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What Happens At An SEC Interview?

defending sec complaints

If the U.S. Securities and Exchange Commission (SEC) is investigating you or your company, you may receive a request to sit for an interview. While meeting with SEC agents and putting the facts on the table can be helpful in some cases, it can also be dangerous if you don’t know what to expect or aren’t adequately prepared.

Important Considerations When Preparing for an SEC Interview

When you receive a request to sit for an SEC interview (most likely in the form of an SEC subpoena), there are a few important facts to keep in mind. First, while the interview is a fact-finding mission, the SEC has a significant amount of information already. This includes information the interviewing agent will ask you to confirm. As a result, if you provide false or misleading information (whether knowingly or unknowingly), there is a good chance that the interviewing agent will know you aren’t telling the truth. This will likely influence not only the rest of the interview, but what the SEC does after the interview as well.

Second, SEC investigations can target a wide range of allegations. Additionally, even if certain charges aren’t on the table at the start of an interview, they could come into play if you share incriminating information during the interview. With this in mind, it is important not to make any assumptions during your interview preparations. Even if you think you know why the SEC is investigating, you must be very careful to avoid overlooking the potential implications of sharing information that may seem irrelevant—but which may ultimately help substantiate charges against you or your company.

Third, most SEC agents are very good at what they do. They know the law, and they are trained interrogators. While questions may seem innocuous, and while it may seem as though the interview is going nowhere, this could easily be part of an intentional strategy designed to lull you into a false sense of security. The SEC agent handling your interview will be thoroughly prepared, and this means that you need to make sure you are as prepared as possible as well.

What To Expect During an SEC Interview

So, you are dealing with an SEC investigation, and you have received a subpoena to sit for an interview. What should you expect from the interview, and what should you do to prepare?

Preliminary Matters (Not Under Oath)

The interview will begin with introductions. The interviewing agent will introduce himself or herself, and you and your counsel will identify yourselves for the record. At this point, the interviewing agent may also provide a general introduction to the pending investigation as well as the SEC’s broader role in overseeing the U.S. securities markets.

Next, the interviewing agent will typically provide you and your counsel with a copy of the formal order outlining the SEC’s investigation. You may or may not have received a copy of this order previously. In any case, you and your counsel will be given the opportunity to review the order before proceeding with your testimony.

Interview Testimony (Under Oath)

The preliminary matters discussed above occur before you, as the interview subject, are put under oath. When everyone is ready to begin the interview, you will be put under oath by the SEC. From this point forward, any intentionally false statements could expose you to prosecution for perjury (notably, however, making false statements to federal agents at any time is a federal offense under 18 U.S.C. Section 1001).

At this stage, the interview will begin in earnest. Typically, the interviewer’s questions will fall into five categories, and SEC agents usually address each category in the following order:

1. Preliminary Matters

SEC interviews almost always begin with a series of preliminary questions. After taking the oath, you can generally expect to be asked questions such as:

  • Have you ever been deposed?
  • Have you ever been investigated by a state or federal government?
  • Are you under the influence of any drug or medicine that could compromise your testimony today?
  • What did you do in preparation for today’s testimony?
  • With whom did you prepare or discuss your testimony?
  • Who is representing you today?
  • Are you personally paying your legal fees? If not, who is paying them?

These are all standard questions; and, generally speaking, they do not have any bearing on the substance of the SEC’s investigation. They are intended to ensure that your testimony is reliable (i.e., that the SEC will be able to use your testimony as evidence against you) and uncover any obvious red flags. Your defense counsel should be able to help you prepare to answer these questions confidently and “correctly” so that your interview gets off to a good start.

As we mentioned above, when the SEC issues a subpoena for an interview, it already has a significant amount of information in its possession. This likely includes information about your legal history (if any). So, if you falsely answer “No” to a question such as, “Have you ever been investigated by a state or federal government?”, there is a good chance the interviewer will know your answer is untrue. This will raise a red flag for the interviewer (even if he or she doesn’t let it show), and it will call the veracity of all of your subsequent answers into question.

2. Education and Professional Background

Next, the SEC’s interviewer will typically ask a series of questions focused on your education and professional background. These will be fairly standard questions as well; and, here too, the agent’s primary goal may be to see if you accurately confirm what he or she already knows as opposed to soliciting new information. Questions you can expect include:

  • Where did you go to school?
  • When did you graduate?
  • Do you hold any professional licenses?
  • Where do you work currently?
  • What is your job title?
  • What are your job responsibilities?
  • Where did you work previously?
  • What were your previous job titles and responsibilities?

Knowing that the interviewer is likely to ask these questions, it is generally a good idea to make sure you are prepared to answer them. If you can’t remember when you graduated or when you switched companies, take some time to study your C.V. or resume. These are all fairly innocuous questions that there is no harm in answering, and being unprepared to answer these types of questions can make you appear uncooperative. While being overly cooperative can potentially jeopardize your interests (unless you are not at all at risk or are making a proffer), it generally isn’t advisable to make the interview adversarial at this early stage.

3. Company Relationship and Key Players

After going over your background, the interviewer will likely shift focus to your relationship with your company or firm. The interviewer will also likely ask about other key players within the organization. During this portion of the interview, you should be prepared to answer questions such as:

  • What is your ownership interest in the company or firm?
  • How and when did you acquire your ownership interest?
  • Who is on the board?
  • What is the company’s organizational structure?
  • Does the company or firm have any affiliates, subsidiaries, or joint ventures?
  • Who owns the controlling interest in the company?
  • What is [Mr. Smith’s] role in the company?
  • How well do you know [Ms. Jones]?
  • Who has signing authority for the company or firm?
  • Who within the company or firm is responsible for securities compliance?

4. Financial Matters

Depending on the nature of the SEC’s investigation and your role within the company or firm that is being targeted (if applicable), the interviewer may also spend a significant amount of time focused on financial matters. Questions during this portion of the interview could address topics ranging from your personal finances (if you are suspected of participating in a fraudulent scheme) to the sources of your company’s or firm’s financing. Topics related to capitalization, specific financial transactions, revenues, profits, liabilities, valuation, and preparation of financial statements could all come up as well, and you will want to work closely with your defense counsel to ensure that you know how to address these questions without inviting further inquiry.

5. Subject-Matter Inquiries

Finally, the majority of the interview will focus on topics that are directly relevant to the SEC’s investigation. If your company is under investigation for recordkeeping or public disclosure violations, the interviewing agent’s questioning will focus on your company’s compliance efforts. If your firm is suspected of defrauding investors, the agent’s questions will focus on your firm’s representations, misrepresentations, and omissions. This, generally speaking, is the most dangerous portion of the interview. It is also generally the portion that is the least predictable.

With that said, it is possible to prepare, and it is essential to prepare as thoroughly as possible. When sitting for an SEC interview, you need to make informed decisions. You need to have an understanding of why each question is being asked, and you need to know what information you should and shouldn’t provide.

Speak with an SEC Defense Lawyer at Oberheiden P.C.

If you have questions about sitting for an SEC interview, we encourage you to contact us for a complimentary consultation. Call 888-680-1745 or send us a message online to speak with an SEC defense lawyer at Oberheiden P.C.

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