by the broker and the arbitrators’ reliance on “testimony” of the attorney for the broker/firm.
• the arbitrators had to legal or factual basis for ordering the investor to pay the broker/firm costs and fees. 

Manipulation of the Arbitrator Selection Process

FINRA represents that it has a specific process for the selection of arbitrators that randomly generates lists of potential arbitrators that are sent to the parties for review, striking, and ranking. FINRA represents that this is a fair process by which the parties may select a panel of arbitrators to decide their dispute. 

That is not really true. What FINRA does not tell investors is that it sometimes removes potential arbitrators from the supposed neutral computer-generated lists at the request of brokers’ attorneys. This case reveals that Wells Fargo’s attorney had a secret agreement with FINRA that certain arbitrators would not even appear on the list of potential arbitrators.

The Court found that the removal of a second arbitrator also violated the Federal Arbitration Act.

Refusal to Postpone Hearing for Good Cause

The Court found that the arbitrators’ denial of the investors request for a short postponement when Wells Fargo produced a significant number of documents just days before the beginning of evidentiary hearings was a violation of the Federal Arbitration Act.

FINRA uses audio recording instead of transcripts. Here there was a transcript showing the broker did a 180 – disavowing testimony he gave before the broker’s counsel had an unspecified medical emergency.

Refusal to Hear Relevant Evidence

The Court found that the arbitrators’ refusal to hear relevant non-cumulative evidence from the investors relating to two of their main claims and in response to evidence introduced by Wells Fargo.

Award Procured by Fraud – Perjury and Improper Evidence

The Court found that key witnesses used an unexplained medical delay that the broker/firm obtained to materially change testimony and that the attorney for the broker/firm “inserted himself as a fact witness and purported to testify to the Panel himself to support the changed story.” 

The investor did not have a transcript when the hearings resumed so broker’s attorney mischaracterized the broker’s earlier testimony. And the arbitrators bought it.

The Court also found that the brokerage firm withheld a key document that was referenced by a number of its witnesses until AFTER the conclusion of the hearing – when the investors could not use it to cross examine witnesses. The Court notes that the brokerage firm “stonewalled” producing the document.

Unauthorized Award of Costs / Fees to Broker / Firm

The Court also found that the arbitrators exceeded their authority in awarding Wells Fargo over $50,000 in fees and costs to be paid by the investors.

Court’s Conclusion

In this case, even though the Court vacated the FINRA arbitration award because of fraud, the investor must still wait years to get justice. Vacating this arbitration award means that the investor has to go through this entire process all over again – from selecting a new arbitration panel, discovery motions that delay the evidentiary hearing, and ultimately an evidentiary hearing. It is more than ironic that I became aware of this decision on February 2 – Groundhog Day. The investor is going to have that very same experience.

Wells Fargo Won an Investor Dispute. Judge Says It Gamed the System.