SEC Compliance Team Lead – Timothy E. Allen | Former Special Agent (U.S. Secret Service & DOJ-OIG)
Complying with the SEC’s labyrinthine regulations is not an easy task. However, the costs of non-compliance can be substantial and can cripple your company with civil and potentially even criminal sanctions.
The experienced attorneys and SEC compliance consultants at our firm can help ensure that your company is complying with the SEC’s numerous rules and regulations. They can also help you defend against any enforcement actions that have already been initiated and that allege that your company is non-compliant.
The SEC’s Extremely Broad Jurisdiction
One thing that frequently surprises business owners and executives is just how much jurisdiction the Securities and Exchange Commission (SEC) has. It reaches into a huge swath of common financial and business practices, including:
- Securities
- Antitrust
- Mergers and acquisitions
- Corporate reporting
- Market manipulation
- White collar crimes
Failing to comply with SEC regulations on any of these fronts can lead to legal liability.
Federal Securities Laws
The SEC is tasked with enforcing federal securities laws and other statutes that regulate the financial industry. Some of the most important include the:
- Securities Act of 1933
- Securities Exchange Act of 1934
- Trust Indenture Act
- Investment Company Act
- Investment Advisers Act
- Sarbanes-Oxley Act
- Dodd-Frank Wall Street Reform and Consumer Protection Act
Some of these laws, particularly the Securities Act and the Securities Exchange Act, are written extremely broadly. In promulgating regulations to enforce those laws, the SEC has adopted interpretations of them that are even more expansive, and the courts have not reined them in. Part of this has to do with the age of the laws that form the basis for the SEC’s jurisdiction. These statutes did not contemplate many of the highly complex types of financial transactions that have become normal in today’s age, but they have not been updated by Congress. This has allowed the SEC to take command and, arguably, stretch beyond its original mandate and into areas that should be out of its control.
Securities professionals, brokers, and trading firms have a wide variety of SEC regulations to comply with in order to trade in securities. Compliance on all fronts is a fundamental requirement for doing business.
Antitrust and M&A
The SEC also plays a role in enforcing the U.S. antitrust laws and overseeing the mergers and acquisitions that may violate them. While the SEC generally works in support of the Antitrust Division of the Department of Justice (DOJ), the information that the SEC gathers from securities professionals and firms often forms the core of a DOJ antitrust investigation.
Whether your company is seeking to absorb another or to sell to a competitor, it is essential to get an SEC compliance attorney on board early in the process to ensure that everything goes smoothly.
Corporate Reporting
To enable the agency in its oversight capacities, the SEC requires publically listed corporations and companies to file annual reports and comply with a litany of disclosure and accounting requirements. These regulations are purportedly to protect investors by requiring all stock-issuing companies to provide access to information that can be useful in trading in that company’s securities. However, by mandating these disclosures, it puts an additional administrative strain on the company, and coincidentally gives the SEC access to huge amounts of data that they can investigate at their own convenience.
Complying with these opaque and nuanced reporting requirements can be difficult. Non-compliance can raise the agency’s suspicion and lead to an investigation and legal liability.
Market Manipulation and White Collar Offenses
In its mandate to protect U.S. investors, the SEC watches closely for signs of market manipulation and other white collar crime offenses. In some cases, it does this directly. In others, it delegates oversight to a self-regulatory organization, like the Financial Industry Regulatory Authority (FINRA).
Some examples of the misconduct that the SEC helps to prosecute are:
- Violations of the Foreign Corrupt Practices Act (FCPA)
- Insider trading
- Money laundering
- Pump and dump traders
- Churning trades in order to generate extra commissions
Because these trading practices hurt investors or put your firm at an unfair advantage compared to others, the SEC tries to regulate them. Part of SEC compliance is to make sure not only that your firm does not break the law, but also that it does not create the appearance of breaking the law.
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)
Marquis D. Pickett
Special Agent U.S. Secret Service (ret.)
The Substantial Penalties for Noncompliance
Not complying with the maze of requirements that the SEC has set out for securities professionals and firms can lead to a wide variety of penalties, up to and including a lengthy prison sentence.
