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Responding to SEC Subpoenas: Dos and Don’ts for Defense Lawyers
Contents
- 1 Responding to SEC Subpoenas: Dos and Don’ts for Defense Lawyers
- 1.1 What is an SEC Subpoena?
- 1.2 Don’t Panic – Consult a Lawyer
- 1.3 Request an Extension if Needed
- 1.4 Carefully Review the Subpoena Scope
- 1.5 Preserve All Potentially Relevant Records
- 1.6 Assert Privileges Where Appropriate
- 1.7 Avoid Over-Disclosure
- 1.8 Conduct a Diligent Search
- 1.9 Produce Records in an Organized Fashion
- 1.10 Be Truthful in Testimony
- 1.11 Get Advice on Fifth Amendment Issues
- 1.12 Seek Adjournments If Needed
- 1.13 Don’t Try to Outsmart Investigators
- 1.14 Consider Cooperation Credit
- 1.15 Key Resources
Responding to SEC Subpoenas: Dos and Don’ts for Defense Lawyers
Dealing with an SEC subpoena can be intimidating. The SEC has broad authority to investigate potential securities law violations, and failure to properly respond can lead to harsh penalties. But working with experienced counsel can help you navigate the process while protecting your rights. This article provides practical tips for responding to an SEC subpoena.
What is an SEC Subpoena?
An SEC subpoena is a demand for documents or testimony related to an SEC investigation. The SEC can issue subpoenas without court approval, giving them broad power to compel cooperation. Subpoenas typically seek things like emails, financial records, trading data, and other documents. You may also be subpoenaed to provide sworn testimony.
Don’t Panic – Consult a Lawyer
The first thing you should do upon receiving an SEC subpoena is consult an experienced SEC defense attorney. They can help you understand your rights and obligations. An attorney can also interact with SEC staff on your behalf. Having counsel signals to the SEC that you take the matter seriously.
Request an Extension if Needed
SEC subpoenas typically demand a fast response, sometimes within just a few weeks. But courts recognize parties need reasonable time to gather responsive records. Don’t hesitate to ask for an extension if you need more time. The SEC may grant a reasonable request, knowing they cannot enforce the subpoena without going to court.
Carefully Review the Subpoena Scope
Analyze the subpoena carefully to understand what records are sought. SEC subpoenas are often broad, seeking “all documents related to X.” Your attorney can help determine if the scope is reasonable and negotiate limitations if needed. You generally only need to produce relevant, non-privileged records.
Preserve All Potentially Relevant Records
Once you receive a subpoena, you must preserve all potentially relevant records. This includes paper and electronic records like emails. Destroying or altering records after receiving a subpoena can lead to obstruction charges. Your attorney can help issue a litigation hold notice.
Assert Privileges Where Appropriate
Certain records and communications may be protected from disclosure by privileges like attorney-client privilege or work product protection. Your lawyer can determine if any records are privileged and communicate this to the SEC. You generally do not need to produce privileged documents.
Avoid Over-Disclosure
Only produce the specific records requested by the subpoena. Volunteering non-responsive records can create problems. The SEC may think you’re hiding something if you produce too much irrelevant material. Stick to the scope of the request.
Conduct a Diligent Search
You must conduct a complete and diligent search to find responsive records. Your attorney can work with IT professionals to search electronic systems. If records once existed but were deleted or destroyed, explain this to the SEC. Failing to search thoroughly can suggest you are withholding documents.
Produce Records in an Organized Fashion
SEC attorneys appreciate organized productions. Work with counsel to produce records in a logical format, such as grouped by custodian or topic. Include a summary of what is included. Disorganized dumps of documents frustrate investigators.
Be Truthful in Testimony
Lying or misleading the SEC during testimony (or any point in the investigation) exposes you to criminal liability. Work with counsel to prepare for testimony and tell the truth. If you don’t recall something, say so. Trying to cover up problems or provide false testimony will only create bigger issues.
Get Advice on Fifth Amendment Issues
You can assert your Fifth Amendment right against self-incrimination during SEC testimony if answering might implicate you in a crime. But this should be done carefully on a question-by-question basis. Speaking with counsel beforehand is essential to handle Fifth Amendment issues properly.
Seek Adjournments If Needed
If you become overwhelmed during testimony, your attorney can request an adjournment to take a break and speak with counsel. But adjournments should be limited, as excessive delays frustrate SEC staff. Use adjournments strategically when truly needed.
Don’t Try to Outsmart Investigators
Being combative, overly technical, or trying to play “gotcha” with SEC attorneys is counterproductive. While protecting your rights is important, cooperation and transparency generally serve you better. Work with your attorney to find the right balance.
Consider Cooperation Credit
In some cases, providing substantial assistance to an SEC investigation can merit cooperation credit and potentially avoid charges. This is a complex analysis that requires careful consultation with counsel. But cooperation may be beneficial in certain circumstances.
Responding to an SEC subpoena is a high-stakes process, but having experienced counsel guide you through it can lead to the best outcome. Don’t ignore subpoenas, be truthful, and work collaboratively with your attorney. Handled correctly, even serious SEC investigations can conclude favorably.