Justia 9
Avvo Rating 10
Avvo Client's Choice Award 2022
Reviews 5 star out of 15 reviews
Leading Lawyers - Celiza P. Braganca
CNBC Badge
Bloomberg Tax
Business Insider
FOX Business
Market Watch
Wealth Management Magazine
Advisor Hub
Financial Advisor IQ
Financial Planning
Investment News
W Radio
Chicago Tribune
PG Pittsburg Gazette

How Should You Respond to an SEC Subpoena?

Bragança Law LLC
Serious and upset businessman reading letter

If you are subpoenaed by the SEC – the U. S. Securities and Exchange Commission – you should contact an SEC subpoena defense attorney right away. Just because you are not named in the title of the investigation or you think you have done nothing wrong, there are many ways that individuals and businesses can unknowingly commit violations of the federal securities laws. .

A subpoena from the Securities and Exchange Commission could lead to the discovery of evidence that prompts a criminal or civil charge against you. An SEC defense attorney can take the necessary steps to protect your legal rights, avoid charges being brought against you, or defend you against any charges.

When Should You Contact an SEC Defense Lawyer?

If you receive an SEC subpoena, you should contact an attorney right away. Although the letter the SEC sends with its subpoena invites you to call the SEC Staffperson with any questions you may have, you should definitely not call the SEC directly. It is important to avoid having direct conversations with SEC Staff because anything you say to the SEC may be used against you. Often recipients of SEC subpoenas call the Staff to explain why they did not do anything wrong. That is a big mistake. If the Securities and Exchange Commission contacts you personally regarding an ongoing investigation, refer their inquiries and questions to your SEC defense lawyer.

Sometimes the SEC Staff will call an individual out of the blue to ask questions before sending a subpoena. If you get a call from the SEC Staff, you should say that you are seeking an attorney to represent you and just get their name and contact information so your attorney can get back to them. Doing this does not make you look guilty. It makes you look like a smart person.

SEC investigations and subpoenas

The attorney you hire should have substantial experience with SEC investigations and subpoenas.

When Does the SEC Issue Subpoenas?

If the SEC believes you may have information about an SEC investigation, it may issue a subpoena that orders you to provide testimony or produce documents. The SEC does not have to seek information in the most efficient manner or from a single source. The SEC may seek the same information from multiple individuals or entities. The SEC may order you to produce information that is publicly available on its own website (Edgar system) or on Twitter, Facebook, LinkedIn, or other social media sites. If you are subpoenaed, your lawyer can work with the SEC to help you respond appropriately.

An investigation by the SEC may be extensive and go far beyond the title of the investigation. An SEC investigation may lead to charges against persons who had little or no connection to the initial subject matter of the investigation. In addition, the SEC can share information it uncovers with federal and state regulators, regulatory organizations, and law enforcement agencies. This is set forth in a five page small print document called Form 1662 that the SEC sends with its subpoenas.

What Can Trigger an SEC Subpoena?

The SEC routinely conducts investigations of alleged crimes and misdeeds in the securities industry.

SEC routinely conducts investigations

Should you become the subject of a subpoena issued by the SEC, that subpoena may be related to an ongoing SEC investigation of:

  • insider trading
  • omissions or misrepresentations related to securities
  • securities fraud
  • stock manipulation
  • the offer, sale, or purchase of unregistered securities

SEC investigations may be launched on the basis of an investor’s complaint, a whistleblower’s tip, or information provided by the Financial Industry Regulatory Authority (FINRA) or other federal or state agencies. An investigation by the Securities and Exchange Commission may also be prompted by information found online or reported by the news media.

If You are Subpoenaed by the SEC, What Steps Should You NOT Take?

If you receive a subpoena from the SEC, do not discuss the subpoena with anyone other than an attorney. The SEC will ask you who you talked to about the subpoena. Only your discussions with your attorney – and if you are married certain discussions with your spouse – will be off limits. By talking to family members and friends or colleagues, you may cause them to be contacted by the SEC to testify about what you said.

You should not panic at the deadline for responding to the subpoena. The SEC typically sets very short deadlines for responses that are not reasonable. The Staff does this to get people to respond promptly. That does not mean you are not entitled to a reasonable amount of time to respond. The date the SEC may set on the subpoena for you to give testimony is always subject to change. The Staff is open to setting a date, time, and place for testimony when you and your attorney are available. Often the testimony can be given remotely.

You should not panic about the instructions for how to respond. An SEC subpoena also includes many pages of data delivery standards that do not always apply. The SEC typically does not require individuals and small businesses to produce documents in accordance with the data delivery standards. Those are the standards for production of documents and information of regulated entities like brokerage firms, investment advisers, and publicly-traded companies.

You should not ignore a subpoena from the Securities and Exchange Commission or decide to invoke your Fifth Amendment Privilege against self-incrimination before retaining an attorney. Refusing to cooperate with an SEC investigation, even when you are invoking a legitimate Fifth Amendment Privilege, has repercussions. Unlike in a criminal prosecution, the SEC can use the fact that you invoked your Fifth Amendment Privilege against you in any case that it brings. The SEC will ask that a court draw an adverse inference that whatever information it sought from you would be incriminating. If you are a professional in the financial services industry – a broker, registered investment adviser, insurance agent – you could lose your registration or license permanently.

If you ignore an SEC subpoena or fail to properly comply, the SEC may seek a federal court order to compel your response. Courts grant these orders because the SEC has a great deal of discretion and leeway in conducting its pre-filing investigations. Ignoring a federal court order could place you in contempt of court and possibly send you to jail.

Can You Object to an SEC Subpoena?

Depending on the specific details of a subpoena issued by the SEC, your attorney may raise certain objections to an SEC subpoena. The Staff may not have any problem with limiting the production of certain types of documents if it will not affect the investigation. Your lawyer can discuss potential objections with the SEC before raising them formally.

Potential objections with the SEC

Two of the most important bases for objection are the following: 

  1. The SEC cannot require you to disclose documents, information, or conversations that are covered by the attorney-client privilege or a valid marital privilege. 
  2. The SEC cannot require you to serve as a witness against yourself by providing incriminating testimony. Sometimes the production of documents is subject to an “act of production” privilege against self-incrimination. 

The process of objecting to an SEC subpoena is not the same as objecting to an ordinary civil subpoena. An attorney with SEC experience will help you satisfy the requirements of an SEC subpoena while ensuring that your legal rights remain fully protected.

What Else Should You Know About SEC Subpoenas?

If you are a professional in the securities industry and you learn that you receive an SEC subpoena, do not rely on your firm’s lawyers for legal advice or representation. Instead, retain a lawyer who will look out for your best interests rather than your employer’s.

An SEC defense lawyer will advise you throughout the SEC’s investigation and will ensure that your legal rights are fully protected during the investigation process.

Client Reviews

Celiza was a great help to me in the course of working to resolve my problem. She was very patient, explaining in detail what was happening and what would follow, doing it in a very professional and friendly...

Barbara M.

As an investor and fiduciary, I have worked with Lisa in several capacities over the last 15 years. Lisa’s diverse background from her tenure as an attorney for the SEC, and in private practice – working on...

Jason M.

Lisa is a strong and tireless advocate. She helped guide me through a complicated investor disclosure issue on a publicly-traded security. Her practical counsel on process--and avoiding unnecessary legal...

Lee B.

Contact Us for a Free Consultation

Fill out the contact form or call us at (847) 906-3460 to schedule your free consultation.

Leave Us a Message