As noted in our previous Securities and Exchange Commission (SEC) article, the SEC is a dynamic regulatory body that has that has the ability to investigate violations in a very sophisticated manner through their Enforcement Division. Once the Enforcement Division gathers and analyzes the collected evidence, they will make a recommendation to the SEC Commission whether to prosecute the alleged violations. The SEC will then decide whether to prosecute in the civil or administrative courts.
The SEC Commission does not take this decision lightly because the consequences for the defendant are dependent on the outcome of these two different types of proceedings. It is important to note that a qualified attorney experienced in both administrative and civil courts are essential to a successful defense. As mentioned earlier, it is now the SEC Commissions responsibility to take this recommendation and decide whether to move forward with a prosecution or not. The SEC has the option of either initiating an action within the SEC in front of an administrative law judge or in the Federal Courts. If warranted, in some cases the SEC may opt to prosecute in both.
In a Civil action the SEC will file a complaint asking for sanctions or remedies in the US District Court. For example, they can ask the court for an injunction which forces the alleged violator to discontinue any actions that led to the violations of the laws or rules. Penalties also include the possible suspension or barring of targets from serving as a director or corporate officer. The SEC can also seek the return of illegally obtained profits and ask for civil monetary penalties or imprisonment.
Here, a case is heard by an independent administrative law judge who is able to levy sanctions through administrative proceedings. After a decision is rendered the defendant or the Enforcement Division are allowed to appeal all or part of the decision to the SEC Commission. The SEC Commission will then reverse, affirm, or remand the decision for further hearings. There are a number of sanctions that a defendant may be subject to. They are:
1. Bars from associating with the securities industry
2. Civil monetary penalties
4. Cease and desist orders
5. Revocation of broker dealer and investment advisor registrations
SEC prosecutions must be taken seriously because they can ultimately effect your ability to work in the securities industry and damage your reputation. The Kushner Law Group will defend your rights by taking proactive steps to assert strong defenses in order to protect you or your organization from the loss of licenses / employment and criminal prosecutions. Call us now so we can help you initiate a strong defensive strategy.