| For lawyers, every case brings its own unique and | | | | prosecution. |
| complicated facets to the courtroom. However, there | | | | 7. An SEC investigation does not automatically lead to |
| are a certain number of set precedents to know | | | | a criminal, grand jury investigation. |
| when your client is under investigation for criminal | | | | 8. You have an opportunity during the SEC's |
| fraud and related securities enforcement. | | | | investigation to present reasons why your client |
| 1. Federal criminal investigations are conducted by the | | | | should not be sued by the SEC. |
| U.S. Attorney's Office and the grand jury, and may | | | | 9. An SEC investigation may also result in proceedings |
| or may not occur simultaneously with an SEC | | | | instituted administratively, which are heard before the |
| investigation. | | | | SEC's administrative law judges. |
| 2. As in a criminal case, generally, your client can | | | | 10. In its administrative proceedings, the SEC |
| assert the Fifth Amendment privilege against | | | | sometimes seeks an order barring a client from |
| self-incrimination as to his/her statements in an SEC | | | | working in the securities industry, e.g. broker-dealers, |
| investigation or litigation. This may not be true with | | | | stock promoters, or other clients, who have |
| regard to responses to SEC discovery requests. | | | | participated in an alleged scheme to defraud or to |
| 3. Securities and Exchange Commission ("SEC") | | | | manipulate stock prices. |
| investigations are civil enforcement actions and may | | | | 11. The SEC can seek to bar company officers and |
| result in a civil Complaint being filed in federal court. | | | | members of boards of directors from serving in such |
| 4. Although SEC suits are enforcement actions, they | | | | capacity when filing suit against them based upon a |
| are civil in nature and usually seek injunctive relief, | | | | fraudulent scheme or scheme to manipulate stock |
| disgorgement of ill-gotten gains, and civil money | | | | pricing. |
| penalties. | | | | 12. The court may appoint a receiver to oversee an |
| 5. Evidence obtained during an SEC investigation or | | | | on-going business that the SEC has sued for fraud or |
| litigation may be used in a criminal prosecution. | | | | for other prohibited conduct, and to recover assets |
| 6. Statements made by a person during an SEC | | | | that could be used to pay expenses and/or be |
| investigation or during litigation with the SEC may be | | | | returned to investors. |
| utilized by the U.S. Attorney's Office for a criminal | | | | |