SEC Cases Generally

The U.S. Securities and Exchange Commission (“SEC”) has the authority to investigate civil fraud and other related matters concerning “securities” as they relate to investors and investments schemes.  The SEC is authorized to seek:  injunctions and cease-and-desist orders; disgorgement (return of monies); and denial of privileges, such as licenses.  Parallel investigations, that is, criminal investigations resulting from the information in SEC cases, often come from SEC actions.  If you are involved in an SEC case or criminal investigation, contact SEC attorney John Teakell to guide you through an investigation.

 

Parallel Investigations

“Parallel investigation” means that two or more government agencies are investigating the same matter at the same time.  The phrase “parallel investigation” often means that a civil or administrative agency, like the SEC is investigating, or has filed a civil lawsuit, against people or their companies, while a criminal investigation is taking place at the same time.  Usually a criminal prosecutor starts a criminal investigation of the same companies or conduct after receiving information from another civil agency, especially the SEC.

A person who has an SEC case, and who then becomes the target of a federal criminal investigation, should be concerned that information obtained by the SEC could be used in the criminal case.  A person under criminal investigation cannot always be compelled to provide information to the investigators, but a civil agency such as the SEC can obtain statements and other information that a criminal investigator may not be able to obtain.

The SEC may issue subpoenas to compel testimony and produce documents.  However, in a situation of invoking the Fifth Amendment privilege against self-incrimination, the SEC does not have the authority to grant immunity from criminal prosecution.

 

SEC Is Authorized to Share Information with the Department of Justice

The SEC’s powers are restricted to civil suits, although the SEC can share information obtained in its investigation or case with criminal prosecution authorities.  These usually are attorneys for the U.S. Attorney’s Office or the U.S. Department of Justice, and investigative agents for them, such as the Federal Bureau of Investigation, or agents of the I.R.S. – Criminal Investigation Division.

 

Criminal Prosecutions

It is common for federal prosecutors to adopt the work of the SEC, using it to make criminal charges.  During an SEC case, there will be statements, subpoenaed documents and records, depositions, and other material that can be adopted by prosecutors to make their criminal case.

Securities fraud charges are prosecuted in federal court, and these offenses are based upon allegations of fraud, sales of securities without a license, and omitting pertinent material in the sale of securities, or insider trading.

 

Action When Under Criminal Investigation

A person under investigation can try to stay the civil, SEC case while the criminal investigation is on-going.  A person under investigation can petition the court in the pending SEC case to basically stop action in the civil case, as it would potentially put that person in the position of having to make statements or produce documents that he would not do in a criminal case or investigation.

Alternatively, when a person under criminal investigation is presented with civil case discovery requests, that is, requests for admission, depositions, etc., he needs to assert his privilege against self-incrimination.  That means he can claim “the Fifth Amendment” privilege, saying that an answer could be used against him in a criminal matter.  Even if you have not been involved in any criminal activity, you can still assert the Fifth Amendment privilege if the civil case covers the same allegations as the criminal investigation or case.

 

Hire Experienced Counsel to Address a Parallel Criminal Investigation

Anyone under investigation needs an experienced federal criminal defense attorney to guide you through a parallel investigation.  Former federal prosecutor John Teakell, who is also a former trial counsel for the SEC, can defend you in any criminal investigation or SEC case filed against you.