Question 1

Should I hire a lawyer if I am being investigated by the SEC?

Accepted Answer

Yes. At this stage the SEC staff is deciding whether to bring an action against you for possible violations of the federal securities laws. Their process is rigorous. The SEC receives many complaints about possible violations but has limited resources, so the agency is selective as to which matters move forward. You have important rights, and likely some defenses that experienced counsel can help you evaluate.   Counsel can engage with the staff on am informal basis to understand the nature of the staff inquiry and focus. Having done so, counsel can help you formulate your defense and prepare responses that will hopefully succeed in convincing the staff not to move forward. But even if they choose to move forward, having worked with experienced counsel you will have begun to make a "record" that can help your case as you move forward in the process.

Question 2

I received a subpoena from the SEC. Do I need a lawyer?

Accepted Answer

If you have received a subpoena from the SEC, this means that the SEC has authorized the staff to commence a formal investigation into possible violations of the federal securities laws.  Such investigations are only opened when there is credible information of possible violations of the federal securities laws.  Further, the SEC has determined that it is necessary to engage in a more formal collection of evidence than can be obtained by voluntary compliance or informal inquiries.  Consultation with experienced counsel before responding is always useful.  Counsel can also assist you in deciding your status as a witness or a subject of the enforcement inquiry.

Question 3

What is a Wells notice?

Accepted Answer

A Wells notice is the name given to the informal administrative process by which the SEC staff gives notice to a potential respondent of a staff recommendation to the SEC regarding affirmative law enforcement action.

Question 4

Is responding to a Wells notice in my interest?

Accepted Answer

A Wells notice is the name given to the informal administrative process by which the SEC staff gives notice to a potential respondent of a staff recommendation to the SEC regarding affirmative law enforcement action.  A response is optional, but can often be very helpful.  Both the response and the staff recommendation are presented to the SEC commissioners before the SEC considers and votes on whether to proceed with law enforcement action.  Failure to respond at the Wells notice stage almost always results in formal law enforcement action.  Thus, a Wells response is often the last best chance to persuade the agency not to commence action, or to modify the proposed action by the staff.  It is also an opportunity to make an offer of settlement that has been rejected by the staff.

Question 5

I am a victim of a securities fraud. What are my options?

Accepted Answer

All federal and state agencies have complaint hotlines to report possible fraud or wrongdoing.  The government agencies could determine to investigate your complaint and take formal action.  These actions could include the appointment of a receiver or other actions by the government to recover funds for the benefit of victims.  But there is no assurance that the government will act in a timely manner to your benefit.  You also have the option of self-help by enlisting experienced counsel to assist you either individually or jointly with other similarly situated victims, to have a receiver appointed for the benefit of creditors who could recover any losses incurred.  Alternatively, you could have one or more direct actions for damages caused by wrongdoing.

Answers to Your Questions

-

Securities Litigation, Appeals & SEC Enforcement