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Call an attorney before responding to an SEC subpoena February 18, 2010

Posted by jefhenninger in Articles.

Receiving a subpoena from an SEC can be a  confusing and troubling situation.  The SEC subpoena will just be asking for documents.  You probably won’t know exactly who or what they are investigating.  As a result, too many people underestimate the seriousness of the situation.  This is compounded by the fact that the SEC does not prosecute cases; that’s for the Department of Justice. 

The SEC may not give any indication to your attorney as to what is going on.  Regardless, a good attorney with experience in these matters should be able to piece things together within minutes.  Once your attorney figures out which way the wind is blowing, he or she should be setting a detailed plan in motion that will cost you some money but, in the end, could save your life.

The first questions to answer are, what is your criminal liability (if any)?   Are you the target of the investigation or just a witness? If you are not the target of the investigation or you don’t have any criminal liability, then you can focus on whether you may be facing any civil or regulatory issues.  Unfortunately, too many attorneys never even ask these questions.  They process the subpoena, shelve the file and hope for the best.  This is truly sad as it can lead to disaster for the client.

If you have criminal liability, trial prep has to start today.  This is the most difficult concept for clients to understand.  As a result, I’ve had people walk out of my office thinking I’m the crazy for suggesting that.  Ironically enough, I’ve read about several of them in the paper months or years later when they are entering a guilty plea or going off to prison.  However, I’ve also had clients that took my advice and they have not been charged, let alone found guilty.  I think the results speak for themselves.

When I say trial prep starts today, I’m not kidding either.  Notice I skipped right over the subpoena?  I’m going to start assessing the entire case and working it up before the subpoena is processed.  I usually want not only all of the documents referenced in the subpoena but in some cases, I want every paper my client has in his/her possession.  Of course, I tailor  it to the case.

Getting back to the SEC subpoena, a good attorney does more than just pass documents from you to them.  Research must be done to determine if the subpoena is valid, over broad, etc.  As with any subpoena, the more you can narrow its focus, the better for your client.  While challenging subpoenas can be expensive, they may yield important information about the investigation behind the subpoena itself.  When it comes to fighting for a client, information is power.

Moving forward in the trial preparation, the next focus should be on possible witnesses and whether or not they should be interviewed.  Even many fellow attorneys might think that this is crazy.  As a result of one subpoena, I’m interviewing witnesses?  Yes. Its not for everyone but tell my client that walked away without an arrest while about a dozen other people associated with his case went to prison.  Ask him if our tactics were overkill.

Finally, all of the legal research needs to be done.  This includes possible charges, defenses, motions, other legal issues and sentencing.  Trial prep does include sentencing research.  A client can change their mind at any time.  You have to be ready to discuss a plea and explain to possible risks to the client.  Furthermore, you may be able to work  on mitigation evidence now to get a lower sentence. 

Keep in mind that not every SEC subpoena requires this level of work.  Every case is different and all options must be on the table.  Most importantly, all options need to be explained to the client so they can make an intelligent decision about how the case should proceed.


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