Several regulators, several kinds of exposure
The SEC can bring civil enforcement actions, which may seek money penalties and industry bars, while criminal securities fraud is prosecuted by the Department of Justice. FINRA disciplines registered firms and individuals, and state regulators enforce their own securities laws. In New York, the Attorney General's office has broad authority under the state's Martin Act, which reaches some conduct that federal law treats differently. Private investors may sue or file arbitration claims at the same time. Each forum has its own procedures and consequences, and what you say or produce in one can travel to the others.
Preparing the record
Investment fraud defense is often a matter of context: what the offering documents and disclosures actually said, which risks were described, how valuations were reached, and what investors were told along the way. Preserve emails, texts, messaging apps, models, board materials, and compliance records, and suspend any routine deletion. Firms usually have their own obligations to retain records and respond to regulators, and individual employees may need counsel separate from the firm's, because their interests can diverge. Avoid discussing the substance with colleagues who may be witnesses. Keep in mind that even well-meant internal emails written after the problem surfaced can become evidence.
Strategy in the early stage
At the outset, we work out which agency is driving the matter, whether criminal exposure is realistic, and how testimony requests should be handled in light of the Fifth Amendment and the consequences of invoking it in civil proceedings. A Wells notice gives you a chance to make a written submission before the staff recommends that the Commission bring an action, and whether to use it is a judgment call. SEC settlement terms, including limits on what a settling party may say publicly afterward, have shifted over time, so current policy should be checked rather than assumed. We lay out these choices before you respond to anyone.
