SEC Defense: San Francisco
SEC Defense Team Lead
Former DOJ Trial Attorney
The Securities and Exchange Commission (SEC) does not just regulate the securities industry: Its Enforcement Division also prosecutes conduct that falls under a wide range of federal laws that govern financial crimes and wrongdoing. Some of those offenses can carry millions of dollars in penalties and even prison time.
201 Spear Street Suite 1100
San Francisco, CA 94105
Many of these enforcement actions come from the SEC’s San Francisco regional office. If you or your company have been contacted by this office, finding a skilled and experienced SEC fraud defense lawyer is essential. Getting legal representation quickly can make a big difference in the outcome of your case.
The SEC Enforces Numerous Federal Securities Laws
The Enforcement Division of the SEC is the department that handles allegations of fraud and other wrongdoing involving the trade of securities. This department has jurisdiction to punish wrongful conduct that falls under a handful of federal financial laws, most notably the:
- Securities Exchange Act of 1934
- Securities Act of 1933
- Foreign Corrupt Practices Act
- Dodd-Frank Act
- Sarbanes-Oxley Act
These laws are wide-reaching and extremely broad. Claiming to be protecting the interests of investors, the SEC uses these laws to investigate and punish the following types of fraudulent conduct:
- Insider Trading – The SEC regularly exercises its jurisdiction to investigate allegations of insider trading, targeting both alleged tippers and tippees who used information that was unavailable to others to make a profit off of buying or selling securities
- Broker-Dealer Fraud – Broker-Dealers who engage in fraudulent business practices, like misrepresenting their assets, credentials, investments, or even their license to trade securities can find themselves under investigation by the SEC
- Selling Unregistered Securities – Securities professionals who sell shares or stocks that are not registered with the SEC and have not obtained an exemption can face legal action by the agency
- Theft or Embezzlement – The SEC and other law enforcement agencies, both federal and state, routinely investigate and prosecute cases where securities professionals take funds from their client and move them into their own bank accounts
- Misrepresentation of Material Information – Many cases of allegedly fraudulent activity involve misrepresentation of some sort, where the securities firm or professional either misled an investor or hid important information from them
Allegations like these are serious. In many cases, they can lead to criminal charges.
The SEC’s Regional Office in San Francisco
While the SEC is based in Washington D.C., it has 11 regional offices across the country. One of them is located in San Francisco, at 44 Montgomery Street. The San Francisco Regional Office has jurisdiction over securities professionals and companies in:
- Northern California
Importantly, this includes Silicon Valley, where hundreds of startups seek to attract investors to get their business up and running and where convictions or even mere allegations of investor fraud make it into national headlines. The securities enforcement in Silicon Valley alone makes the San Francisco region one of the most active in the country.
Regulated professionals in Southern California fall under the jurisdiction of the Los Angeles Regional Office.
Potential Penalties of an SEC Enforcement Action
The SEC Enforcement Division is restricted to administrative actions and civil litigation. This means that the penalties that it can directly impose on a securities professional are restricted to professional sanctions, as well as civil fines and the disgorgement of any money that was illegally obtained through the fraudulent activity.
These financial penalties, however, can be astoundingly steep. According to the SEC Enforcement Division’s annual report for 2020, the SEC brought 715 enforcement actions that demanded $3.589 billion in disgorgement and another $1.091 billion in other penalties. The vast majority of that money, however, came from under 5 percent of the cases brought by the Division. The largest 5 percent of cases demanded 81 percent of the total monetary sanctions, totaling $3.795 billion. The median SEC enforcement action, meanwhile, demanded $532,860 –still a substantial sum for a securities firm or individual to pay.
In addition to these financial sanctions, the SEC Enforcement Division can also pursue injunctions against individuals and companies. These injunctions are court orders that forbid certain types of conduct in the future. If those injunctions are violated, it can lead to jail time for contempt of court.
