Responding to an SEC Subpoena: How to Pay for Attorney’s Fees

There is one major concern that just about everybody has when they receive an SEC subpoena. That is, “How on earth am I going to pay for this?” There are two ways that you might be able to get help paying for attorney’s fees to respond to a subpoena if the subpoena is related to work that you have done for a company. It could be a former employer. It could be a current employer. It could be a company where you are serving or served as director.

Insurance

The first way that you may be able to get help in paying for an attorney to represent you in responding to a subpoena is through a director and officer insurance policy. If you worked for the company as a director or officer, your expenses in responding to a subpoena relating to that work may be covered by a “D&O” policy.

If that sounds like you, it is worth contacting your company in order to see if they have that type of policy or any other type of policy that may cover attorney’s fees in responding to the subpoena.

Indemnification

The second way that you may be able to get help in paying for an attorney to represent you in responding to a subpoena is if your company has an obligation to indemnify its employees for those kinds of expenses. A duty to indemnify employees may be imposed by a state statute, or it could be something that the company has in its bylaws, or it could be in an employment contract.

It is worth contacting an attorney as well as the company to inquire about whether you are entitled to indemnification.

It is important to remember that indemnification and insurance coverage would not apply to a subpoena that does not relate to a company. For example, if you receive a subpoena seeking information about your personal purchases of securities, even purchases of stock of your employer, it is highly unlikely you would be covered by insurance or indemnification. That trading activity would not ordinarily be considered part of your duties as an employee.

Should You Accept Representation by Your Employer’s Attorney?

Some people think they can avoid attorney’s fees by relying on the attorneys hired by the company. This is almost always a mistake. You need an attorney who will represent you, not someone who has no duty to give you advice that is in your best interest. Company attorneys are generally very clear in saying, “We represent the company, not the employees, not any individual we might be talking to.” You should understand that the obligations of those attorneys are to their client – the company – not to you. The “advice” and information they give you must be in the best interests of their client, the company. That advice/information could be contrary to your best interests.

What Should You Do If You Receive a Subpoena?

If you receive a subpoena, it’s important to not panic. You should contact an attorney who can help you figure out whether you be able to seek insurance coverage or indemnification for attorney’s fees incurred in responding to a subpoena relating to work you did on behalf of the company. Contact Bragança Law today for help with SEC investigations and subpoenas.