Conducting Corporate Investigations for SEC Compliance

  • Former Federal Agents
  • 100 Years of Combined Experience
  • Investigations, Compliance & Defense
Chris Quick

Former Special
Agent (FBI & IRS)

Roger Bach

Former Special
Agent (DOJ-OIG & DEA)

Timothy Allen

Former Special Agent
(U.S. Secret Service & DOJ-OIG)

Ray Yuen

Former Special
Agent (FBI)

Michael S. Koslow

Former Special
Agent (DOD & OIG)

Tim Allen

Internal Audit Team Lead – Timothy E. Allen | Former Special Agent (U.S. Secret Service & DOJ-OIG)

Securities firms large and small have to reach and maintain compliance with the wide variety of laws and regulations that the U.S. Securities and Exchange Commission (SEC) enforces. Maintaining that compliance, however, is not a passive activity. Securities laws evolve, business practices change, and clients, customers, and employees can commit misconduct that requires the firm’s intervention or throw the company into a very negative limelight.

By conducting a corporate investigation of your security firm’s SEC compliance measures, you can detect wrongdoing and other forms of noncompliance. This can insulate your company from legal liability or can mitigate the penalties that the SEC imposes by showing that you are taking your compliance obligations seriously and acting in good faith.

The compliance and auditing professionals at Corporate Investigation Consulting have brought numerous securities firms across the country into compliance with SEC regulations and requirements, and then helped those firms audit their compliance efforts and conduct corporate investigations to ensure that they were adequately protecting the firm.

The SEC Enforces a Wide Variety of Securities Laws

The United States Securities and Exchange Commission is one of the largest law enforcement agencies that deals exclusively with financial and white collar crimes and misconduct. While the SEC only has jurisdiction to file administrative complaints and civil charges, it can refer potentially criminal conduct to the U.S. Department of Justice (DOJ) for further action.

Just a few of the most important federal laws that the SEC is tasked with enforcing are the:

Additionally, the SEC has the authority to promulgate regulations that help them enforce the policies behind these laws, as well. Some of these regulations, like SEC Rule 10b—5, arguably stretch well beyond the boundaries set by these laws.

Depending on the law and the particular violation at issue, the penalties that an administrative sanction or civil judgment can carry can be crippling. At the very least, an administrative finding of wrongdoing can put your ability to buy and sell securities at risk. Depending on the case, civil allegations can lead to fines, disgorgement, and treble damages – sanctions that most securities firms are unable to pay. In the most extreme cases, the SEC uncovers evidence of securities fraud or another white collar offense and passes their investigation on to the DOJ for a criminal prosecution that carries decades in jail upon a conviction.

Put our highly experienced team on your side
Roger Bach

Former Special Agent (OIG)

Timothy E. Allen

Former Senior Special Agent U.S. Secret Service

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Maura Kelley

Former Special Agent (FBI)

Ray Yuen

Former Supervisory Special Agent (FBI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Marquis D. Pickett

Special Agent U.S. Secret Service (ret.)

Issues That Should Trigger a Corporate Investigation

Given the high penalties that come with an administrative, civil, or especially a criminal case, securities firms need to take steps to comply with the laws that the SEC enforces and then ensure that those steps are sufficient and effective. However, there are certain incidents that should make company executives and decision makers at least consider going further and conducting a corporate investigation for SEC compliance. Some of the most common of these incidents include:

  • An internal report of a securities violation
  • A finding of noncompliance by an audit
  • Media coverage of potential wrongdoing at your firm
  • Allegations of misconduct on social media
  • The SEC sends notice of an upcoming investigation

All of these situations are the first stage in what can be a series of escalations that ends up exposing the firm to substantial legal liability. Even if the allegation comes from a disreputable source, if there is any truth to it at all it can create serious problems if not handled from a very early stage. This is especially true if you are contacted by the SEC and notified that the agency intends to conduct an investigation of your business practices. These intrusive audits rarely just happen anymore. They are almost always the result of signs of misconduct that have already been detected by the SEC.

Getting ahead of these situations is essential, and a corporate investigation of your firm’s SEC compliance efforts is usually the best way to get started.

