No one ever wants to receive an SEC subpoena, but when you do it is important to take action immediately so as to protect your future.
In this article we will review what an SEC investigation subpoena is, the different types of SEC subpoenas you can receive, and what to do, step-by-step, if you receive an SEC investigatory subpoena.
What is an SEC Subpoena?
An SEC subpoena is a legal order for recorded testimony that is issued by the Securities and Exchange Commission in connection with one of its investigations. The subpoena requests documents, data, or both which are relevant to an ongoing investigation.
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Note: If you get served with an SEC subpoena, it means you’re likely under suspicion of committing or witness to securities fraud even though the SEC will tell you not to conclude anything from the fact you were served with a subpoena. It is strongly encouraged that you consult with a SEC defense lawyer.
SEC Subpoena Power
The Securities and Exchange Commission (SEC) is the federal agency responsible for enforcing securities laws, proposing new securities rules, and regulating the securities industry. The SEC has the power to investigate almost any company or individual for securities fraud.
The SEC is primarily interested in issues involving potential stock manipulation, false or misleading statements in offering documents, insider trading, and other areas where investors are being cheated out of money. The staff of the SEC has subpoena power which they can use to compel individuals and companies under investigation to produce requested documents and/or testify at hearings under oath about their involvement with certain companies or businesses. If you receive an SEC subpoena, your life could be turned upside down until the issue is resolved.
There are two types of SEC subpoenas:
Subpoena ad testificandum: This subpoena compels the person to whom it is addressed to appear at a specific time and place and testify under oath or affirmation.
Subpoena duces tecum: This subpoena compels the person to whom it is addressed to produce documents in his possession or control, either at a designated location or before the person who signed the subpoena.
What happens when you get an SEC Subpoena?
When you get served with an SEC subpoena, it means that your records are being requested by a federal agency for an investigation. Generally, you’ll be told that you have 30 days from the date of service of this document to provide all records related to whatever it’s requesting.
IMPORTANT: You will likely have to appear in front of a SEC enforcement official who may ask you questions under oath and subject to the penalty of perjury and/or making false statements to a government official. Do not lie about not having any records because if they come back and say you lied about having them, you could be charged with obstruction of justice.
What Is the SEC Subpoena Timeline, and What Happens After You Comply?
The SEC subpoena timeline is the set of return dates and follow-up steps that begin when the subpoena is served because the SEC uses subpoenas to gather evidence in a formal investigation. A subpoena includes a return date, and it may demand documents, testimony, or both.
After counsel issues a preservation hold, that hold prevents spoliation by pausing routine deletion of emails, texts, and trading data, and we typically confer with SEC staff about scope, formats, custodians, and rolling productions. Privilege protects attorney-client communications, so we segregate potentially privileged material and a privilege log identifies withheld documents without waiving protection.
Once production occurs, the SEC may schedule on-the-record testimony, provide the formal order on request, or send follow-up subpoenas as new theories develop. An SEC subpoena can lead to outcomes that range from closure of the inquiry to a Wells notice, settlement discussions, or a civil enforcement action, so the response strategy should be calibrated early to your role as a witness, subject, or target.
What should I do if I get an SEC Subpoena?
Unfortunately, investigations by the SEC does happen from time to time. If you receive an SEC subpoena, it’s important to act quickly and be proactive. Below are the steps to take after receiving a subpoena from the SEC:
Step 1: Consult a SEC defense lawyer who is experienced with SEC subpoenas immediately. Your lawyer will be able to guide you through the process and represent you during the investigation. An attorney can determine how to respond to your subpoena, what information you should immediately turn over, and help you avoid making any mistakes that could result in additional scrutiny or legal consequences.
Step 2: Know your rights under the concept of “privileged” information. Under the attorney-client privilege, for example, you do not have to provide anything to the SEC if it would be between you and your lawyer.
Step 3: Read the terms of the subpoena thoroughly. Make sure you understand them and determine what information must be turned over. If your subpoena requests specific documents, the SEC will likely want to review all of those documents.
Step 4: Respond to the subpoena as soon as possible with an attorney by your side. Returning things too quickly without consulting a lawyer first could look bad for you during the rest of the investigation process. And if they ask for something that is difficult or unrealistic to produce, you can let them know that upon receiving their request. Some items may take longer than 30 days to find/produce depending on how easy it is for you to obtain (i.e., if there are thousands of emails it could take some time).
Step 5: Keep a detailed record of all aspects of the process, including any contact or communication with an SEC investigator(s) so that you can protect yourself down the road with evidence in case there is any uncertainty about what happened during the investigation process.
Step 6: Keep the details of your case confidential with yourself and your legal representation. Do not discuss or share information about your case with anyone who isn’t an attorney because you do not want to risk incriminating yourself.
Step 7: Be proactive and do not engage in any activity that could be considered obstruction of justice, such as lying or concealing information.
What types of records might the SEC subpoena?
The Commission may subpoena documents related to financial transactions (including transfers of money between accounts), communications (including e-mails), photographs, videos, and other data like employment history or company policies/employee handbooks/training manuals. For example, the SEC may subpoena communications related to specific stock sales or actions taken during an acquisition.
Schedule a Consultation with an Experienced SEC Defense Attorney
If you are served with an SEC subpoena, you should promptly contact a lawyer experienced in representing parties dealing with federal investigations to guide you through how to handle your case and protect yourself.
The Law Offices of Robert Wayne Pearce, P.A. has over 45 years of experience dealing with the SEC subpoenas and enforcement actions. Our attorneys can help you determine what information needs to be turned over, provide advice on how to handle the SEC investigation, and work hard to protect your interests. We will carefully review all of your options and develop a strategy that best protects you from any consequences brought about by an SEC subpoena.
If you would like to speak with one of our partners directly, please call us today at 800-732-2889 or Contact Us online for a free consultation.
