The financial institutions of the United States are some of the most regulated businesses in the country, often regulated by both Federal and State laws. In fact, there is a specific entity dedicated to monitoring and enforcing the laws of the country against members of the financial sector – the Securities and Exchange Commission, or SEC. Most of the crimes the SEC deals with are insider trading, illegal securities trades, or otherwise manipulating the market – ‘white collar crimes.’
Insider trading is the practice of buying or selling stocks based on non-public or confidential information. It is basically having a leg up on the public with the chance to earn millions of dollars by trading on information that is not available to anyone else, often seriously affecting the market for other, more honest, traders. The SEC might file a civil lawsuit against someone who has engaged in insider trading, or more seriously, they might involve the Department of Justice to prosecute criminal charges. Some of the more famous examples – like Enron – dealt with company officers misrepresenting the health or success of a company and defrauding its shareholders, to the tune of almost $1 Billion in some cases.
If you have any contact with the SEC or the Department of Justice dealing with a white collar crime, it is a good idea to seek out legal representation as soon as possible, even if you are not sure if there is a criminal investigation about you. The attorney you hire needs to be familiar with the legal maze and legislation regarding financial regulations. Most of the time, those accused of crimes in the financial sector face civil, criminal and regulatory punishment. Therefore, you should also find someone with a lot of trial experience. Too often, white collar criminal attorneys only know the ‘book’ side of the law, and have little experience in actually trying a case to a jury or a judge. Trying to find the correct balance can be difficult, but more than worth it should you ever face such a situation.
As soon as you believe you could be the subject of an investigation, take pains to not destroy any documents (including electronic or digital) that might be relevant to your work. If evidence is destroyed by you, you could potentially face additional sanctions from the court for something called ‘spoiliation.’ Take care to back up your files, and keep paper documents in a safe, secure place.
It is a good idea for businesses to hire companies or legal representation to help conduct internal investigations or compliance reviews to prevent and mitigate criminal wrongdoing by its employees. An internal investigation would examine the practices, policies and records of a company to monitor any unusual activity. It would allow the company to interview its employees, and examine work emails and the IT system. This would be done in an effort to identify potential pitfalls or criminal behavior in the company, but privately, without the risk of a humiliating trial at the hands of the Department of Justice. Compliance reviews will also be an audit of sorts, making sure that the company upholds its own policies and procedures, as well as follows the hundreds of regulations by which they must abide. A law firm will be able to provide guidance and expertise to help the company act within the color of the law, while still running a successful business model.