What If I Don't Remember During SEC Testimony??

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 do not recall,” in order to avoid incriminating oneself or oneself’s employer is not permissible. If witnesses falsely claim not to remember in order to mislead investigators, they can still be held liable for false statements.

For example, making a false statement to an SEC investigator could violate federal law under 18 U.S.C. § 1001. This is a criminal offense punishable by fines and up to five years of federal imprisonment.

SEC testimony can take two forms: an informal interview and “on-the-record” testimony. If a witness provides on-the-record testimony, they must swear an oath to tell the truth, and a court reporter will transcribe their responses verbatim. In most cases, SEC investigative testimony is nonpublic unless and until the SEC Commission orders its release.

When witnesses choose to answer questions asked by SEC investigators, their responses must be truthful. The following protections apply to witnesses who provide voluntary testimony:

• Witnesses who are not under subpoena cannot generally be forced to testify. However, if a witness chooses to testify, they must be truthful.
• While a witness can generally refuse to answer incriminating questions, they cannot provide false answers.
• If a witness knowingly provides false answers under oath during SEC testimony, this can constitute perjury, which is a federal crime under 18 U.S.C. § 1621 punishable by fines and up to five years of federal imprisonment.
• Although witnesses who are not under subpoena generally cannot be compelled to testify, their testimony can still be subject to perjury laws if it is sworn.

How Should I Answer If My Memory is Incomplete?

The first step is for the witness to make sure that they have a complete understanding of the question. If the SEC investigators are asking ambiguous questions, witnesses should ask for clarification before answering. With that, the witnesses should then be able to make informed decisions about how to answer based on their recollection of the events at hand.

Similarly, if the SEC investigators are asking questions based on documents that the witness has not reviewed, the witnesses may ask to review the documents. This will help witnesses determine whether they have a recollection of the events described in the documents and, to what extent their recollection is accurate.

Testifying to not remembering whether an event happened is different from affirmatively testifying to not recalling that the event happened. The former could indicate that witnesses do not remember if the event occurred, while the latter is an affirmative statement about having no recollection. This requires a witness to carefully consider their recollection of an event before testifying.

Reviewing a document to refresh a witness’s recollection should, ideally, result in the same answer as if the witness had simply recalled the event from memory. But in each case, witnesses must be careful to avoid using the document to infer details that he or she cannot personally certify.

Similarly, if a witness is not recalling a specific fact and is attempting to use a document to determine the fact’s accuracy, the witness is not attempting to use the document to refresh a witness’s recollection. This is an important distinction, as witnesses will need to be able to distinguish their recollections from a document’s contents if requested.

When answering questions, witnesses will also need to identify where their knowledge of any specific fact comes from. This information may come from memory, from another person, a document, the investigator’s questions, or a combination of these. If witnesses are not sure where a particular piece of information comes from, this should also be disclosed. Answering guessing questions during SEC testimony is not recommended, as doing so could potentially lead to liability for providing false testimony.

Witnesses will need to be careful when answering questions with implied premises. If a witness answers these questions, they will need to either adopt the premise or reject the premise. If the premise is incorrect, witnesses must be careful to not adopt the premise, as they will otherwise be lying. If witnesses do not know whether the premise is correct or not, the safest approach is to inform investigators of the witness’s lack of knowledge and, if appropriate, to reject the premise.

If a witness’s recollection conflicts with what is documented in a related document, the document will be the best source for determining the truth. Testifying that the document is the best source is the best response to avoid providing incorrect testimony. If a witness believes that a document is incorrect, the witness should state that the document is in conflict with the witness’s recollection. Guesses, or attempts to explain conflicting documentation, should be avoided.

What If I Remember Something After My SEC Testimony?

If you testified in a formal SEC interview, your counsel may ask you a few questions at the conclusion of your testimony to clarify your answers for your counsel’s internal purposes. You can request the transcript of your testimony from the SEC and, subject to the applicable rule, purchase a copy. But it will take time for you to receive the transcript from the SEC. In the meantime, the SEC may request additional documents and/or further testimony if it determines that it is necessary to advance its investigation.

You will also want to maintain a copy of your transcript if the SEC pursues an enforcement action against you or if your testimony is used in a later SEC proceeding or a parallel federal proceeding. SEC investigators will analyze your testimony to determine if you have provided accurate information. They will compare your claimed lack of recollection with prior statements, surrounding details, and contemporaneous records. So, for example, if you truthfully had no recollection of an event during your SEC testimony, you should be able to describe the surrounding circumstances of the event. You should also be able to answer questions about other events and details related to the event you do not recall. However, if you find that a document from the event’s time supports your recollection, you can provide this information to investigators. This information will be a supplement and will not alter your testimony.

