Learning that your company has come under the scrutiny of the Securities and Exchange Commission (SEC) can be understandably fear-inducing. You may not even understand how your company drew the attention of the SEC in the first place.
But now is not a time for uncertainty. The broad investigative powers of the SEC make them powerful adversaries if your case goes south for any reason. Learning how to prepare your corporation for the SEC investigation is very wise.
SEC investigations are akin to grand jury proceedings
Understanding the way a grand jury works can help prepare you for an SEC investigation. Just as with grand juries, SEC investigations are non-public and can be either informal or formal. While the commission is conducting their investigation, they typically will not even acknowledge whether or not an investigation has been initiated.
Conduct your own internal investigation
A good way to be proactive if you know or suspect an SEC investigation is about to ensue (or is ongoing) is for the company to conduct its own internal investigation. This gives you the advantage of knowing which documents and digital records to preserve for later review. You may also learn which employees or executives could be the targets of the SEC’s investigation.
Prepare to cover your legal bases
Few companies are prepared to handle the intense pressure and scrutiny of an SEC investigation on their own. Since your own corporate counsel could wind up being drawn into the probe, it is prudent to seek outside counsel to help you formulate the best possible defense to any charges that may arise.