SEC Insider’s Guide: A Guide to the SEC’s Investigative and Enforcement Process

SEC Insider’s Guide: A Guide to the SEC’s Investigative and Enforcement Process SEC WHISTLEBLOWER ADVOCATES In addition to the information contained in this Guide, we encourage readers to visit our website to review Frequently Asked Questions about the SEC Whistleblower Program, the securities laws enforced by the SEC and our Firm. www.secwhistlebloweradvocate.com Page ii I. OVERVIEW OF THE SEC. ....................................... 1 A. Introduction and Mission....................................... 1 B. Organization of the SEC........................................ 2 C. SEC Divisions......................................................... 4 1. Division of Corporation Finance. .................................4 2. Division of Investment Management..........................4 3. Division of Trading and Markets. .................................5 4. Division of Economic and Risk Analysis......................5 5. Division of Enforcement..............................................5 D. Other Important Offices. ....................................... 6 1. Office of the General Counsel....................................6 2.  Office of Compliance Inspections and Examinations........................................................6 3. Office of International Affairs......................................6 II.  THE SEC’S LAW ENFORCEMENT ARM: THE DIVISION OF ENFORCEMENT. ...................... 6 A. Overview............................................................... 6 B. How the Securities Laws are Enforced.................. 7 1. Investigations..............................................................7 2. Types of SEC Enforcement Actions. ............................7 C. Specialized Units and Market Intelligence. ............ 8 III. THE INVESTIGATIVE PROCESS............................. 9 A. Matters Under Inquiry........................................... 9 B. Formal Investigations.......................................... 10 IV. SOURCES OF INVESTIGATIONS. ......................... 11 A. Complaints and Tips From the Public.................. 11 B.  Referrals From Self-Regulatory Organizations. ...................................................... 12 C. Other Sources . .................................................... 12 V.  SUBPOENAS OF DOCUMENTS AND/OR TESTIMONY. ......................................... 12 A. The Power to Issue Subpoenas. ........................... 12 B. Challenges to Subpoenas. .................................... 12 VI.  PRIVACY AND CONFIDENTIALITY OF INVESTIGATIONS. .......................................... 13 A. Confidentiality of Information............................. 13 B. Freedom of Information Act. ............................... 13 C. The Privacy Act of 1974. ...................................... 13 D. Whistleblower Confidentiality............................. 14 VII. PRIVILEGES......................................................... 14 A. Attorney-Client Privilege. .................................... 14 B. Work-Product Doctrine. ....................................... 14 C. Self-Evaluative Privilege...................................... 15 D. Waiver. ................................................................. 15 Table of Contents SEC Insider’s Guide Page iii VIII. COOPERATING WITH THE SEC. .......................... 16 A. Proffer Agreements. ............................................ 16 B. Cooperation Agreements.................................... 16 C. Deferred Prosecution Agreements. ..................... 17 D. Non-Prosecution Agreements. ............................. 17 E. Grants of Immunity. ............................................. 17 IX. CLOSING AN INVESTIGATION. ........................... 19 A. Wells Process. ...................................................... 19 1. Wells Notice..............................................................19 2. Wells Submission. ......................................................19 B.  Closing Investigations Resulting in an Enforcement Action.................................... 19 C. Closing Without Further Action. .......................... 20 D. Termination Letters. ............................................. 20 X.  STATUTE OF LIMITATIONS IN ENFORCEMENT ACTIONS............................. 21 A. Governing Statutes. ............................................. 