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Navigating an SEC Investigation: What to Expect and How to Protect Yourself

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Discovering that you are the focus of an investigation by the Securities and Exchange Commission (SEC) can be a distressing experience. It is normal to have questions and apprehensions about the investigation process and the potential repercussions it may have. In this comprehensive guide, we will explore what you can anticipate if you find yourself in this situation and provide guidance on safeguarding your interests.

The SEC Investigation Process

One of the first things you might wonder when you learn about an SEC investigation is whether it becomes public knowledge. Fortunately, for individuals being investigated, the SEC prefers to keep things under wraps. The reason behind this discretion is to avoid tipping off potential witnesses or causing unnecessary panic. SEC investigations typically remain confidential until there’s substantial evidence of wrongdoing.

During this initial phase, the SEC may approach various parties, including your custodians, broker-dealers, and clients, to gather information and documents. They may also request you to provide testimony. Rest assured, the SEC’s aim is not to publicize your situation prematurely.

Here’s everything you need to know about SEC violations.

What Happens Next?

Assessing Wrongdoing

Once the SEC completes its investigative process, they will decide whether you’ve engaged in any wrongdoing. This is a crucial juncture, as their findings will determine the course of action they take.

Legal Action

If the SEC determines that you have violated securities rules and regulations, they have the authority to take legal action against you.

This action can come in two primary forms:

  1. Civil Lawsuit: The SEC may decide to file a civil lawsuit against you, seeking remedies such as injunctions, disgorgement of ill-gotten gains, and civil penalties.
  2. Criminal Charges: In more severe cases, the SEC can refer your case to the Department of Justice for potential criminal charges. This can result in fines and even imprisonment if convicted.

The Best-Case Scenario

It’s important to note that not all SEC investigations end in a negative outcome. In the best-case scenario, the SEC finds no evidence of wrongdoing on your part. This means you can breathe a sigh of relief and put this chapter behind you.

The Worst-Case Scenario: Understanding the Consequences

Now, let’s address the elephant in the room: the worst-case scenario. If you’re a financial advisor facing an SEC enforcement investigation, you may wonder about the most severe consequences.


In severe cases where the SEC uncovers significant violations, you could face serious repercussions. This includes being barred from working in the financial industry, which involves a formal reprimand. This action can have devastating consequences for your career and reputation.

Suspensions and Fines

Another potential outcome is facing a suspension, temporarily preventing you from conducting financial activities. Moreover, the SEC can impose substantial fines, often exceeding $100,000. These fines can be financially crippling.

Seeking Legal Counsel

Given the potential gravity of an SEC investigation, it’s crucial to seek legal counsel as soon as you become aware that you are the subject of one. Skilled attorneys with experience in SEC matters can provide invaluable guidance and support throughout the process.

Contact My RIA Lawyer Today

Discovering that you’re under investigation by the SEC can be a stressful experience, but it’s essential to remain calm and seek legal assistance promptly. Remember that the outcome of the investigation can vary, and the best-case scenario involves no findings of wrongdoing. However, it is equally crucial to prepare for the worst-case scenario, which could involve severe consequences for your career and finances.

If you find yourself facing an SEC investigation, don’t hesitate to seek professional legal advice. Your livelihood and your firm’s reputation are at stake.

Contact us today to schedule a consultation.

Author Bio

Leila Shaver is the Founder of My RIA Lawyer, a law firm that provides compliance and legal consulting for financial institutions. With extensive experience as a securities attorney and compliance expert, she has served as Chief Compliance Officer and General Counsel to RIAs, BDs, and TAMPs with billions in assets under management.

Leila understands the challenges RIAs face and is committed to helping RIAs streamline their processes, mitigate risks, and ensure compliance with regulatory requirements. She received her Juris Doctor from Atlanta’s John Marshall Law School and is a West Georgia Young Lawyers’ Association member. Leila has received numerous accolades for her work, including the Carroll County Bar Association’s Outstanding Young Lawyer Award in 2017.

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