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Five Things to Know About SEC Enforcement Actions


The best way to avoid being involved in a U.S. Securities and Exchange Commission (SEC) enforcement action is to work with a Florida securities registration filings attorney to ensure that you are in compliance with all federal laws and regulations. At the same time, however, we know it can be important to learn more about SEC enforcement actions. Learning that your business will be investigated by the SEC for securities law violations can be an anxiety-inducing experience. Detailed information about SEC enforcement actions is extremely complicated, and that information can vary based on the specific facts of a case.

Recognizing that SEC enforcement actions can look quite different depending upon the specific issue at the center of the investigation, we want to provide you with five basic things to know about SEC enforcement actions. 

  1. Division of Enforcement Executes Law Enforcement Function of the SEC

As the SEC website explains, the Division of Enforcement was established in 1972, and the Division of Enforcement is what handles all enforcement activities. Prior to its creation, various divisions of the SEC handled enforcement actions. The Division of Enforcement is tasked with investigating alleged violations of federal securities laws, and prosecuting cases in both administrative proceedings and federal courts. 

  1. Information About SEC Violations Comes from Numerous Sources

The SEC can obtain information about violations from a wide variety of sources, such as tips from an investor, by surveilling market activity, and even from the news media. 

  1. SEC Investigations Are Conducted in Private

SEC investigations are not public, but rather are conducted through informal modes of inquiry such as interviews and examinations of documents. At the same time, however, a person can be subpoenaed in an SEC investigation. 

  1. SEC Investigations Can Result in an Administrative Action or a Federal Court Case

After an SEC investigation concerning a violation of federal securities laws, the SEC can decide whether it wants to initiate a civil action or an administrative action (if it determines that there is cause to initiate one of those types of actions). It is important to understand, however, that civil actions in federal courts are different from administrative actions. In an administrative process, an administrative law judge (ALJ) presides over a hearing concerning the alleged violation. With a civil action, the case goes before a federal judge. Civil and administration actions also result in different types of sanctions or penalties. 

  1. Investigations Can Rise as a Result of Many Different Types of Violations

The SEC cites many different common violations of federal securities laws that result in SEC investigations. Some examples include but are not limited to:

  • Misrepresenting information about securities;
  • Violations of a broker-dealer’s responsibility to customers; and
  • Sale of unregistered securities.

Contact a Florida Securities Lawyer 

By working with a Florida securities lawyer from the beginning, you can be sure that your securities registration filings are in compliance with federal law and that you will not be investigated for misrepresentation or fraud. If you have questions about what type of financial information you must disclose to the SEC or what steps you must take to be in compliance with federal law, an attorney at our firm can help you. Contact the Law Office of Clifford J. Hunt, P.A. for more information about how we assist clients with Florida securities registration filings and other securities matters.




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