What the government's expanded investigations of market manipulation may mean (and what you should do before and after the subpoena arrives)

Abstract

Purpose

This paper aims to discuss the SEC's investigatory program with respect to market manipulation in the securities of certain financial institutions and to provide constructive steps for firms to take prior to and after they receive a subpoena or other inquiry from the SEC staff.

Design/methodology/approach

The paper discusses the implications of a formal SEC investigation, how to respond, and appropriate document retention, disclosure, and internal investigation policies.

Findings

It is essential that firms and individuals provide timely and accurate responses to SEC requests. Document retention and destruction policies are a critical issue. A financial services firm that has received an SEC subpoena or request for information should consider whether any disclosure to its clients and other investors is advisable. When an entity concludes that potential violations may have occurred, it should consider whether to conduct a more extensive internal investigation and whether separate counsel is advisable. In sending materials to the SEC, the responding entity should request confidential treatment.

Practical implications

It is essential that firms and individuals provide timely and accurate responses to SEC requests, whether pursuant to a subpoena or to a request to submit a narrative statement.

Originality/value

The paper provides practical guidance by experienced securities and litigation lawyers as a result of government investigation into market manipulation.

Citation

Mennitt, G.J., Huey‐Burns, P. and Jossen, R.J. (2009), "What the government's expanded investigations of market manipulation may mean (and what you should do before and after the subpoena arrives)", Journal of Investment Compliance, Vol. 10 No. 1, pp. 43-46. https://doi.org/10.1108/15285810910948126