SEC Case Results

Our team of former DOJ officials and former FBI agents with substantial SEC investigative experience has resolved a plethora of SEC investigations, both civil and criminal, with zero liability outcomes for our thrilled clients. Additionally, corporations have engaged us to address SEC compliance concerns preemptively through either conducting a comprehensive SEC internal investigation or by boosting the client’s compliance by adding or reforming pertinent SEC policies, protocols, and SEC compliance training materials.

Points of Contact:

• Nick Oberheiden
• Alina Veneziano
• John Sellers (DOJ, ret.)
• Maura Kelly (FBI, ret.)
• Marie Kondzielski (FBI, ret.)

Prior Case Results

• SEC v. Client (Criminal—Securities Fraud). Our client found out that his business is under investigation by the SEC and the FBI. Because, at first, there was some confusion about the exact nature of the allegations, our team conducted an internal investigation with the help of former FBI agents. Parallel to our own due diligence, I opened a dialogue with the supervising federal prosecutor. We learned that the government’s investigation into our client was an offspring from another SEC matter, and that our client, allegedly, misrepresented material information and gave investment advice without having the appropriate credentials. We implemented our SEC compliance package, reformed the company’s public statement policies, added disclaimers, and ultimately met with the SEC, the FBI, and the Justice Department. Our client, well prepared for this important meeting, explained the due diligence process at the company, introduced the heightened compliance standards, and substantiated why certain public company statements did not amount to advice but were informational and backed up by data. Because the government left convinced that there was no fraud at my client’s business and that all future statements will go through more scrutiny, the government closed the case with no penalties and no charges.
• SEC v. Client (Criminal—Insider Trading, SEC Fraud). Our client hired us after learning that the FBI was investigating his employer and management for securities fraud, insider trading, and misappropriation of investor funds. We positioned our client early with the U.S. Attorney’s Office and the federal prosecutors handling the matter realizing that there was substantial exposure for him with respect to co-mingling of funds. When the prosecutor wanted to hear from our client, we only offered what is called an Attorney Proffer, that is the attorney, but not the client himself, would give the government information (which cannot be used against a client). The government agreed and I had the opportunity to present our side of the story while pointing the Justice Department in several directions they were previously not aware of. Approximately eight months later, the government filed indictments against several members of the company—but not against our client! Case resolved with zero liability and no criminal charges.
• SEC v. Client (Criminal—Insider Trading). This was perhaps the closest call in a criminal SEC matter so far! The FBI showed up one day at our client’s house serving him a target letter and a grand jury subpoena. The prosecutor, well known to us, made clear in our initial conversation that the government is preparing insider trading charges based on evidence that our client sent several text messages to others informing them about non-publicly available developments inside a publicly traded company. Over a course of several months, we were able to present not just our client but also information to the government that put the alleged text messages into a different light. Quite a bit of research further revealed that the information our client distributed was what we called contextual knowledge to any sophisticated investor at the time. In other words, a prudent investor’s due diligence would have allowed someone to anticipate the developments that ultimately changed the stock price. In essence, I used a classic government standard (should have known, deliberate ignorance) and flipped it to the benefit of our client. We got our client out with no penalties and no criminal charges!
• SEC v. Client (Criminal—Insider Trading). The SEC served a subpoena on our client only requesting specific communications between our client and a group of people within a certain time frame. It was instantly clear that the SEC was conducting an already established insider trading investigation in preparation of a referral to the FBI. In light of the (unusual) fact that the government already had its entire case put together before reaching out to a target, we only saw a benefit in cooperating. And it worked. Instead of simply surrendering, we used the cooperation to present our side of the story—and one of my famous scales from 1-10 to illustrate how and why our client’s information did not amount to “insider” information in the traditional and SEC-defined way. As a result, first, we were able to avoid any referral and there was no FBI or DOJ involvement, and our client was not charged. Second, the SEC imposed a nominal penalty on our client which we anticipated and greatly welcomed as a case outcome.
• SEC v. Client: Our client, an attorney, found himself accused by the SEC of failing to do sufficient due diligence prior to preparation of opinion letters for companies that the SEC admitted were actively defrauding the attorney as well as many others. The client worried for the future of his practice and even his law license. In short order, our SEC defense team obtained a settlement offer that would save the practice and the license and require only a small payment by the client. Law license saved and no charges filed!
• SEC v Client: Our client was head of sales for a pharmaceutical company and chose to invest some of his money in their stock. When the SEC suspected insider trading by some of the company’s executives, his name was high on their list. After talking to Elizabeth, who had the client cooperate in full by providing both documents and testimony, the SEC lost interest in our client’s honest and easily explained trades and turned their attention back to the senior executives who had profited from buying and selling company stock during restricted periods. Crisis averted!
