How Long Do SEC Settlements Take??

No available source establishes an average duration for SEC settlement negotiations. Investigations and settlement negotiations are two distinct steps in the enforcement process. An investigation that results in charges involves eight stages. These are followed by settlement negotiations and approval by the SEC Commissioners. Negotiations take a variable amount of time depending on the individual case and the interests involved. There is no reliable information regarding how long the negotiation and approval steps take.

Factors that impact the amount of time it takes to settle:

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Why can the SEC investigation take months or years?

Factors that can increase the length of an SEC investigation include:

1. Complexity and Scope of the Investigation

The complexity and scope of an investigation vary wildly. The SEC can investigate small-scale securities-law violations in limited circumstances that involve few individuals and a single entity. It can also investigate complex and far-reaching financial-fraud schemes or issuer-disclosure violations. The latter can involve hundreds of individuals and entities across dozens of different industries. They can also span many years, involve multiple cross-border transactions, and require thousands of pages of financial records to trace. Investigations that involve multiple issuers can be exponentially larger. As a result, complex financial-fraud and issuer-disclosure investigations averaged approximately 34 months for investigations that ultimately resulted in charges filed in fiscal 2021.

2. Investigation Statistics and Exclusions

The SEC’s investigation statistics provide limited insights into how long an individual’s investigation might last. They do not establish an average investigation duration because they only include investigations that resulted in charges. The statistics exclude investigations that the SEC closes without taking action. Most investigations end this way. These excluded cases can range in duration from a few weeks to several years. They do not all terminate for the same reasons.

3. Emergency SEC Cases

While long-duration investigations are common, investigations can also take a few hours or days. Emergency cases, which may involve asset freezes, cryptocurrency scams, or ongoing consumer-fraud schemes, are often filed within days of the initial investigation. When the SEC files a case within days of a suspected violation, it is usually because it is necessary to seek an immediate temporary restraining order (TRO) or preliminary injunction.

4. Routine Investigations

Many routine investigations do not take years, though they may take much longer than emergency cases. For example, investigations of corporate insider trading and corporate-disclosure issues can take many months.

5. Investigation Duration as an Indicator of Evidence Strength

Investigation duration does not establish whether the SEC’s evidence is strong or weak. While investigators and SEC Commissioners may believe that they have everything they need to file a case, they may choose to continue the investigation as the government prepares its evidence. The evidence collected in a long investigation is not necessarily more convincing. The SEC may prolong investigations that lack clear evidence of criminal conduct in order to cast as wide a net as possible.

6. Confidentiality of Investigations

SEC investigations are generally kept nonpublic until the agency decides to file charges or other disclosures are necessary. If the SEC issues an investigation order, it will name an investigation that is focused in nature. The investigation order will identify certain events or transactions and name several individuals as targets. This will not necessarily lead to the individual facing charges. An investigation can take up to a year or more.

What milestones show how much settlement time remains?

Once you receive a Wells notice, it is an indicator that the SEC staff may recommend enforcement charges against you. The issuance of a Wells notice does not provide a standard timeframe for how much time remains until settlement. The length of time that will pass before the Commission makes a decision, if it makes one, depends on your individual circumstances. If the enforcement staff is inclined to pursue charges or a settlement, they will ask for more time to finalize the recommendation, conduct further investigations, or continue negotiations. Once they request Commission authorization to file charges, this triggers a process to seek Commission approval for filing the complaint or order. This decision typically occurs within a few weeks. However, if the SEC staff does not have the evidence to support a filing, it may take months or even longer for the investigation to resolve.

1. Wells Discussions

After receiving your Wells notice, your counsel may meet with the SEC staff to discuss the case. During these discussions, your counsel will either object to the staff’s recommendation to file charges or begin negotiating the terms and conditions of a settlement. If you reach a settlement with the staff, settlement discussions may come to an end, and your settlement will be approved by the Commission.

2. Commission Authorization and Approval

As with other milestones in the SEC settlement process, there is no mandated timeline for Commission approval. Even if you reach an agreement with the enforcement staff, the Commission still must approve your settlement. This results in your settlement being subject to the timing of Commission authorization. The SEC enforcement staff does not have the authority to approve the settlement.

