“SEC Witnesses” refers to individuals who provide information to the U.S. Securities and Exchange Commission (the “SEC”). Sometimes these people reach out to the SEC on their own because they have information about a fraud or other violation of the federal securities laws that they think the SEC should know about.Other times, the SEC may ask someone to talk to them over the telephone or to come in to the SEC’s offices to talk about something. The SEC sometimes makes this request informally through a letter or a telephone call. This is called an “informal request”. Other times, the SEC may send someone an official subpoena that requires that person to answer questions under oath before the SEC. This is sometimes called a “formal request”.
“SEC witness” usually means someone who may have information about a securities fraud or other violation of the securities laws. But that is not always the case. Sometimes the SEC thinks a person might have some information, but it is not certain. For example, this sometimes happens when the SEC is investigating something and they want to talk to everyone who worked in a company, office, or department to find out who, if anyone, may know something about what the SEC thinks happened.
An SEC witness may be an SEC whistleblower. If a witness reports a fraud at the company that he or she works for (or a fraud at another company) to the SEC, he or she may be eligible to become an SEC Whistleblower. The SEC has rules that a witness must follow in order to report a fraud if he or she wishes to be considered as a whistleblower and eligible for an SEC award. If the witness meets the requirements and becomes an SEC Whistleblower, and if the SEC collects over a certain amount of money from the company or the individuals who were responsible for the fraud that the witness reported, he or she will be entitled to receive a monetary reward from the SEC. According to the Dodd-Frank Act, the SEC must give out that whistleblower reward. The amount of the SEC whistleblower award must be between 10% – 30% of the amount of money that the SEC collects based on the information that the witness (the whistleblower) provided. For additional information about the SEC Whistleblower award program, please click here.
An SEC witness may also be someone who may have committed or helped others to commit a fraud or securities violation; such people are sometimes referred to as “subjects” or “targets” of an investigation. While the SEC itself does not use the terms “subject” or “target”, they are terms that are often used by people outside of the SEC. When people outside of the SEC talk about a “subject” of an investigation, they usually mean someone who the SEC thinks may or may not have committed a fraud or securities violation, but the SEC cannot be certain without more information. “Target” is usually used to refer to someone who the SEC likely thinks actually did commit a fraud or securities violation, based on information that the SEC has at the time. All of these people are technically SEC witnesses or potential SEC witnesses.
Over the course of an SEC investigation, someone who the SEC initially believes may be just a witness may come to be viewed as a “subject” or a “target”. Likewise, over the course of an SEC investigation, someone who the SEC initially believes may be a potential “subject” or “target” may come to be viewed as just an innocent witness. Again, the SEC does not use these terms, and will most likely simply refer to someone as a “witness” if anything.
When someone talks to the SEC, the conversation may be done informally over the telephone or in an SEC office, and one or more SEC lawyers will often take handwritten notes of what is said. This is more likely to happen when the person contacts the SEC and requests a telephone call or a meeting on their own. When the SEC asks a person to talk to it “informally”, the person may or may not be sworn in under oath to tell the truth, and the conversation may or may not be recorded word-for-word in an official transcript. When the SEC sends someone a formal subpoena, that person will usually be sworn in under oath and the deposition (often called an “On The Record” or “OTR”) will typically be recorded word-for-word in an official transcript.
If you would like information about The Pickholz Law Offices’ experience representing SEC Witnesses, or those who believe that they may become an SEC Witness, please feel free to click on the “Sample Matters” link and the other links on the right side of this page.
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