Criminal Defense Lawyers

Securities Fraud: Responding to a Search Warrant or Subpoena

Dealing With a Search Warrant or Subpoena in a Securities Fraud Investigation

Getting hit with a search warrant or subpoena related to a securities fraud investigation can be intimidating. But with the right preparation and legal advice, you can get through it. This article provides an overview of how to respond and protect your rights if you find yourself in this situation.

Overview of Securities Fraud

Securities fraud involves deceiving investors to gain an unfair advantage in the buying and selling of stocks, bonds, and other securities. Common schemes include insider trading, pump and dump scams, and making false statements in SEC filings or financial reports.The penalties for securities fraud can be severe, including huge fines and many years in prison. That’s why the SEC and DOJ aggressively investigate potential violations using tools like search warrants and subpoenas to gather evidence.

Understanding Search Warrants vs Subpoenas

If you’re caught up in a securities fraud probe, you may receive a search warrant or a subpoena. Here’s how they differ:

• Search warrants allow law enforcement to enter and search specified locations and seize evidence like computers, documents, and electronics. Agents can show up unannounced to execute a search warrant.
• Subpoenas order you to provide testimony or turn over documents and records relevant to an investigation. You receive advance notice to comply by a specific date.

In both cases, take the demand seriously and consult a securities litigation attorney right away. Failure to comply can lead to contempt charges.

Steps to Take if You Get a Search Warrant

Having federal agents suddenly show up at your home or office with a search warrant can be jarring. But by staying calm and following these steps, you can protect yourself:

• Don’t obstruct the search. As unpleasant as it is, let the agents do their job. Interfering or destroying evidence can lead to obstruction charges.
• Don’t answer questions. Politely decline to answer any questions without your lawyer present. What you say can be used against you.
• Ask for a copy of the warrant. Review it to understand what they are authorized to search and seize. Object if they seem to exceed the scope.
• Identify privileged materials. Tell agents if they are improperly handling privileged documents so your attorney can take action later to have them excluded as evidence.
• Take notes. Document what is being searched and seized for your records. This can help your lawyer argue later that the search exceeded the warrant’s scope.
• Consult your attorney. Call them immediately so they can observe the search or intercede if needed. Their presence also shows you are taking it seriously.
• Remain professional. As upsetting as it is, stay cool during the search. Anything you say or do can impact the case.

By politely asserting your rights and documenting what occurs, you lay the groundwork to challenge any improperly seized evidence.

What to Do if You Get a Subpoena

Subpoenas related to securities fraud probes also require careful handling. Here are key steps if you receive one:

• Notify your attorney immediately. Let them review the subpoena to understand what records are being requested and negotiate with the SEC if anything seems overly broad.
• Avoid destroying evidence. Once you are on notice of an investigation, destroying relevant documents or communications can constitute obstruction of justice.
• Compile responsive documents. Work with counsel to conduct a thorough search for the records requested in the subpoena and provide them by the production date.
• Consider asserting privileges. Certain materials may be protected under attorney-client privilege or other legal privileges. Your lawyer can assert those objections appropriately.
• Testify truthfully. If the subpoena orders you to testify, answer all questions honestly after discussing the matter with counsel. Perjury can have dire consequences.
• Get legal advice on Fifth Amendment options. If you have personal exposure in the investigation, your attorney may advise invoking your Fifth Amendment right against self-incrimination to avoid testifying.

Responding to a subpoena promptly and properly lets you demonstrate you are taking the matter seriously. It also minimizes the chances of facing contempt allegations.

How Lawyers Can Help When Facing Securities Fraud Probes

Securities fraud investigations call for experienced legal counsel. Here are some of the ways a knowledgeable lawyer can help protect you:

• Guide you on responding to search warrants and subpoenas appropriately to avoid missteps.
• Review materials seized and negotiate the return of privileged documents.
• Prepare you for any testimony and represent you in interviews with investigators.
• Detect improper government conduct, like exceeding the scope of warrants.
• Negotiate with regulators to narrow or resolve investigations.
• Defend against resulting SEC civil enforcement actions or criminal prosecution.
• Avoid or minimize sanctions if violations did occur.

Don’t go it alone when dealing with a search warrant or subpoena related to securities violations. Get advice from a qualified white collar defense attorney right away. With proper representation, you can advocate for yourself and achieve the best possible outcome.

Potential Defenses in Securities Fraud Cases

If securities fraud charges are filed, an experienced securities litigation lawyer can analyze the facts of your case and identify potential defenses to pursue. Some possibilities include:

• Lack of intent – The SEC must prove you acted intentionally or recklessly. If your conduct was negligent but not willful, it may not meet the threshold for fraud.
• Reliance on professionals – Reasonably relying on attorneys, accountants or other professionals could negate allegations you “should have known” your actions violated securities laws.
• No material misstatements – Misstating information is only actionable if it would significantly impact an investor’s decision. Your lawyer may argue the facts were immaterial.
• No investor reliance – Defrauding investors requires proof they relied on the false information. Your attorney can look for facts showing their decisions were independent.
• Statute of limitations – Civil and criminal securities fraud charges must be brought within a certain time period or can be barred.
• Unconstitutional conduct – If agents exceeded the scope of their authority, your rights were violated. This can lead to evidence being suppressed.

An experienced securities enforcement attorney can assess if arguments like these apply and build the strongest defense to defeat the allegations or mitigate penalties.

How Cooperating Can Help Resolve Securities Fraud Charges

Once charged, cooperating with authorities by providing information about wrongdoing by others involved can be beneficial. Potential benefits include:

• Lighter charges – Cooperators may avoid the most serious charges and instead face less severe offenses.
• Reduced penalties – Prosecutors often recommend reduced fines, prison time or agree to probation for cooperators.
• Avoid charges completely – In some cases, cooperators avoid criminal charges altogether and may only face lesser civil fines.
• New identity – For cooperators whose safety is at risk, entering witness protection can provide a new identity and relocation.

That said, cooperating often requires admitting your own misconduct, which can have consequences like being barred from working in the securities industry. So any cooperation deal requires careful consideration of the trade-offs.An experienced securities fraud attorney can advise you on the pros and cons of cooperation in your specific case and negotiate an advantageous deal on your behalf if you choose to pursue it.

Conclusion

Being on the receiving end of a search warrant or subpoena related to securities fraud is extremely serious. Don’t ignore it or try to handle it without experienced legal counsel. A knowledgeable lawyer can protect your rights, guide your response, and defend you if charges ensue. With proper representation, it is possible to mitigate penalties or even defeat allegations in appropriate cases.