21 B. Scope................................................................... 21 C. Tolling Agreements. ............................................. 21 XI.  ENFORCEMENT ACTIONS AND REMEDIES. .................................................. 22 A. Civil Actions. ........................................................ 22 1. Civil Injunction. ..........................................................22 2. Disgorgement...........................................................22 3. Civil Penalties............................................................22 4. Barring Service as an Officer or Director. ..................22 B. Administrative Proceedings. ................................ 23 1. Cease and Desist Proceedings. .................................23 2. Civil Monetary Penalties. ...........................................23 3.  Revocation of Licenses and Bars from the Industry. ......................................................23 4. Proceedings to Correct Filings. .................................23 5. Disciplining Professionals. .........................................23 XII.  SEC COOPERATION WITH OTHER AGENCIES. .............................................. 24 A. Parallel Proceedings............................................ 24 B. Informal Referrals to Other Authorities.............. 24 1. Referrals to Criminal Authorities...............................24 2. Referrals to Self-Regulatory Organizations. ...............24 3.  Referrals to the Public Company Accounting Oversight Board. ....................................24 4. Referrals to State Agencies.......................................24 5. Referrals to Professional Licensing Boards. ...............24 C.  Sharing Information Obtained During Investigations. .......................................... 25 SEC Insider’s Guide Page 1 SEC Insider’s Guide A GUIDE TO THE SEC’S INVESTIGATIVE AND ENFORCEMENT PROCESS Labaton Sucharow was the first, and remains the only, law firm to establish a national practice focused exclusively on representing SEC whistleblowers. Collectively, our team brings more than a century of time- tested, real-world federal law enforcement experience to our SEC whistleblower advocacy. Our practice leader, a principal architect of the SEC Whistleblower Program, and members of our team previously held senior positions within the SEC, and led hundreds of successful SEC enforcement actions and related DOJ prosecutions. We have cultivated important relationships and in-the-trenches knowledge of what drives successful enforcement actions. As a low-volume, ultra-selective practice winning precedent-setting whistleblower awards, we offer our clients sophisticated counsel driven by a highly disciplined qualitative and quantitative analytical approach. Successfully reporting securities violations is a high-stakes, complex process. This guide serves as an introduction to the structure and operations of the SEC, as well as topics related to investigations and enforcement actions. I. Overview of the SEC A. Introduction and Mission The mission of the Securities and Exchange Commission (the “SEC” or “Commission”) is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. An independent federal agency established pursuant to the Securities and Exchange Act of 1934 (the “Exchange Act” or the “’34 Act”), the SEC was designed to enforce the Exchange Act and the Securities Act of 1933 (the “Securities Act” or “’33 Act”). In the wake of the Great Depression, these acts were created to restore investor confidence in the capital markets. The Commission is empowered with broad authority over all aspects of the securities industry. This includes the power to investigate and prosecute violations of the securities laws, as well as the power to regulate and oversee brokerage firms, transfer agents, clearing agencies, and stock exchanges, such as the New York Stock Exchange and NASDAQ. In particular, the SEC’s responsibilities are to:  interpret the federal securities laws; issue new rules and amend existing rules; oversee the inspection of securities firms, brokers, investment advisors, and ratings agencies; oversee private regulatory organizations in the securities, accounting, and auditing fields; and coordinate U.S. securities regulation with federal, state, and foreign authorities. www.secwhistlebloweradvocate.com Page 2 B. Organization of the SEC The SEC is headed by