The SEC will consider many factors when making a decision to charge or not. The
SEC will look at the quality and nature of the evidence, meaning how persuasive and credible it is or not.
It will look to determine whether there is investor harm for example as opposed
to a technical violation which did not cause investors to suffer economically.
It will also look to the target of the investigation to determine whether or not this individual has previously
violated the federal securities laws or otherwise had been has been the subject of criminal prosecution.
A recidivist, as they’re called, someone who has a prior record, uh, faces a much higher risk of being
prosecuted for that reason. The SEC will also take into account
remediation or steps to have mitigated the violation or harm, including putting
in place new policies and procedures, firing those individuals found to have
committed the underlying violations, etc. The SEC historically and under this
current administration continues to take those efforts into account when
determining whether to charge and if so will um account for that in its
discussions of an appropriate settlement. Additionally, it is important to understand that the SEC’s
enforcement priorities tend to change depending upon the particular administration.
For example, what was considered to be chargeable under a prior administration
may not be so under the current administration.
Thus, it’s important to understand what the current enforcement priorities are to get a better understanding of the
likelihood of whether that violation, if proven, is likely to be prosecuted.