• SEC v. Client (Civil, Subpoena). Our client was caught in the crossfire between a former business partner (now competitor) and the SEC. After a myriad of litigation and SEC subpoenas, we worked ourselves step by step out of the hole the former partner put the client into. First, we convinced the government that there was no fraud and that any potentially misrepresentations were neither systematic nor profit driven. Second, we confirmed to the SEC that the company discontinued all activities of concern to regulators. Third, we used the closure of the SEC matter to end the civil opponent’s leverage over our client by attacking the civil litigation matter now free of fear and exposure to the SEC.
• SEC v. Client (Civil, Subpoena). Our client was previously the co-founder of a private blockchain exchange platform for private equity investing. After learning of an investigation by the SEC claiming investment fraud, securities fraud, and misappropriation, our client hired us to represent him. We determined that the Division was primarily eager to investigate her connection and investments in this company. Novel technological businesses that utilize blockchain technology, smart contracts, and allow for crypto investments and/or mining have drawn particular attention to both state and federal agencies—as this case has done. This case is especially sensitive as there are current and ongoing FBI, FTC, and SEC investigations into the same matter. Our team of securities defense attorneys prepared a personalized defense strategy on his behalf that focused on unfamiliarity with certain intricate financial/developmental/operational aspects of the company, despite his co-founder status.
• SEC v. Client (Civil, Subpoena). The SEC served each of our clients and the CEO of an emerging technological company with federal subpoenas. Following multiple correspondence and meetings with the SEC staff, we were able to narrow the SEC’s focus to our client’s technology, IP rights, and investor solicitations. Due to the business nature of an emerging company, our client has numerous email correspondences that the SEC had requested.  We worked with our highly dedicated forensics team.  Our forensic expert used sophisticated extraction software to compile relevant email correspondences from multiple email accounts to then forward to the SEC — saving our clients days of time and hassles.  Our task over the past several months has been to demonstrate to the SEC that our client’s business was started from and continues to be a family-run business built from the investments from family and close friends — which was unfortunately cut short by the negative consequences of the novel coronavirus.  Further, in contrast to the belief of the SEC, we aim to show that our client’s business was the furthest thing from a massive, multi-industry, multi-million-dollar investment plan.
• SEC v. Client (Civil, Subpoena). Our client worked as the CFO for a nationwide farming manufacturer, distributor, and seller. The company’s expected business needs necessitated millions of dollars and entailed many multi-million-dollar contracts with other companies, which caught the SEC’s eye. Our client left the business and thereafter received an SEC subpoena. The SEC’s subpoena targeted our client for his involvement in a potentially fraudulent investor solicitation and investment scheme.  Our objective is to convince the SEC that our client’s responsibilities did not align with those of a CFO and were limited to mere signatures and preparing financial statements and tax forms.  We plan to use hard evidence such as countless email correspondences to prove that our client did not have access to intricate financial details nor to private and confidential investor information such as solicitation materials and names of brokers, promoters, etc.
• SEC v. Client (Civil, Subpoena). Our client was asked by the SEC to “voluntarily” provide documentation, records, and a narrative to support its investigation regarding a small investment club between our client and other individual. Our client acted immediately to hire us.  The SEC was particularly focused on our client’s brokerage accounts and the amounts that were transferred to and from his personal bank accounts.  We understood right away that the SEC was searching for potential charges under the Investment Adviser’s Act of 1940.  The importance of cooperating with the SEC became even clearer when the staff asked for additional, follow-up documentation from our client.  Our defense strategy consists of convincing the SEC that our client does not satisfy the definition of “investment adviser” nor did he render “advice” to others, that his company was by no means an investment company under the Investment Company Act of 1940, and that there were no securities, privileges, or any other membership interests or rights whatsoever, involved in the company that required registration under the federal securities laws.
• SEC v. Client (Civil, Subpoena). Our client was involved in managing a high worth investment fund that handled various projects each worth millions of Dollars.  One recent investment in the low millions had a suspicious activity trail, and the funds used for this transaction were being held up internationally. The SEC subpoenaed our client and his bank accounts to scrutinize this and other international transfers from wealthy investors as well as to scrutinize an allegedly improper “payment” given to our client.  Supporting our client’s claims with documentation and bank receipts showing that there was no illegal transfer or use of the funds by our client are our key focuses.  Further, as our client’s business is high-profile and high worth, hundreds of email correspondences were at stake. To the great satisfaction of our client who has key duties within his company to carry out every day, our team saved weeks of time by using forensic analysis to extract relevant emails form our client’s email accounts to give to the SEC for review.
• SEC (Compliance Review). One of the country’s best selling and best-known investment advisors hired us to conduct a comprehensive SEC compliance review specifically to cover the areas of investment advice, website content exposure, book content review, and professionalizing the client’s disclaimers for seminars and presentations. We did as he asked and added several techniques and SEC case references to demonstrate for everyone visible at first sight our client’s good intent to comply with all SEC rules and regulations.