If the SEC ever learns of professional conduct that it thinks runs afoul of its rules, it will conduct a close investigation to learn more. Even if the investigation turns up nothing and the suspicion proves to be groundless, the very inconvenience of an SEC investigation can hurt your business. It can also deter any clients or customers who learn of it from engaging your professional services.
But it does not take much for the SEC to take administrative action against a regulated securities professional. In lots of cases, the evidence of wrongdoing that gets uncovered by the SEC would not amount to a criminal or even a civil case. Nevertheless, the SEC is often willing to use the evidence to support administrative sanctions against you or your firm, like a suspension or even a lifetime ban against trading in securities.
If the case escalates, you may end up facing civil or criminal liability. Civil cases carry huge fines – sometimes triple what was obtained through an allegedly wrongful or fraudulent business practice – while criminal cases can lead to jail time.
Frequently Asked Questions
Is the SEC an Executive Agency?
Kind of. The SEC is what is known as an “independent agency” of the federal government. It exists apart from the executive branch of the U.S. government, though it has a lot in common with other executive agencies, like the DOJ.
One of the most important differences is that independent agencies like the SEC are more insulated from the President of the United States. The heads of other executive departments, who serve on the Cabinet, can be dismissed for no reason at all, while the head of the SEC can only be dismissed for cause. This gives the SEC a level of insulation from the prevailing political winds of the moment which, in theory, lets it regulate the markets with more certainty and less political pressure.
Do SEC Regulations Have the Force of Law?
Yes, so long as the regulation complies with the statutory grant of authority that Congress gave to the SEC. Unfortunately, that statutory grant of authority came in the Securities Exchange Act of 1934, which was passed by Congress in the aftermath of the Great Depression, which was caused by the Wall Street Crash of 1929. Facing political pressure to prevent another Great Depression, Congress gave the SEC extremely broad mandates to regulate markets and protect investors. Almost any regulation that the SEC can think of can be made to fall within one of those concerns, giving the SEC an extremely broad regulatory authority.
What are Some Steps That Corporate Investigation Services Will Take to Ensure Compliance?
Every case is different, and we recognize that a once-size-fits-all approach is unlikely to protect the needs and interests of your particular business. However, after learning all that we can about your specific needs – something that we find other compliance attorneys tend to skip over – we look for all of the regulations and rules that might come up in the future for your business. Based on your needs and the SEC’s legal requirements, we craft a compliance strategy that is unique to your business’ needs, as well as an actionable plan for executing on that strategy, keeping it up to date, and strengthening it through internal audits.
Why Don’t the Lawyers at Corporate Investigation Services Call Themselves the Best SEC Compliance Team?
Because we prefer to let our work and our experience speak for themselves.
We have represented numerous brokerage firms and regulated professionals in the past, helping them steer clear of SEC investigations or, when that was too late, helping them protect their interests and their future. With our legal representation, professionals have been able to carry on with their daily business without the inconvenience of an SEC investigation slowing them down.
The experience of our team is also above and beyond what other compliance firms can provide. Our firm is filled with former law enforcement agents and investigators who used to help the SEC prosecute a wide variety of financial transgressions. Now they use that experience to help regulated professionals and their brokerage firms navigate the tricky waters of SEC compliance.
Speak With Experienced SEC Compliance Consultants Today
Given the penalties that come with noncompliance with SEC’s rules and regulations, following the law to the letter is paramount. It is not enough to just comply: The mere appearance of noncompliance can lead to an invasive investigation that can hamper your business and hurt its bottom line.
The SEC compliance attorneys and consultants at Corporate Investigation Services have extensive experience as former law enforcement officers in the SEC and in other financial regulatory agencies. We used to conduct the investigations that get securities professionals and brokerage firms into legal trouble. We know what catches the SEC’s eye and how to avoid it.
Contact us online or call our law office at (866) 352-9324 for legal help and to take the steps necessary to avoid unwanted scrutiny by the SEC.