a bi-partisan five-member Commission, comprised of a Chairman and four Commissioners. All members are appointed by the President, confirmed by the Senate and serve staggered 5-year terms. The Chairman serves as the Commission’s Chief Executive Officer. The SEC is headquartered in Washington, D.C. The SEC is organized into five main divisions and 24 offices headquartered in Washington, D.C. The five main divisions are: Corporate Finance; Investment Management; Trading and Markets; Risk, Strategy, and Financial Innovation; and Enforcement. The SEC also has 11 regional offices in the following cities: New York; Boston; Philadelphia; Atlanta; Miami; Chicago; Denver; Fort Worth; Salt Lake City; San Francisco; and Los Angeles. The regional offices investigate and litigate potential violations of the securities laws. The regional offices also employ examination staff, who examine and investigate regulated entities such as investment advisers, investment companies and broker-dealers. Their jurisdiction extends to surrounding areas as follows: SEC HEADQUARTERS AND REGIONAL OFFICE LOCATIONS SAN FRANCISCO • • SALT LAKE • FORT WORTH • CHICAGO • ATLANTA • MIAMI • PHILADELPHIA ★ SEC HEADQUARTERS ★ SEC HEADQUARTERS ● ATLANTA REGIONAL OFFICE GEORGIA, NORTH CAROLINA, SOUTH CAROLINA, TENNESSEE, ALABAMA ● BOSTON REGIONAL OFFICE CONNECTICUT, MAINE, MASSACHUSETTS, NEW HAMPSHIRE, VERMONT, RHODE ISLAND ● CHICAGO REGIONAL OFFICE ILLINOIS, INDIANA, IOWA, KENTUCKY, MICHIGAN, MINNESOTA, MISSOURI, OHIO, WISCONSIN ● DENVER REGIONAL OFFICE COLORADO, KANSAS, NEBRASKA, NEW MEXICO, NORTH DAKOTA, SOUTH DAKOTA, WYOMING ● FORT WORTH REGIONAL OFFICE TEXAS, OKLAHOMA, ARKANSAS (EXCEPT FOR THE EXAM PROGRAM WHICH IS ADMINISTERED BY THE DENVER REGIONAL OFFICE) ● LOS ANGELES OFFICE ARIZONA, HAWAII, GUAM, NEVADA, SOUTHERN CALIFORNIA (ZIP CODES 93599 AND BELOW, EXCEPT FOR 93200-93299) ● MIAMI REGIONAL OFFICE FLORIDA, MISSISSIPPI, LOUISIANA, U.S. VIRGIN ISLANDS, PUERTO RICO ● NEW YORK REGIONAL OFFICE NEW YORK, NEW JERSEY ● PHILADELPHIA REGIONAL OFFICE DELAWARE, MARYLAND, PENNSYLVANIA, VIRGINIA, WEST VIRGINIA, DISTRICT OF COLUMBIA ● SALT LAKE REGIONAL OFFICE UTAH ● SAN FRANCISCO REGIONAL OFFICE WASHINGTON, OREGON, ALASKA, MONTANA, IDAHO, NORTHERN CALIFORNIA (ZIP CODES 93600 AND UP , PLUS 93200-93299) • NEW YORK • BOSTON LOS ANGELES • SEC Insider’s Guide Page 3 COMMISSIONER COMMISSIONER COMMISSIONER COMMISSIONER INVESTOR ADVOCATE ADMINISTRATIVE LAW JUDGES LEGISLATIVE & INTER- GOVERNMENTAL AFFAIRS CHIEF ACCOUNTANT INVESTMENT MANAGEMENT INVESTOR EDUCATION & ADVOCACY CHIEF OPERATING OFFICER COMPLIANCE INSPECTIONS & EXAMINATIONS ENFORCEMENT MUNICIPAL SECURITIES INTERNATIONAL AFFAIRS ECONOMIC & RISK ANALYSIS CORPORATION FINANCE EQUAL EMPLOYMENT OPPORTUNITY CREDIT RATINGS PUBLIC AFFAIRS ACQUISITIONS HUMAN RESOURCES CHAIRMAN -------------------- OFFICE OF THE CHAIRMAN FINANCIAL MANAGEMENT TRADING & MARKETS STRATEGIC INITIATIVES INFORMATION TECHNOLOGY MINORITY & WOMEN INCLUSION INSPECTOR GENERAL GENERAL COUNSEL ETHICS COUNSEL SECRETARY SUPPORT OPERATIONS ATLANTA REGIONAL OFFICE BOSTON REGIONAL OFFICE CHICAGO REGIONAL OFFICE DENVER REGIONAL OFFICE FORT WORTH REGIONAL OFFICE LOS ANGELES REGIONAL OFFICE MIAMI REGIONAL OFFICE NEW YORK REGIONAL OFFICE PHILADELPHIA REGIONAL OFFICE SALT LAKE REGIONAL OFFICE SAN FRANCISCO REGIONAL OFFICE The current SEC organization chart looks like this: In fiscal year 2016, the SEC’s total budgetary resources amounted to $1.9 billion, a 10% increase over the preceding fiscal year. The majority of the SEC’s spending was on personnel compensation and benefits; the agency employed a staff of 4,554 full-time equivalents (FTEs), including 4,404 permanent and 150 other-than-permanent FTEs in FY 2016. Additional spending primarily consisted of contractual services and supplies, and acquisitions of assets. The SEC’s spending is almost entirely offset by its collections each fiscal year, and FY 2016 was no exception: Source: https://www.sec.gov/images/secorg.pdf. 0 $1,000 $2,000 $1,583 ■ Total Actual Offsetting Collections ■ Appropriations ■ New Budgetary Authority $984 $1,016 $1,443 $1,598 $1,321 $1,321 $1,350 $1,500 $1,605 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY uploads/Finance/ reg-guide 1 .pdf

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• Détails
• Publié le Fev 10, 2022
• Catégorie Business / Finance
• Langue French
• Taille du fichier 0.6004MB