Furthermore, the SEC Enforcement Division also works in conjunction with other federal enforcement agencies, like the Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI). Evidence obtained by the SEC that can support a criminal investigation is frequently forwarded to these federal agencies for further scrutiny.
Frequently Asked Questions About SEC Defense in San Francisco
What Can Trigger an SEC Fraud Investigation?
The SEC can decide to initiate an investigation for a handful of different reasons.
Some investigations begin when the SEC looks through a company’s public statements or filings. If there is a discrepancy or if there is inadequate or missing information, it can trigger an investigation as the SEC looks to resolve the error or find the correct data.
Other investigations come from different government agencies, like the DOJ, FBI, or the Internal Revenue Service (IRS). These other law enforcement agencies can bring the SEC in to help on one of their ongoing cases.
Still other investigations begin when a whistleblower – usually a former employee or client – brings the SEC evidence of potential wrongdoing and the SEC finds it credible and important enough to warrant further inquiry.
What Does the SEC Consider to Be Fraudulent Conduct?
The SEC defines fraud as any omission or misrepresentation that could affect an investor’s decision-making process. This definition is incredibly broad, and deliberately so: If the SEC used a concrete definition of fraud, bad actors would quickly find ways to deceive investors without doing anything that could be considered fraudulent.
For most securities professionals, though, the SEC’s amorphous definition of fraud makes it difficult to know when the line is being crossed. Innocent brokers can find themselves facing serious allegations of fraud for something that they thought was perfectly fine to do.
What Constitutes an SEC or Securities Violation?
The broad definition of fraudulent activity, coupled with the wide range of federal securities laws that the SEC enforces, means that there are numerous ways for a regulated professional to commit a securities violation. Any list of potential SEC violations is going to be incomplete because novel ways of deceiving investors are being developed every year.
Why Doesn’t Oberheiden P.C. Call Itself the Best SEC Fraud Defense Law Firm?
Because we prefer to let our record of defending regulated securities professionals do the talking for us. Many of our attorneys have extensive experience investigating and prosecuting SEC violations from the side of law enforcement. They have taken that knowledge with them to Oberheiden P.C. to better defend innocent traders and brokers who are being accused of violating federal securities law.
The results speak for themselves.
The attorneys at Oberheiden P.C. have provided effective legal representative and strategic defensive tactics for numerous professionals who are regulated by the SEC and who fall under the jurisdiction of the vast array of laws it enforces. In many cases, we have been able to persuade the Enforcement Division to drop an investigation in its early stages by disclosing exculpatory evidence that showed that the Division’s suspicions of fraud were groundless.
What to Do If You Have Been Accused of Securities Fraud
If you or your firm have been accused of securities fraud by the San Francisco Regional Office of the SEC, the most important thing that you can do to avoid these serious penalties is to hire an SEC fraud defense lawyer. Getting an attorney on board as soon as possible – preferably as soon as you become aware of a potential investigation – is essential as it gives your defense team the time that it needs to conduct an internal review of the business practices that the SEC intends to investigate. That internal review can uncover the strengths and weaknesses of your position and take appropriate action to protect you or your firm from civil or criminal liability.
The SEC fraud defense and securities litigation lawyers at Oberheiden P.C. have helped numerous securities professionals and firms protect their interests during an SEC investigation. Our attorneys have experience as federal prosecutors who investigated and pursued these very claims from the SEC’s side. We know how investigations move forward and how the targets of those investigations can act to minimize their legal liability. In some cases, we have taken the necessary measures to forestall an SEC investigation, entirely. In many others, we have adopted the appropriate defense strategies that proved necessary to resolve the issue before civil or criminal charges were filed, protecting our clients from serious sanctions.
If you think that you or your firm are being investigated by the SEC, time is of the essence. Call the SEC defense lawyers at Oberheiden P.C. at 888-680-1745 or contact them online to get a skilled and experienced defense team on your side so they can review your case and determine the best way forward.