3. Judicial Entry of Consent Judgment (if applicable)

If you agree to settle your case in federal court, this will take slightly longer. Your consent judgment must be entered in federal court. To do this, you will need to obtain authorization from the Commission, and your settlement will only become effective after the federal court grants judicial entry of the consent judgment.

4. Issuance of Commission Order (if applicable)

If you agree to an administrative settlement, this will be far shorter than a federal court consent judgment. An administrative settlement becomes effective upon the Commission’s approval and issuance of its formal order. This method of settlement avoids the delay of waiting for judicial entry.

Can an SEC case settle before or after filing?

A filed enforcement action may still require either separate settlement negotiations or litigation. The enforcement action may take the form of:

• a civil action in federal district court;
• an authorized administrative proceeding; or
• an investigation that is closed without the SEC filing any charges or establishing any type of settlement agreement.

As a result, it is possible for an SEC case to settle before the enforcement action is filed or after it has already been initiated. These are referred to as prefiling and post-filing settlements, respectively. A prefiling settlement establishes the terms and conditions of the settlement and agreement before the SEC commences the enforcement action. A post-filing settlement resolves the claims that have already been filed in federal district court or by the SEC through the Commission’s administrative authority.

With respect to the Commission’s authorization to file charges, this is also not the matter’s final resolution. The Commission’s decision to authorize filing does not signify that the target of the investigation will necessarily be filed with or charged. Filing an action in federal district court or an administrative proceeding may still require settlement negotiations or litigation in order to resolve the enforcement action.

With respect to emergency filings, you will typically not know that the SEC is investigating you until the filing of the action is made public. This may be because the SEC is seeking a temporary restraining order or prelim injunction, or because of other urgent considerations. In these cases, if you face charges, you will need to resolve the case without the benefit of being able to seek a prefiling settlement.

Q: What should I do if I am facing a potential SEC enforcement action?

If you are facing a potential SEC enforcement action, you need to reach out to an experienced SEC defense attorney immediately. The sooner you get experienced defense counsel involved in the process, the more likely you are to avoid an enforcement action filing. SEC defense counsel can help you understand what is at stake, engage with the SEC in an informed manner, and work toward a favorable resolution. When choosing an SEC defense firm, you want an SEC defense firm with a proven track record of favorable outcomes in SEC enforcement actions. Spodek Law Group is one of the most experienced and successful SEC defense firms in the country.

This is the point at which most people call a lawyer. Spodek Law Group takes federal criminal defense cases nationwide from its New York and Los Angeles offices.

How do parallel DOJ cases affect SEC settlement timing?

The SEC can share investigative information with criminal and regulatory authorities, including the DOJ or State Attorneys General. This means that the possibility of an SEC enforcement action can raise concerns of criminal charges and even a potential criminal case. Parallel proceedings can result in the same alleged conduct, and the SEC and the DOJ may even conduct their investigations jointly. Even if the same conduct is at issue, criminal charges may be different from civil charges. This adds to the complexity of a potential SEC enforcement action.

If your employer’s investigation may trigger parallel proceedings, you should also be aware of the fact that your employer’s lawyer does not represent you. This means that the employer’s lawyer only represents you if their engagement expressly includes you. In a situation like this, you should reach out to experienced SEC defense counsel immediately. You need to be sure that you have protection for your interests.

In some cases, courts grant a stay of the SEC’s civil proceedings in order to avoid interfering with parallel criminal proceedings. When you reach out to our defense team, we will immediately review your situation. We will determine whether parallel proceedings are underway and if there is the potential of them emerging. If so, we will work diligently to develop strategies to protect you and your interests. This will include advising you about whether we should seek to delay the SEC’s civil proceedings.

Parallel criminal exposure can also constrain your options when it comes to testifying and the extent to which you can negotiate a settlement. If you may face criminal penalties for the alleged conduct, you should rethink your settlement approach. Our defense attorneys can help you decide whether to push for a settlement or whether you may want to continue fighting the SEC charges. We will guide you every step of the way.

Is there a legal deadline for an SEC settlement?

