Listed below are a few tips for Enforcement Division investigative staff. Some are fairly obvious, a few took me a while to realize, and a couple, well, those were based on my own failings. In no particular order, here they are:
- Don’t let defense counsel unduly delay witness testimony. Absent extraordinary circumstances you should not allow counsel to delay witness testimony for more a few weeks from the time you first contacted counsel. Be reasonable, but also be ready to issue a subpoena for a day of your choosing if defense counsel won’t promptly provide you a with a reasonable date for the witness’ testimony.
- Never ever permit a witness to get away with failing to comply with a testimony subpoena. If you have determined that a subpoena was needed in the first place to compel the witness’ testimony then you must be willing to enforce that subpoena on a timely basis if the witness fails to appear. Not doing so will undermine the Enforcement program in a significant way.
- Rarely accept at face value what defense counsel tells you. Trust but verify. During my career, it was surprisingly common for defense counsel, including counsel associated with well regarded law firms, to make false representations to SEC staff. Whether counsel lied intentionally to hide something that reflected poorly on their clients or lied just because they had gotten into the habit of lying, I was never quite sure. More than a handful of times, defense counsel led me astray by providing me with information about evidence or events that didn’t hold up under scrutiny. Though they weren’t lying per se, they nevertheless gave me unreliable information, probably just repeating what someone told them without verifying it independently. Perhaps they were just making statements to the staff that their clients insist that they make. Accordingly, if the facts are relevant to your matter, require defense counsel to commit their statements to writing, backed up with documentary support or affidavits. Sometimes it is helpful to memorialize counsel statements in a letter to them describing what was said and asking them to concur or respond.
- Work for the best supervisor you can find. This can make a significant difference in both the cases you will be able to work on and the outcomes of your investigations. If you supervisor doesn’t add value to the process, you will not be as effective as you could otherwise be. A talented persuasive supervisor can make the difference between bringing a close case to a successful conclusion and nothing at all to show for your hard work. If you supervisor isn’t well respected and talented (you will know it when you see it), do your career a favor and move to another supervisory group. Although the transition will be awkward it will not career limiting. Don’t stick long with a mediocre supervisor when a much better one works right down the hall.
- Just say no. From time to time you may be asked to do something that you just want to do, whether to work on a particular investigation or to work with a particular individual. Although it shouldn’t be your regular response to every unpleasant assignment, you can and should politely decline certain investigations or “opportunities” even when others try to strong arm you into doing them.
- Do not expect much in the way of effort or help from SEC trial attorneys and don’t defer to their views unless they make complete sense to you. Remember, many in the trial unit have spent little time inside of a court room and some have a limited understanding of how SEC investigations work. It is not unusual for an SEC trial attorney to have only a basic understanding of finance or accounting. Moreover, no matter how competent, no trial attorney is ever going to understand the facts of your investigation as well as you do. In my experience, many SEC trial unit attorneys were often just trying to figure out how to avoid a trial, not trying to figure out how to make the case. Most of the time it makes sense to keep the trial attorneys out of the picture until they absolutely must be involved.
- Study the documents closely. Most cases are made with the documents so be sure you review them carefully and understand them. As best you can, make sure that all requested documents have been produced. Study the documents carefully when you get them and study them again later on as the investigation proceeds. Show them to others to see if they make the same sense of them when you can’t. Make sure you understand the documents completely, including the jargon in them. This should be basic, but not everyone does this.
- Be extremely wary when defense counsel tries to narrow a subpoena request. Sometimes counsel does this because they know that a smoking gun or incriminating document has been requested and they are now trying to avoid producing it.
- Develop relationships with others outside of your investigative unit so that you can use them as a sounding board. These individuals can be a source of helpful wisdom and can sometimes confirm your beliefs when you think you might be correct but everyone around you is telling you that you are not. They probably have ideas that you haven’t thought of. Without a dog in the fight, these individuals can be valuable sounding boards.
- Take careful contemporaneous notes when something seems amiss. This is an big pain in the rear to do, but can very important to you or your career. If someone, be it a colleague or defense counsel, suggests something or does something that seems out of bounds or just abnormal, document the event or discussion contemporaneously and carefully, with dates and times. These notes may later prove invaluable if that issue becomes relevant.
- Be suspicious of early settlement offers. If defense counsel makes a settlement offer soon after your investigation begins, that may suggest that you are close to uncovering something bigger and better. Yes, you can accept the early settlement but it also might mean that you are foregoing the bigger prize. By settling early counsel is sometimes trying to protect individuals or keep hidden a problem unrelated to the investigation as you understand it.
- If the case merits the cost, put the witness testimony on video tape. A dry testimony transcript (often filled with ridiculous typos and misspellings) doesn’t capture the witness like a video recording of witness testimony
- Don’t give up. Sometimes a supervisor with limited information or insight might not like your approach to a problem or share your view about a potential violation. Keep at it though until you are satisfied. In general, others (particularly at the top of the supervisory pyramid) have only spent a fraction of the time that you have thinking about the issues associated with your case. Keep trying if you don’t think your arguments have been adequately considered. Sometimes as an Enforcement attorney you have to step on a few toes in order to accomplish your objectives.
The SEC in Action 