You’ve Received an SEC Subpoena. Attorney Selection Is Key.

Dmitriy Smirnov

February 3, 2025

Firm News

A subpoena from the Securities and Exchange Commission (SEC) is a formal request for documents or testimony related to an investigation into potential violations of federal securities laws. The SEC frequently issues subpoenas as part of its broader investigative process, particularly in cases involving suspected insider trading, securities fraud, or market manipulation. While receiving a subpoena does not necessarily imply wrongdoing—a point made clear in the subpoena itself—it signals that the SEC is scrutinizing your actions. How you respond can have serious legal consequences, making it essential to handle the situation with care and expert legal guidance.

The Importance of Timely and Accurate Responses

Responding to an SEC subpoena is not a matter to take lightly. The SEC expects full and accurate compliance with the subpoena’s requirements. Failing to meet deadlines, withholding requested information, or providing incomplete responses can lead to severe penalties. Delays in responding can be perceived as a failure to cooperate, potentially escalating the situation.

The SEC has broad authority to enforce compliance with subpoenas. Under 15 U.S.C. § 78u(c), a United States district court may issue an order compelling compliance. If a recipient refuses to comply, the court can hold them in contempt, leading to fines or other penalties. In SEC v. Howatt, 525 F.2d 226 (1st Cir. 1975), the court emphasized that the SEC must be pursuing a legitimate investigative purpose, and the information requested must be relevant to that purpose. However, courts have a limited role in reviewing SEC subpoenas, and the agency must only meet a low burden to justify enforcement. See McVane v. FDIC, 44 F.3d 1127, 1135 (2d Cir. 1995).

The Scope of an SEC Subpoena

When issuing a subpoena, the SEC typically seeks a broad range of information. This may include:

• List of investors
• Offering documents and agreements
• Any correspondence to prospective investors
• List of bank records
• Telephone records

To avoid tipping off potential fraudsters, the SEC reminds subpoena recipients of the confidential nature of its investigations and avoids contacting individuals closely associated with the suspected wrongdoer. In order to avoid having the bank disclose the subpoena to the account holder, the SEC frequently seeks a court order prohibiting the bank from notifying the customer, under Section 21(h)(4) of the Securities Exchange Act.

The Role of an SEC Subpoena Attorney

A seasoned SEC subpoena attorney plays a critical role in ensuring compliance while protecting your legal rights. An experienced attorney can:

• Evaluate the scope of the subpoena to determine what must be disclosed
• Identify privileged or confidential materials that should not be turned over
• Anticipate legal risks and potential exposure
• Negotiate the scope of the subpoena where appropriate
• Ensure that all responses are timely and complete
• Manage communications with the SEC to prevent unnecessary complications

SEC investigations often involve complex legal issues, including privilege claims and the risk of self-incrimination. An SEC subpoena attorney helps navigate these risks, ensuring you avoid accidentally disclosing sensitive information.

What Happens if You Fail to Respond Properly

Failure to comply with an SEC subpoena can have severe consequences. If the SEC believes you have obstructed its investigation, it can seek a court order enforcing compliance. A refusal to comply with such an order can result in contempt charges, fines, or additional legal penalties (SEC v. Brigadoon Scotch Distrib. Co., 480 F.2d 1047, 1056 (2d Cir. 1973)).

Once the SEC demonstrates that the subpoena serves a legitimate purpose, the burden shifts to the recipient to prove the subpoena is unreasonable or issued in bad faith. This is a heavy burden. SEC v. Knopfler, 658 F.2d 25, 26 (2d Cir. 1981). Courts generally do not grant evidentiary hearings on such claims unless a respondent presents substantial factual evidence of an improper purpose. RNR Enters., Inc. v. SEC, 122 F.3d 93, 96 (2d Cir. 1997).

Administrative Proceedings

An Administrative Proceeding (AP) is an enforcement action under Commission Rule of Practice 101(a)(4), which applies to cases where the SEC seeks to impose sanctions for securities law violations. These proceedings are adjudicated by Administrative Law Judges (ALJs), independent judicial officers who conduct hearings and issue rulings. ALJs also have the power to issue subpoenas as part of their proceedings.

Why You Need Legal Representation

Given the high stakes, having a skilled SEC subpoena attorney is essential. An experienced attorney ensures that:

• Your legal rights are protected throughout the process
• You comply with the SEC’s requirements without exposing yourself to unnecessary risks
• You receive strategic advice on managing your response and minimizing potential consequences

If you’re facing an SEC subpoena, don’t delay in seeking legal counsel. At Fridman Fels & Soto, we provide expert legal representation to individuals and businesses involved in SEC investigations. Our founding partners bring decades of experience, including senior positions at the SEC, to help clients navigate regulatory scrutiny effectively.

SEC Subpoena FAQs

What is an SEC subpoena?

An SEC subpoena is a legal order requiring an individual or company to produce documents or provide testimony related to an SEC investigation.

What should I do when I receive an SEC subpoena?

Contact an experienced SEC subpoena attorney immediately to review the subpoena, assess the potential risks, and ensure compliance.

Can I ignore an SEC subpoena?

No. Ignoring an SEC subpoena can lead to severe penalties, including contempt charges. Always respond in a timely and appropriate manner.

What happens if I fail to comply with an SEC subpoena?

Failure to comply can result in legal consequences, including fines, contempt charges, and damage to your professional reputation.

Can an SEC subpoena attorney help negotiate the scope of a subpoena?

Yes. A skilled attorney can negotiate the scope of the subpoena to ensure only relevant and necessary documents are provided, protecting your interests.

Contact Us for SEC Subpoena Investigation Help

If you receive a Wells notice, an SEC subpoena for documents or testimony, a FINRA 8210 request, a FINRA on-the-record (OTR) interview request, or a similar inquiry from a state regulator, such as Florida’s Office of Financial Regulation (OFR), act immediately. Contact Fridman Fels & Soto, PLLC to speak with an experienced SEC defense attorney. Prompt action is critical to protect your rights and ensure an effective response.

Alejandro Soto is a former senior official with the SEC. He leads Fridman Fels & Soto, PLLC’s Securities Litigation and SEC Defense Practice Group and is admitted in Miami, FL, and Washington, DC.