1. Statutory Limitation Period for Civil Penalties

Section 2462 of Title 28, United States Code establishes the federal government’s general statutory limitation period for seeking civil penalties. This provision applies to SEC enforcement actions. Section 2462 requires the government to commence an action for civil penalties within five years from the date the claim first accrued, and that five-year period begins to run from the date the alleged violation occurred. In the Supreme Court decision of Gabelli v. SEC (2013), the Court rejected a discovery rule and held that the limitation period begins to run from the alleged violation of the federal securities laws.

2. Statutory Limitation Period for Disgorgement and Equitable Remedies

Congress extended the statutory limitation period for disgorgement and specified equitable remedies. In 2021, Congress extended the limitation period for scienter-based disgorgement claims to ten years. At the same time, Congress set a five-year limitation period for disgorgement claims in cases not involving scienter, while applying a ten-year period to other specified equitable remedies.

3. The “No-Deny” Settlement Policy

In 2026, the SEC rescinded its “no-deny” settlement policy, which prohibited the denial of the allegations in a settlement. The Commission no longer conditions settlements on a defendant’s agreement not to publicly deny the allegations, and it has stated that it will not enforce the no-deny provisions contained in prior settlements.

4. Matters Under Inquiry (MUI) Timeline

In fiscal 2021, the SEC staff targeted the closure or conversion of Matters Under Inquiry to formal investigations within 60 days. This targeted timeframe does not establish a standard duration for MUIs, as it is not always achievable. Some regional offices’ average time spent on MUIs exceeded 200 days.

Q: Do I Need to File a Lawsuit against the SEC to Compel it to Close its Investigation?

No, you cannot compel the SEC to close its investigation, and your only recourse is to fight to have the investigation dropped. With respect to your situation, it is important to determine if you can defend against the SEC’s enforcement efforts. You must act fast to engage with the SEC’s staff to inform the government of your lack of culpability. You should also ensure that you are taking all available defensive measures to avoid facing the SEC’s civil sanctions and any parallel criminal referral to the U.S. Department of Justice.

How are SEC defense fees and settlement money handled?

Q: Is there an 80/20 rule regarding the fees charged by SEC defense lawyers?

The research does not establish an 80/20 rule for the fees charged by SEC defense lawyers. The provided research does not establish whether there is a rule that states, for example, that a lawyer is only entitled to 20% of their client’s disgorgement amount.

We recommend that SEC defense counsel’s fees be computed on an hourly basis. Our experienced SEC defense counsel is prepared to work with the SEC on a separate hourly basis or fixed-fee basis.

Q: Is there a maximum percentage that lawyers can charge for the defense of their clients?

No, there is no maximum percentage that lawyers can charge. While some believe that lawyers can only charge 20% to 30% of their client’s disgorgement amount, this is not the case.

Q: Do legal fees go toward the SEC’s settlement amount?

No, these fees are legally distinct from the SEC’s settlement amount. Legal fees are not part of the SEC’s settlement amount. Instead, they are to be paid by the party being investigated. Disgorgement, penalties, prejudgment interest, and other payments to investors are all payments to the SEC or the affected investors.

Q: Can I recover costs in SEC enforcement cases?

Yes, there are several ways you could potentially recover your SEC defense costs. D&O insurance may cover your costs depending on the terms of the insurance policy. The cost of SEC defense can be covered via corporate advancement or indemnification, but the applicable law or company documentation may not allow this. Other ways to cover the cost of your SEC defense may be available.

Q: Do SEC defense counsel charge their clients by hour?

They may. Under the engagement agreement, SEC defense counsel may be paid either on an hourly fee or a fixed-fee basis. The engagement agreement will dictate the amount of the fee and the payment schedule.

Q: Are civil penalties for insider trading expensive?

Yes, civil penalties can be very expensive. Under Section 21(d)(3) of the federal securities laws, civil penalties for insider trading can be up to three times the illicit trading gain or avoided loss.

Q: What payments must a single person make in an SEC resolution?

The SEC can seek to obtain disgorgement of the illicit profits along with prejudgment interest and civil penalties. All of these will be included in the individual’s settlement amount.

Contact a Federal Criminal Defense Attorney

Nothing here is legal advice, and the details of your case matter. Todd Spodek and Spodek Law Group take federal criminal and white collar cases nationwide, from offices in New York, Brooklyn, Queens and Los Angeles. You can reach the firm at 212-300-5196.