No, the Securities and Exchange Commission, or “SEC,” cannot initiate a criminal case. The SEC is responsible for monitoring and regulating financial markets. It works “to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.”
To that end, the SEC investigates possible violations of federal securities laws and initiates enforcement proceedings when it concludes the securities laws have been violated. The SEC’s enforcement mechanisms are not criminal, however. The SEC can initiate administrative enforcement proceedings before an “administrative law judge” – an employee of the SEC who decides whether a violation has occurred. Or, the SEC can enforce the securities laws through a civil lawsuit in federal court.
Because SEC proceedings are not criminal, they do not risk imprisonment. Nonetheless, the penalties and consequences of an SEC enforcement action can be severe. For example, violations of the securities laws might result in civil monetary penalties of millions, or even hundreds of millions, of dollars. They may also result in an individual being barred from serving as an officer or director of a public company.
While the SEC has no authority to initiate a criminal case, many violations of the securities laws are also crimes. As a result, the SEC will often work closely with criminal investigators at the FBI and with prosecutors at the Department of Justice. It’s not uncommon for SEC investigations to proceed in parallel with a criminal investigation and for SEC lawyers and prosecutors to cooperate in an investigation. In some cases, the SEC may even make a referral to the Department of Justice, asking the Department to investigate conduct that the SEC believes is criminal.
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FAQs
No, the Securities and Exchange Commission, or “SEC,” cannot initiate a criminal case. The SEC is responsible for monitoring and regulating financial markets.
Can the SEC fine you? ›
SEC's Regulatory Responsibilities
Under the Exchange Act, the SEC can sanction, fine, or otherwise discipline market participants who violate federal securities laws. The SEC can also issue rules pursuant to specific statutory provisions, to help effectuate those provisions.
What does the Securities and Exchange Commission investigate? ›
Formal investigative proceedings are nonpublic unless otherwise ordered by the Commission. Some common violations of federal securities laws include selling unregistered securities, stealing customers funds, insider trading, and manipulating market prices, among other things.
What are the six most common violations reported by the Securities and Exchange Commission? ›
What is the SEC Looking For?
- Fraudulent schemes, such as Ponzi or pyramid schemes.
- Theft of money or securities.
- Insider trading.
- Manipulation of investment prices.
- Making false or misleading statements about a company, including in SEC filings.
- Offering fraudulent or unregulated securities.
Under the doctrine of respondeat superior, a corporation may be held criminally liable for the illegal acts of its directors, officers, employees, and agents.
Can the SEC file criminal charges? ›
No, the Securities and Exchange Commission, or “SEC,” cannot initiate a criminal case. The SEC is responsible for monitoring and regulating financial markets.
Does the SEC have criminal enforcement power? ›
The Division is responsible for detecting and investigating a wide range of potential violations of the federal securities laws and regulations. The securities laws prohibit fraudulent conduct both criminally and civilly, but the Commission is responsible only for civil enforcement and administrative actions.
How often does SEC settle cases? ›
According to our research, the SEC has successfully settled or won 95 of these lawsuits. Protos was unable to determine the outcome of 21 cases, most of which are either unresolvable or still ongoing. For example, the SEC sued John McAfee in 2010, but he died in 2021, so the outcome of that lawsuit is unresolvable.
What are the bad things about the Securities and Exchange Commission? ›
A disturbingly persistent pattern has emerged in U.S. Securities and Exchange Commission enforcement cases that involves three key elements: (1) The commission rarely sues individual defendants at large financial institutions, settling instead with the entity only; (2) when it does sue individual defendants, it ...
How long does an SEC investigation take? ›
The length of an SEC investigation depends upon its subject matter and scope. The average SEC investigation lasts anywhere between six months and one year. However, sometimes SEC investigations can last several years and put a tremendous strain on the resources of the party being investigated.
(a) A prosecutor should seek or file criminal charges only if the prosecutor reasonably believes that the charges are supported by probable cause, that admissible evidence will be sufficient to support conviction beyond a reasonable doubt, and that the decision to charge is in the interests of justice.
Can a company be held criminally liable? ›
Can Corporations Be Held Criminally Liable? A corporation may be held liable for a criminal act of an employee so long as that employee was acting in the scope of their employment and their conduct benefits the corporation. Corporations cannot be imprisoned or punished as individuals can.
Why aren't corporate crimes prosecuted? ›
In addition, white collar crimes often involve large amounts of money, which can make it difficult for law enforcement agencies to investigate and prosecute the case. Another reason why many white collar crimes are not publicized is because persons who engage in business often access quality legal advice and resources.
What can the SEC do to you? ›
The SEC may also bring a variety of administrative proceedings, which are heard by internal officers and the commission. Common proceedings include cease and desist orders, revoking or suspending registration, and imposing bars or suspensions of employment.12.
How much does the SEC make in fines? ›
Enforcement's FY 2023 "performance review" continues the previous year's trend of record-breaking achievements. Following last year's historic $6.4 billion in remedies ordered, Enforcement secured roughly $4.95 billion in regulatory penalties and fines in FY 2023 – the second highest in the agency's history.
What happens when you file a complaint with the SEC? ›
The information you provide will go through the SEC channels to the appropriate office. The Division of Enforcement reviews complaints and any investigations are confidential. The SEC cannot disclose information about investigations, or even acknowledge the existence of investigations until they become public record.
