Table of Contents:
I Introduction . . . 1
II The Enforcement Landscape . . . 3
A. Source of Enforcement Authority . . . 3
B. Specialized Enforcement Unit . . . 5
C. Points of Emphasis . . . 5
D. Recent Enforcement Actions . . . 6
III Preparing for the New Era of SEC Enforcement . . . 8
A. Preparedness Assessment . . . 8
1. Document retention policies . . . 8
2. IT systems. . . . . 8
3. Compliance training . . . 9
B. First Steps Upon Learning of the Investigation . . . 9
1. Take the investigation seriously . . . 9
2. Retain experienced counsel. . . . 9
3. Investigate quickly and thoroughly. . . . 10
4. Preserve documents . . . 10
5. Preserve the attorney-client privilege . . .10
6. Consider taxpayer confidentiality . . . 10
7. Seek to narrow the scope of the document request . . . 11
8. Evaluate whether there is a duty to disclose the investigation . . .11
IV How SEC Investigations and Enforcement Actions Work . . . 12
A. The Power of the SEC. . . . 12
B. The Initiation and Escalation of an SEC Investigation . . . 12
1. Sources of an SEC investigation . . .12
2. Informal inquiries . . . 12
3. Formal investigations . . . 14
4. Internal investigations . . . 15
5. Wells notice and submission . . .16
6. Action by the Commission. . . . 16
C. Disclosing an SEC Investigation . . . 17
D. Civil Enforcement Actions . . . 17
1. Injunctive actions . . . 17
2. Civil penalties. . . . 17
3. Prospective relief. . . .18
E. Administrative Proceedings . . . 18
1. Process . . . 18
2. Sanctions . . . 19
V Orrick Contacts . . . 20
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