While the SEC has extremely broad investigative and enforcement powers, it cannot file criminal charges. It can, and often does, work with the Department of Justice and the United States Attorney’s Office to bring those charges.
The SEC and the DOJ often work together, with the SEC sending its more serious cases to the DOJ for criminal prosecution. In fact, the SEC often “loans” its Senior Attorneys to the DOJ to assist in the prosecution of criminal charges in securities fraud cases. One of my partners held such a position as a “Special Assistant United States Attorney” while he was technically a Senior Attorney at the SEC.
So, while the SEC is technically an administrative regulatory agency without criminal prosecution powers, the SEC can, and does, bring criminal charges through its referrals to the DOJ.
The reality is that it is rare for white collar criminals to serve any significant jail time on criminal charges. Although they do go to prison, prosecutors often choose to file civil charges. Given the extreme financial penalties and remedies available to the SEC it can be argued that the civil penalties are nearly as devasting as the criminal penalties. With disgorgement, and a three time multiplier, plus injunctions, the SEC has the ability to destroy a defendant’s life. And there is always the possibility of bringing parallel proceedings – filing civil and criminal charges for the same conduct at the same time, a true abusive prosecutorial strategy.
Mark J. Astarita is a veteran securities attorney who represents investors and financial professionals nationwide in securities investigations and arbitrations. Have a question? Email him at firstname.lastname@example.org, call his office at 212-509-6544 or visit The Securities Lawyer
Need help with a securities law issue? Call New York Securities Lawyer at 212-509-6544 or visit the website. Representing investors and advisers across the country for over 30 years.