Do I need a lawyer for possible SEC investigation?
You are likely to be charged for something ONLY if you made a trade based on information gained in one of the following ways: a. In the normal course of your job you were privy to the information that became public at the time of the earnings restatement, or to the fact that an earnings restatement was in the works. b. Somebody in such a position tipped you off in any way that any negative news likely to affect the value of the stock was about to be announced. (You don’t even have to be an employee to be hit for this one; it could be that your golf buddy mentioned something to you.) c. You misappropriated information (stole it in some way) that allowed you to profit from a trade. (Here, too, you don’t have to be an employee of the company being traded in order to be charged.) Even if you qualify to be charged under one of the above, you would have an absolute defense if you had been selling the stock at fairly regular intervals and in fairly equal installments as part of a regular prog
You needed a lawyer the first time you talked to the company’s lawyer — who wasn’t representing you, and was taking notes that in all likelihood will be handed over to the SEC and any other law enforcement agency that asks.That is absurd. Nothing the company’s lawyer finds out is discoverable for a variety of reasons. In general, I’d always advise you to have your own attorney when facing potential prosecution. However, there are some litmus tests you can apply. Did you in fact have the ability to know about the “accounting irregularities” or planned restatement? The closer you are to those who knew, the most risk you have. Did you sell the stock in some usual and predictable way (as soon as it vested, for instance) or were the circumstances surrounding the sale unusual? In general, the SEC’s record of pursing legal remedies against individuals for insider trading is terrible. They rarely seem to be able to convict anyone even when it seems pretty clear that they did in fact engage in
who had never invested before Which is why it seems pretty important, in the poster’s case, to be able to document the “ongoing process of occasionally selling the company stock to reduce [his] exposure”. Seems to me, the more it appears that this really was just an ordinary, regular transaction, the less it seems like you got tipped, and the less likely you’ll need a lawyer.
Assuming you are not a securities trader and not a listed “insider” I would personally wait until you are contacted to be interviewed by the SEC before I bothered getting my own counsel. Attorneys who focus on securities litigation tend to be pretty expensive big firm guys and you could eat through 2k in fees in literally no time. I second this comment. The SEC is only going to bother where they feel there’s a reasonable chance of conviction. Their pockets aren’t infinitely deep; they won’t waste time and money on a simple joe who occasionally sells small amounts of stock. I’d start familiarizing myself with the basic law about insider trading, and document everything! Wait to get a lawyer until you feel the SEC is actively investigating you.
You needed a lawyer the first time you talked to the company’s lawyer — who wasn’t representing you, and was taking notes that in all likelihood will be handed over to the SEC and any other law enforcement agency that asks. You now really need a lawyer. You will need to put down a serious retainer but you will get it back if you don’t use the time. The time will be $500+ an hour if the lawyer is qualified. And worth every penny.
