Securities Enforcement (2024)

FAQs

How serious is an SEC investigation? ›

SEC Investigations Can Be a Lengthy Process

For the SEC, investigations are serious, lengthy and comprehensive because there is no more important work than protecting the investing public.

Theft of money or securities. Insider trading. Manipulation of investment prices. Making false or misleading statements about a company, including in SEC filings. Offering fraudulent or unregulated securities.

If the SEC files a civil lawsuit in federal court, it will typically seek an injunction, which is an order that prohibits future violations. An individual or company that violates an injunction can be subject to fines or imprisonment for contempt.

To put it simply, SEC violations are breaches of rules and regulations set forth by the Securities and Exchange Commission (SEC). The SEC is the government agency responsible for regulating the securities industry, which includes stocks, bonds, and other investment instruments.

The vast majority of those targeted by the SEC ultimately agree to settle their cases, often factoring in the enormous amount of time and expense required to fully litigate a case against the government to conclusion.

Because SEC proceedings are not criminal, they do not risk imprisonment. Nonetheless, the penalties and consequences of an SEC enforcement action can be severe. For example, violations of the securities laws might result in civil monetary penalties of millions, or even hundreds of millions, of dollars.

The SEC's Division of Enforcement is in charge of investigating alleged breaches of securities law. Unregistered securities offerings, insider trading, accounting errors, negligence, market manipulation, and fraud are all common reasons for SEC investigations.

The length of an SEC investigation depends upon its subject matter and scope. The average SEC investigation lasts anywhere between six months and one year. However, sometimes SEC investigations can last several years and put a tremendous strain on the resources of the party being investigated.

The SEC may seek a penalty when- ever it believes that an individual or corporation has violated a Federal Securities Law statute or SEC rule, or a previously entered SEC cease-and-desist order, except for an insider- trading violation, which is covered by the separate ITSFEA penalty provisions.

In a civil enforcement action filed in a United States District Court, the Commission can obtain a court order enjoining an individual from further violations of the securities laws, disgorgement of any money obtained from the illegal conduct, and in some circ*mstances, civil penalties.

Are SEC cases criminal or civil? ›

The SEC's powers are restricted to civil suits, although the SEC can share information obtained in its investigation or case with criminal prosecution authorities.

The SEC conducts its investigations on a confidential basis as a matter of policy. The purpose of this policy is to protect the integrity of any investigation from premature disclosure and to protect the privacy of persons involved in our investigations.

A number of administrative proceedings are available to the SEC, including cease and desist orders; revocation or suspension of registration; suspension from employment, or bars from employment. The Commission can order civil fines or seize any ill-gotten gains obtained by violators. 5.

If you willfully engage in insider trading, market manipulation, or make false or misleading statements, the potential penalties are: Up to ten million dollars ($10,000,000) in fines, Up to 3 years in prison, or both.

How long does it take for the SEC to investigate alleged securities violations? Longer than you might think. Typically, SEC investigations take two to four years to complete.

Are you wondering, “How long do SEC or DOJ investigations take?” The average SEC investigation takes between 12 and 18 months, but some can take several years. However, it may reopen an investigation if new evidence comes to light.

Currently, settlement date occurs two business days after trade date, but recent rule amendments from the Securities and Exchange Commission (SEC) and conforming FINRA rule changes will soon make that cycle one day shorter.