The SEC has an extensive network for gathering information. Many investigations start with complaints from the public or with tips from whistleblowers (who may be entitled to financial awards). Referrals from other government agencies,…
Why does FINRA start an investigation? Customer complaints, U4/U5 disclosures, tips, referrals, and even results of regular examinations are among the primary drivers of FINRA inquiries and enforcement proceedings. Market surveillance and the examination…
Essentially, a Wells notice comes directly from the SEC staff, and it contains the staff’s preliminary assessment that, based on the results of its investigation, it will be recommending enforcement of a particular action…
Does an SEC Subpoena Mean I Did Something Wrong? What Does an SEC Subpoena Require Me to Do? What Should I Do if I Get an SEC Subpoena? Where Can I Find Out More…
Q: How is an SEC Consent Decree Different from a Commission-Approved Administrative Settlement? An SEC consent decree is a negotiated civil judgment entered by a federal court; a Commission-approved administrative settlement is an agency…
An SEC cease-and-desist order is a binding administrative command issued by the Commission to the respondent to cease and/or desist from the alleged conduct of violating securities laws. A cease-and-desist order issued by the…
In many contexts, “securities fraud” is treated as a single, unified violation. But, as we explain in “A Guide to Defending Against Federal Civil and Criminal Securities Fraud Enforcement,” that general term refers to…
In federal securities fraud cases, a fact is material if a reasonable investor would consider it important in making an investment decision. Materiality is not defined by any bright-line rule or formula; instead, what…
If a witness honestly does not recall a fact relevant to the SEC’s investigation, that witness is entitled to say so in response to questioning. However, it is important to understand that stating, “I…
No, not if the subpoena is served to a witness and no formal order is issued. However, there are some exceptions to the rule. In SEC cases, this includes: The subpoena is served on…