• SEC (Compliance Review). We conducted a comprehensive SEC compliance review for a business that was under federal criminal investigation. We made several important changes, implemented compliance policies and protocols and thus helped the business avoid further criminal exposure.
• SEC (Compliance Review). An individual contacted us for immediate legal assistance after selling his vested shares after a takeover during the blackout period. Trading during blackout periods can cause serious ramifications such as being fired or insider trading allegations by the SEC. We advised him to speak immediately to his company’s compliance department to inform them of the mistake as this demonstrates a good faith effort to correct one’s mistake in the eyes of the SEC. We also advised that he speak with his company’s legal department for a possible agreement in advance regarding trading during blackout periods or other such “pre-cleared” transactions. Lastly, we strongly advised the individual to hire a financial/securities attorney to evaluate whether the specific facts of his case fell under an exception.
• SEC (Compliance Review). We were asked to scrutinize the securities compliance of a $500M start up business that was largely investor focused. Years later, that business was sued by one of its investors for alleged investor fraud and misappropriation of investor funds. Partially due to our compliance materials, the lawsuit ended up dismissed after our client introduced the compliance binders, protocols, and operational policies we once established.
• SEC (Compliance Review). We reviewed and made changes to a healthcare business that was using physician investors as part of its business model. Even though all investors were so-called sophisticated investors, we made sure that the company’s SEC filings and claims of applicable exemptions were done correctly, familiarized the compliance officer with certain SEC details, and introduced a Q&A summary of all important securities requirements.
• SEC (Compliance Review). This industry leader sought our compliance advice after being subpoenaed by the SEC for a variety of rule violations. Because time was of the essence, we expedited our internal investigation and provided numerous protocols and policies to boost the client’s compliance. For example, we added important content to the client’s website, we gave training sessions to the client’s employees, and we rewrote previously existing inadequate policies of how to handle securities. Our compliance approach convinced the SEC to give our client a second chance, now reassured the company is in good hands!
• SEC (Internal Investigation). Our client hired us to conduct a comprehensive SEC compliance review after learning of rumors that a former investor “turned them in.” We used several former federal agents to interview witnesses, review corporate documents, and to assist in boosting the client’s corporate compliance policies in consideration of and in light of our team members’ SEC frontline investigative experience. By the time the complaint against our client materialized, our client already had cleaned house and was thus able to present a detailed set of documents, policies, and SEC compliance training materials that instantly discredited the investor’s allegations. We saved our client a lot of money by attacking the allegations preemptively!
• SEC (Internal Investigation). Many SEC subpoenas request any and all communications between the subpoenaed individual and multiple other individuals in any form of electronic medium.  This can make the task of gathering every relevant email a daunting and extremely time-consuming endeavour.  Our team includes forensic consultants who have the tools and software to extract relevant emails by keyword from your electronic devices — such as emails correspondences from your multiple email accounts or text messages and chats from your phone.  Through this method, we instantly save our clients days and sometimes weeks of work!
• SEC (Internal Investigation). After receiving a complex subpoena from the SEC, our client retained us as legal counsel. An examination of our client’s subpoena quickly revealed that this was a case of insider trading allegations.  We had to tread carefully with this case because our client had a fragile immigration status.  We sought to negotiate and maintain open communication with the SEC.  To assist our client in preparing for an interview with the SEC, we developed a comprehensive document of detailed Q&As based on our prior conferences and correspondences with the SEC.  To combat the insider trading allegation, we focused on emphasizing that our client never received material, non-public information, never traded irregularly, and never received subsequent financial gain.  It would therefore be impossible for the SEC to prove insider trading.
• SEC (Internal Investigation). The founder of a human resources company found herself in the middle of an SEC investigation. Worried and confused about why she and her business as well as some of her family members were being investigated, she hired our team. We soon discovered that the matter was likely initiated by a former disgruntled investor who withdrew their investment and went to the SEC as a whistleblower or was initiated by the SEC itself likely based on our client’s public filings for an exemption from registration.  Our priority was to contact the SEC and set up a rolling production schedule with prioritized requests and a reduced subpoena scope to make things easier for our client.
• SEC (Corporate SEC Advice). We have prepared Private Placement Memoranda and provided SEC corporate advice for more than a hundred clients from different industries including healthcare, retail, and the financial world. Whereas many PPMs seemed to contain copied and pasted boilerplate language, we strive to tailor our work products to the specific industry and situation of our client and include pertinent SEC cases and specific rules to express our clients’ due diligence and demonstrated intent to comply with all rules and regulations.