What if I Made a Mistake in SEC Testimony?

If you find that you’ve made a mistake during your SEC testimony, your counsel can help correct it. Counsel can supplement your testimony by providing the necessary information to the SEC investigators on your behalf. This will not change your original answer. For example, if you testified that you don’t recall a specific fact, and later you find out that you remember it, your counsel can provide this information to investigators. The SEC investigators can then decide if they need further testimony from you. However, witnesses must make sure they do not try to supplement their testimony with false information. If witnesses make knowingly false statements to SEC investigators, it could potentially lead to charges under 18 U.S.C. § 1001, which can lead to fines and federal imprisonment.

Todd Spodek and the attorneys at Spodek Law Group handle federal cases of this kind from New York, Brooklyn, Queens and Los Angeles.

How Long Will the SEC Investigation Last?

The duration of an SEC investigation can vary depending on its scope and the subject matter involved. An SEC investigation may last for several months, or it could take up to several years. There is no rule or statute that dictates how long investigations must last. Once the investigation is complete, the SEC may or may not pursue enforcement action against the company or the person under investigation.

Should I Tell My Defense Lawyer the Complete Truth?

If your lawyer is your personal defense counsel, then yes, you should tell your defense lawyer the complete truth, including any facts that might harm your case. Your personal defense counsel cannot do their job effectively without all the pertinent facts in hand. If you have only informed your lawyer of the facts you believe to be helpful, your lawyer may not be able to adequately protect you or provide effective advice in conjunction with the SEC’s investigation.

Your personal defense lawyer is also bound by the attorney-client privilege. While this privilege generally covers the confidential disclosure of information in the pursuit of legal advice, there are notable exceptions. The privilege does not cover the underlying facts or documents that existed before the disclosure. For instance, if you disclose the contents of a document to your lawyer, the disclosure may be protected. However, the document itself is not protected by the attorney-client privilege and may be subject to disclosure.

The lawyers representing your company are not your personal lawyers. While they will protect you if it also protects the company, they will not represent you personally unless they have entered into a separate representation agreement. If you hire your own independent lawyer, you will then have a personal defense counsel that is bound by the attorney-client privilege and can provide you with fully-informed legal advice.

Your lawyer will also be obligated to preserve the integrity of the judicial process. A lawyer cannot knowingly counsel or assist a witness in providing false testimony. Therefore, the lawyer will need to know all of the facts in order to guide the witness through the process in an ethically sound manner. If a witness refuses to provide a full disclosure, the lawyer can no longer afford the witness full confidence and will instead guide the witness through the process in the most prudent manner possible.

If you are a current or former employee of the company under investigation, you should also determine if your company has privileged interviews with you. If you were interviewed by the company’s lawyers, this was done in the course of obtaining corporate legal advice. Accordingly, the privilege over this interview generally rests with the company. The fact that your testimony is the same as facts presented during the interview does not itself make your testimony protected by the privilege.

If your company has decided to cooperate with the SEC, then you will need to engage independent counsel. This is because the company’s interests in cooperating with the government are not the same as your interests as an individual. In this scenario, independent counsel can better provide you with the legal advice you need and can help you make informed decisions about your SEC testimony in conjunction with any parallel criminal investigations.

Can I Invoke the Fifth Amendment Instead of Answering?

Yes, the Fifth Amendment privilege against self-incrimination generally applies to testimony given during civil SEC investigations. While this privilege is most commonly associated with criminal proceedings, witnesses can still rely on it when questioned by SEC staff. In practice, witnesses who rely on the privilege do so on a question-by-question basis, allowing them to withhold answers that could expose them to criminal liability while providing others.

Can you invoke the Fifth Amendment privilege to avoid producing documents? Generally, the Fifth Amendment privilege does not apply to documents that exist independently of the witness’s testimony. This is because the privilege is intended to protect witnesses from making a statement. However, the act of producing documents can sometimes communicate incriminating information to investigators independently of the contents of those documents. If the act of producing documents would expose you to criminal liability, you may be able to rely on the privilege to avoid producing them. This is a complex legal issue that requires coordination with your counsel.

