Six Things to Do After Receiving an SEC Subpoena

 It is crucial to be proactive when it comes to SEC investigations. Below is a list of key steps to take after receiving a subpoena from the SEC:
Hire a securities law defense attorney. Your attorney should have ample experience in the federal subpoena process as well as SEC internal investigations. Retaining an attorney is critical because you need to ensure that your response is appropriately tailored to your case. An attorney can help you determine how to respond and what information to provide as well as what information to withhold due to privilege. It is sometimes possible to challenge the validity of the subpoena.
Understand the concept of “privileged” information. Certain information is privileged including conversations between you and your attorney under the attorney-client privilege or information that could incriminate you under the Fifth Amendment right against self-incrimination. These privileges prevent such information from being compelled by the terms of the subpoena. Your attorney will be able to assess the viability of a privilege claim.
Read the terms of the subpoena carefully. The subpoena will state the dates and procedures to follow when submitting document requests and appearing to provide testimony. It is your responsibility—with the assistance of your attorney—to ensure that all deadlines are strictly adhered to. The SEC has a zero-tolerance policy for failing to comply with deadlines. If you do not comply with your subpoena or if you provide fraudulent documents or testimony, you could face criminal penalties and jail time. It is also important to remember that if you have not received a subpoena, you are under no obligation to answer questions.
Start thinking about the requests outlined in the subpoena. The SEC drafts its document requests broadly, some of which span multiple years. If ESI is involved, these requests can quickly become overwhelming. It is good practice to begin accumulating the requested information right away as well as information that may be useful down the road such as names of witnesses. This will help your attorney with drafting your individualized defense strategy as early in the investigative process as possible.
Do not discuss the details of your case with anyone. This includes posting on social media or casual conversations with friends. Law enforcement and federal agencies may try to question you regarding the investigation and have no qualms about doing so. However, this can be detrimental to your case in the long run since anything you say is likely to be used against you. Always request for your attorney to be present before divulging any information to the SEC staff or law enforcement.
Assess your internal working environment. Many companies and executives find it useful to have an internal audit conducted to see if there are any weaknesses uncovered. If so, your attorney can help you prepare a response strategy to correct the problem. This step is important because it shows the SEC that you have a cooperative attitude and are willing to make amends as soon as possible.
The SEC is a powerful agency responsible for investigating companies, executives, and investors for violations of the federal securities laws. It has increased its investigative efforts in recent years to root out instances of fraud and misconduct that harms U.S. investors and U.S. capital markets. It accomplishes this mission through its broad federal subpoena power.
The SEC will subpoena companies and executives who are either targets of a forthcoming investigation or who may have knowledge of the matter at issue. It is important to be proactive when responding to an SEC subpoena since the failure to do so could lead to criminal charges and jail time. Hiring a securities fraud defense attorney can help you guard against these risks, cooperate with the SEC, and reduce your liability exposure.
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