Further results:

• Defended CEO of publicly traded company in DOJ and SEC investigation
• Defended a registered investment advisor in SEC investigation
• Defended an attorney in a securities and commodities fraud investigation brought by CFTC and SEC
• Defended an attorney under Wells Notice to avoid SEC enforcement
• Defended business owner under SEC investigation for organizing so-called investment clubs
• Represented NY financier in SEC investigation alleging violation of employment terms regarding blackout period
• Represented corporate executive under investigation for buying company shares during merger negotiations
• Defended prominent corporate executive in DOJ insider trading investigation
• Represented Wall Street hedge fund manager in SEC and FINRA investigation
• Represented broker in SEC and FBI insider trading matter
• Defended president of company against allegations of market manipulation
• Defended former CFO in alleged leak of sensitive company information during merger negotiations
• Defended board of company against pump and dump allegations brought by Attorney General, SEC, FBI, and DOJ
• Represented former company chief financial officer in DOJ investigation regarding alleged theft of client funds
• Represented executive in criminal investigation alleging aiding and abetting of corporate tax evasion
• Represented cryptocurrency executives in international criminal money laundering investigation
• Counseled miners in cryptocurrency compliance matter
• Counseled blockchain business owner in corporate compliance matter under Howey
• Defended an attorney in investment fraud and money laundering investigation
• Represented an attorney in national Ponzi scheme investigation