Corporations do not have the same Fifth Amendment protections as individuals. Corporations cannot invoke the Fifth Amendment privilege over corporate records. The act-of-production doctrine does not help a corporation either. Because the act of producing corporate records is treated as an act of the entity rather than of the individual custodian, a corporation cannot refuse to produce its records on the ground that the production itself would be incriminating.

Waiver is another major concern. If you answer a question about a particular subject, you may waive your Fifth Amendment protection regarding the closely related details of that subject. There are several ways this waiver can occur: (i) if you provide answers that become incriminating, (ii) if you voluntarily disclose more information than is required, and (iii) if your testimony exposes you to criminal prosecution. This makes it challenging to answer questions in such a way that prevents waiver in all scenarios, which is why guidance from a lawyer is essential.

When should you invoke the Fifth Amendment privilege during SEC testimony? In some cases, you may not need the privilege. But if it is warranted, exercising the privilege without compromising your criminal defense is critical. If you think you need the privilege, you should coordinate with your counsel, and your counsel can help you make informed decisions regarding when to answer questions and when to rely on the Fifth Amendment privilege.

Can the SEC staff provide immunity? SEC staff cannot grant immunity on their own. The only immunity available is statutory use and derivative-use immunity under 18 U.S.C. § 6002; the SEC's Division of Enforcement may request it, but it takes approval from the U.S. Department of Justice and a court order under 18 U.S.C. §§ 6003-6004. Statutory immunity is the type of immunity used in federal criminal prosecutions and is only available through the intervention of the U.S. Department of Justice. When granting use immunity, the SEC staff protects witnesses from facing criminal charges based on their answers to questions asked by investigators. However, this protection is limited and only available if granting it falls within the SEC staff’s scope of authority.

Consequently, if you need to testify but require immunity, it will be necessary to work with your counsel to coordinate with the appropriate government authorities.

Can I Get Out of an SEC Testimony Subpoena?

If you are subject to an SEC testimony subpoena, what are your next steps? If you are subject to a subpoena issued by the SEC, your first step should be to communicate with your counsel. Your counsel can determine if the subpoena is lawfully issued and if you have grounds to successfully challenge it. If not, your counsel can negotiate the scope of the subpoena, your response timing, and other pertinent aspects of the case.

Can the SEC Enforcement Personnel File Motion to Enforce Subpoenas?

If subpoena enforcement is necessary, the SEC can ask the district court to enforce the subpoena. According to 15 U.S.C. § 78u(c), the SEC may apply for leave of court to a U.S. District Court to enforce a subpoena under the Exchange Act. After you receive the subpoena, if you do not satisfy its requirements and the SEC determines that you have deliberately failed to comply with a valid subpoena, the SEC can take action to enforce the subpoena. It will need to show the court that (i) the purpose of enforcement is legitimate, (ii) that the subpoena was served in compliance with applicable laws and procedures, and (iii) that the documents or testimony sought are relevant to the investigation.

Will I Be in Contempt for Not Following the Subpoena?

Not necessarily. Being in contempt is something that happens after a court order has been issued but has not been followed. A subpoena is part of the administrative or agency process, and not a federal court order. If you are served with a subpoena but are unable to satisfy it, this may potentially lead to a court order requiring compliance. If you do not then comply with a court order, then you may be found in contempt of court.

Does Federal Rule 45 Apply?

Federal Rule 45 governs third-party subpoenas under federal rules of civil procedure. The rules under Rule 45 require a subpoena’s recipient to file a written objection within 14 days of the date of service, and any other substantive issues can then be litigated between the two parties involved. However, Federal Rule 45 does not apply to administrative subpoenas issued by agencies during the investigative process. So, if you received a subpoena issued by the SEC, you cannot simply file a written objection with the SEC.

Can I Simply Ignore an SEC Testimony Subpoena?

No, you should not ignore an SEC testimony subpoena. There is no unilateral procedure for a subpoena’s recipient to cancel or disregard an SEC investigative subpoena. As with other subpoenas, recipients should communicate with their lawyers to determine how they can protect their rights.

Can the Privilege Shield me from a Subpoena?

A privilege shield generally protects communication from being disclosed in an enforcement case or trial. As a result, when witnesses assert a privilege, this assertion applies to particular communications and not necessarily as an automatic cancellation of a subpoena in its entirety. If an SEC witness identifies certain records, documents, communications, or information to be protected under a privilege, the witness will still need to comply with the remainder of the subpoena’s demands.

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.