The Securities and Exchange Commission published an Investor Bulletin providing a general overview of its Division of Enforcement’s investigation process. According to the SEC, “Enforcement decides whether to initiate an investigation based on many factors, including the magnitude and nature of the possible violations, the number of victims affected by the misconduct, the amount of potential or actual harm to investors from the misconduct, and whether misstated or omitted facts would have impacted investors’ investment decisions.” The SEC also describes in the bulletin the process by which it may determine to bring a legal proceeding against a respondent.

My View: I looked up and down in the SEC’s Investor Bulletin to find any statement that subjects of an SEC investigation are not accused of any wrongdoing until a formal legal action is commenced and, even then, may only be found to have violated a provision of law or SEC rule after a formal adjudicatory process or voluntary settlement. Since the SEC found it useful at this time to publish this bulletin, it would have been helpful to disclose these other important caveats too!