We understand that receiving an investigation subpoena from the SEC can be worrying. This is an alert that this federal agency is investigating your conduct, and is ordering you to answer a list of questions and produce a wide range of documents. This could be the first step to the SEC bringing legal action against you for securities law violations.
Responding to the SEC subpoena is not optional. You must take it seriously and immediately take steps to deal with it. If not handled properly, your career could be damaged.
NOTIFYING YOUR FIRM
You have a regulatory obligation to notify your broker/dealer. The manner in which you approach your firm will be crucial. If not handled properly, your career could be damaged.
CONTACTING the SEC
SEC subpoenas often have an extremely short response deadline, assuming that the target will ask for an extension. The initial contact with the SEC is important for obtaining an extension of time and for using it as an opportunity to gain an understanding of the nature of the investigation. If the SEC denies a request, it likely means you are a target and have serious problems.
Hire an attorney who is experienced in defending advisors and firms in securities regulatory and disciplinary matters. You should not be using a general litigator or the attorney who helped you with your estate plan or who set up your LLC, no matter how highly you think of them. You should have a lawyer who understands the securities industry, and who regularly deals with personnel in the Enforcement Division at the SEC. Qualified counsel can help you frame your answers to the SEC subpoena to minimize or avoid further regulatory danger.
Scott Matasar, Esq. is a founding Member at Matasar Jacobs LLC. His legal practice focuses on representing firms and individuals in the securities brokerage industry. Among other things, he regularly defends clients in FINRA customer arbitration cases, represents advisors under investigation by FINRA as well as state and federal regulators, and counsels both firms and advisors on a wide range of securities regulatory and operational issues, including transition matters.
Scott can be reached at firstname.lastname@example.org, or at 216.453.8181.