Finding out that the Enforcement Division of the Securities and Exchange Commission has plans to investigate you or your California business may have you feeling anxious and unsure where to turn. While the SEC maintains responsibility for keeping the U.S. public securities market fair, it also conducts investigations into individuals and entities it suspects might be running afoul of the law and prosecutes them accordingly.
Per the U.S. Securities and Exchange Commission, certain actions may trigger an SEC investigation. Some of these actions are as follows.
Violations that may trigger an SEC investigation
Any violation of federal securities law has the potential to trigger an SEC investigation. If the SEC believes you may have manipulated market prices, stolen customer funds or otherwise violated your obligation to your customers, you may face an SEC investigation. Participating in insider trading, selling unregistered securities or misrepresenting or omitting important facts about securities may also attract the attention of the SEC.
Cases that may follow an SEC investigation
If, after its investigation, the SEC believes it has enough evidence to launch a case, it may do so in one of two ways. If the SEC files a civil action, it may ask for an injunction halting any further acts it considers violations. It may also seek monetary penalties or bar you from working in certain professions, among other possible repercussions.
The SEC may also decide to have you take part in a hearing with an administrative law judge. At this point, you have a chance to make your case before the judge makes a decision and recommends sanctions he or she feels are appropriate.
Both types of cases have the potential to lead to serious legal repercussions. If you are facing an SEC investigation, it is wise to develop a comprehensive understanding of the charges you face and the possible penalties associated with them.