What To Do If You've Violated Securities Law?
The prospect of being charged with an offense under U.S. securities laws can be downright scary to consider. It's important to approach the situation in a structured and thoughtful way rather than freaking out. Let's explore five things anyone who thinks they might have violated a securities law should do.
Preserve All Physical and Electronic Documents
Just don't delete or destroy things, even if you're pretty sure they won't have anything to do with a potential offense. Preservation of potentially discoverable materials is your absolute first priority. That means it's your first priority before even contacting a corporate lawyer.
Failure to produce discoverable materials can lead to what's called an adverse inference. This means that a court would have to assume that whatever was in the missing documents was the pinnacle of bad for your case.
If you deleted emails or texts, for example, try to write down your closest contemporaneous memory of what they contained. You may also be able to recover these from your company's data backup systems, especially if you know which dates to look for.
Obtain Counsel
Get in touch with a securities law attorney and tell them what your situation is. Follow their instructions to the letter.
Determine If Anything Illegal Occurred
Sometimes things feel like violations, but they're not. Talk with the securities law attorney about how things unfolded and what regulations might apply.
With a little luck, you may only need to put together new reporting regarding whatever went wrong. If that's the case, have the lawyer walk you through all the steps for reporting the issue. Take your time to ensure you get everything right, and keep speaking with your attorney every time you need to take action.
Come Clean
If something illegal occurred, there is likely to be no upside in continuing to operate as if everything is okay. Your lawyer can tell you how to go about disclosing what happened. Remember, a judge is far more likely to go easy on a person who has come clean than one who kept compounding the problem.
Keep Quiet
Bear in mind that discussing the incident can create a new set of potential violations. This happens if your situation is likely to create actionable information about the future of the securities in question. Don't discuss the situation with anyone outside of the legal circle of trust your attorney has established. When the time to go public arrives, your lawyer will guide you through the process.
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