From the SEC web site:
"All SEC investigations are conducted privately. Facts are developed
to the fullest extent possible through informal inquiry, interviewing
witnesses, examining brokerage records, reviewing trading data, and
other methods. Once the Commission issues a formal order of
investigation, the Division's staff may compel witnesses by subpoena
to testify and produce books, records, and other relevant documents.
Following an investigation, SEC staff present their findings to the
Commission for its review. The Commission can authorize the staff to
file a case in federal court or bring an administrative action.
Individuals and companies charged sometimes choose to settle the case,
while others contest the charges.
Under the securities laws the Commission can bring enforcement actions
either in the federal courts or internally before an administrative
law judge. The factors considered by the Commission in deciding how to
proceed include: the seriousness of the wrongdoing, the technical
nature of the matter, tactical considerations, and the type of
sanction or relief to obtain. For example, the Commission may bar
someone from the brokerage industry in an administrative proceeding,
but an order barring someone from acting as a corporate officer or
director must be obtained in federal court. Often, when the misconduct
warrants it, the Commission will bring both proceedings.
Civil action: The Commission files a complaint with a U.S. District
Court that describes the misconduct, identifies the laws and rules
violated, and identifies the sanction or remedial action that is
sought. Typically, the Commission asks the court to issue an order,
called an injunction, that prohibits the acts or practices that
violate the law or Commission rules. A court's order can also require
various actions, such as audits, accounting for frauds, or special
supervisory arrangements. In addition, the SEC often seeks civil
monetary penalties and the return of illegal profits, known as
disgorgement. The courts may also bar or suspend an individual from
serving as a corporate officer or director. A person who violates the
court's order may be found in contempt and be subject to additional
fines or imprisonment.
Administrative action: The Commission can seek a variety of sanctions
through the administrative proceeding process. Administrative
proceedings differ from civil court actions in that they are heard by
an administrative law judge (ALJ), who is independent of the
Commission. The administrative law judge presides over a hearing and
considers the evidence presented by the Division staff, as well as any
evidence submitted by the subject of the proceeding. Following the
hearing the ALJ issues an initial decision in which he makes findings
of fact and reaches legal conclusions. The initial decision also
contains a recommended sanction. Both the Division staff and the
defendant may appeal all or any portion of the initial decision to the
Commission. The Commission may affirm the decision of the ALJ, reverse
the decision, or remand it for additional hearings. Administrative
sanctions include cease and desist orders, suspension or revocation of
broker-dealer and investment advisor registrations, censures, bars
from association with the securities industry, and payment of civil
monetary penalties, and return of illegal profits. "
http://www.sec.gov/about/whatwedo.shtml |
