“SEC Defendants” can have slightly different meanings depending on whether the U.S. Securities and Exchange Commission (the “SEC”) is conducting an investigation or whether it has filed a formal legal proceeding against a person or a company.
When the SEC is conducting an investigation it usually believes, based on evidence available to it at the time, that a fraud or other securities violation may have occurred. While the SEC does not use the term “target”, often people outside of the SEC use that term to refer to the indivuduals or the company that the SEC likely thinks may have committed the fraud or securities violation. 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 “target”. Likewise, over the course of an SEC investigation, someone who the SEC initially believes may be a potential “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. During an investigation, sometimes people outside of the SEC will refer to a “target” of the investigation as an “SEC defendant” in the investigation.Over the course of its investigation, the SEC may come to believe that one or more people, or one or more companies, did in fact commit a securities fraud or securities violation. A person or company may be able to get the SEC to agree to settle the situation during the investigation. The settlement is typically documented in an agreement (called a “Consent Decree” or “Consent Order”), which the SEC then files in a court for the court’s approval. A person or company that settles with the SEC during an investigation is formally called a “defendant” when the SEC files the settlement papers with the court.
If a person or company does not settle the situation during the investigation, the SEC may bring a legal proceeding against that person or company. This legal proceeding is often a formal lawsuit in a federal court. Once a lawsuit is filed in court, the person or company that the SEC is suing is called a “defendant”.
Sometimes, the SEC brings an administrative proceeding instead of a lawsuit in court. Generally speaking, an SEC administrative proceeding is similar to a lawsuit, except that it has its own rules and will be decided by an SEC Administrative Law Judge instead of by a federal judge or jury. The person or company that the SEC is suing in the administrative proceeding is also called an “SEC defendant”.
If you would like information about The Pickholz Law Offices’ experience representing SEC Defendants, or those who believe that they may become an SEC Defendant, 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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