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What Every Advisor Should Know About SEC Investigations

No advisor wants to utter the dreaded I-word – investigation. Just saying it out loud makes your palms sweat and your heart race. Visions of reputational ruin, careers derailed, and financial devastation dance through your mind.

For some financial advisors, the conclusion of an SEC investigation causes significant damage. And sadly, much of the carnage could have been mitigated. If only they had understood the game and brought in skilled legal defense before the walls came crashing down.

That’s why, in this post, we want to let you peer behind the curtain to understand the forces moving against you. By understanding their playbook, you can prepare a counterattack with the help of a battle-tested legal team before it’s too late.

Understanding the Roots of an SEC Investigation

If you receive that fateful letter or inquiry, the first question scalding your mind will be – why me? The possibilities span:

  • Collateral Damage – You have essential information or records related to allegations against another individual. Don’t relax yet, though…the investigation tentacles may still reach your firm if you provide inadequate supervision or control of wrongdoers.
  • Evidence Trail – Perhaps during routine examination, SEC snoops spotted red flags that demand further scrutiny through a formal proceeding. Often, the progression flows from informal evidence gathering to the sledgehammer of a formal investigation.
  • Blast Radius – You or an associate directly engaged in fraudulent activities, theft of customer assets, market manipulation schemes, or false statements/disclosures. When substantial evidence points to malicious intent, the SEC unleashes the full fury of its arsenal against advisors in its crosshairs.

While motivations differ, the resulting inquiries share alarmingly similar life-altering consequences. But before your knees buckle in surrender, understand that the investigation game remains fully winnable with an elite defensive squad by your side.

Informal vs. Formal – The Investigative Process

In the early “informal” stage, inquiries may seem casual information requests without sharp teeth behind them. But don’t be lulled into complacency. Informal proceedings commonly snowball into weaponized formal investigations.

Once substantial violations surface from gathered documents and testimony, the real nightmare begins. Now, in aggressive formal mode, the SEC can subpoena third-party witnesses and records, even prying evidence from resistant sources.

As the heat intensifies, you’ll receive the infamous Wells notice outlining charges and specifying remedies sought against your firm. Even amid swirling chaos, this represents a pivotal moment where masterful legal artistry can greatly transfigure outcomes.

Binding Resolution Behind Closed Doors

Understand that Wells notice negotiations remain behind closed doors. Here lies your temporary lifeline to get resolution under confidential cover before the SEC issues public formal charges.

Navigating securities investigations requires legal counsel deeply familiar with this complex area. Without strong and strategic defense against SEC staff allegations, advisors risk severe penalties and irreparable damage to their careers that may otherwise have been negotiable. The unfortunate consequences suffered by ill-equipped respondents serve as a warning.

My RIA Lawyer boasts one of the most seasoned SEC defense teams in the industry, blending meticulous securities experience with proven negotiating skills. Our secret lies in receiving Wells notification as an opportunity, not a death sentence – turning claims of malfeasance into watered-down concessions before blood hits the streets.

Even if charges remain, our behind-the-curtains resolution readies the ground for public-facing advisors to continue serving clients with minimal lasting damage. But without counseling, the SEC sinks advisors into financial and reputational oblivion. Don’t become another casualty.

Contact Our Regulatory Defense Team Before It’s Too Late

The hourglass empties grain by grain. Yet many advisors squander irreplaceable time, presuming innocence will prevail. But, breaching the SEC fortress demands insight and connections only available from securities legal veterans. Delaying reputable legal defense even one more day intensifies misfortune exponentially.

Instead, contact the regulatory defense attorneys at My RIA Lawyer.  Our SEC compliance team has successfully defended hundreds of advisors and firms facing SEC investigations, saving them from excessive penalties and reputation damage.

Don’t spend another sleepless night tortured by an SEC investigation. Prepare your countermeasures NOW. Contact us today.

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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