SEC Investigations & Formal Orders

An informal inquiry involves voluntary document requests and may include voluntary interview requests. A formal order of investigation, authorized by the Commission, gives the SEC staff the power to compel testimony and document production through subpoena. Testimony under a formal order is under oath; false statements can be charged as federal crimes. Receiving a formal order is a significant escalation but does not mean an enforcement action is inevitable.

A Wells Notice formally notifies you that the SEC staff intends to recommend an enforcement action, and invites a Wells submission responding to staff's preliminary conclusions. A well-crafted submission can cause the staff to decline to recommend enforcement or recommend lesser charges. It requires deep understanding of the evidence assembled, the legal theories to be pursued, and the most persuasive arguments. Alejandro Soto has handled Wells submissions from both sides of the process.

Yes. The SEC and DOJ closely coordinate. When the SEC develops evidence of criminal conduct, it routinely makes criminal referrals to the relevant U.S. Attorney's Office. The existence of a parallel criminal investigation constrains how a client responds: a witness can assert Fifth Amendment rights in a criminal proceeding but generally cannot do so in an SEC civil proceeding without adverse inference risk. Defense strategy must account for both proceedings simultaneously.

No. A phone call from SEC staff, or even a letter requesting a voluntary interview, is not legally compulsory. You have no obligation to speak with the SEC voluntarily, and you should retain experienced securities enforcement counsel before responding or agreeing to any interview. Voluntary statements to the SEC can be used against you in enforcement proceedings and are potentially available to DOJ prosecutors in a parallel criminal investigation. The SEC cannot compel testimony without a formal order of investigation and a subpoena. Until a subpoena is served, every interaction with the SEC is voluntary, and retaining counsel before any interaction is the most important protective step you can take.