Steps in an SEC Corporate Compliance Investigation

Each corporate compliance investigation is different. It should reflect the concerns of the securities firm, the legal threats that it is facing, how advanced those threats are, the corporate structure of the company, and numerous other factors. However, all investigations tend to follow these six stages, at least to some extent:

  1. Assemble the investigation team
  2. Develop an investigation strategy
  3. Identify sources of information
  4. Gather documents and interview relevant personnel
  5. Assess the information that has been obtained
  6. Report the findings to stakeholders and decision makers

Why the Team at Corporate Investigation Consulting Fits Your Needs

For securities firms that want to outsource a corporate investigation and get to the bottom of a potential issue, assembling the right team of investigators is crucial.

The corporate investigation team at Corporate Investigation Consulting has you covered.

Our team of investigators are all senior level professionals. Most of them came to Corporate Investigation Consulting with decades of prior experience working within the SEC, DOJ, and other federal agencies like the:

  • Internal Revenue Service (IRS)
  • Office of Inspector General (OIG)
  • Federal Bureau of Investigation (FBI)

There, they worked with securities and financial cases just like your own, acting as law enforcement investigators, auditors, and other agents.

That experience on the side of law enforcement has given our roster of corporate compliance specialists a deep understanding of how your case is likely to proceed, what evidence investigators are looking for, and how you can best insulate your securities firm from liability.

Frequently Asked Questions About SEC Compliance and Corporate Investigations

What are the Risks of Not Conducting a Corporate Investigation for SEC Compliance?

When warning signs present themselves, the risks of not conducting a corporate investigation into potential securities misconduct within your company are substantial. Even delaying the investigation can make a huge difference in the eventual outcome of the situation.

Securities misconduct or outright fraud can lead to huge civil fines and administrative sanctions, not to mention the blow that the case will have on your company’s reputation. Should the SEC’s investigation uncover evidence of criminal wrongdoing, the risks grow even more. Executives can even face prison time.

Getting ahead of the situation and learning all that you can about the allegations being made is critical. It can help you make informed decisions about how to react to the next stages of the case and plan your defense strategy.

Will the Results of the Investigation Be Privileged from Discovery in a Civil or Criminal Case?

If done correctly, a corporate investigation into securities misconduct within your firm would be protected by attorney-client privilege. Confidential communications between an attorney and his or her clients are not subjected to discovery requests or other demands for evidence in a lawsuit or other enforcement action. This is essential for an effective defense. If the results of the investigation are not privileged then the SEC or plaintiff suing your firm will be handed what could be damning evidence against your company.

Should My Securities Firm Hire an SEC Defense Law Firm?

This is one of the many questions that a thorough and effective corporate investigation can answer. In many cases, the allegations that were brought to your attention and that prompted the investigation are found to be groundless. Hiring a securities defense law firm is often not worth it in these instances. However, if the investigation uncovers incriminating evidence that imperils the securities firm, then calling a defense firm is often the next step in the process.

This is a great example of why it is so important to conduct the internal investigation of securities misconduct. Without running the investigation, you are reacting blindly. The results of the investigation can help you understand what the risks are, what the SEC is likely to find if it conducts its own investigation, and what are going to be the best steps for you to take to protect your company from liability.

Why Doesn’t Corporate Investigation Consulting Call Itself the Leading Team of SEC Compliance Investigators?

Because we prefer to let our clients do that kind of talking for us. Our extensive experience in corporate investigations and auditing, including in the securities industry, has made us a sought-after firm for SEC compliance investigations. Some of these have provided invaluable information to our clients and helped them better prepare for what would be a difficult year. Many of them have assuaged decision makers and let them focus on their business practices and helping their own customers.

Contact Corporate Investigation Consulting to Get Started

Once Corporate Investigation Consulting is on your side, we can analyze your situation, create an effective strategy for the upcoming investigation that will answer all of the pressing questions and concerns you may have, execute that internal inspection, and present the results to decision makers within your firm in an easily understandable and actionable way that lets you make informed decisions about how to proceed.

Contact Corporate Investigation Consulting online or call us at (866) 352-9324 to conduct the SEC compliance investigation that you need at this important stage of your business.

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