Criminal Charges for Submitting False Docs to SEC Examiners
The SEC and the U.S. Attorney have commenced civil and criminal proceedings against a broker-dealer and its principal in connection with attempts to mislead SEC examiners about net capital deficiencies. The SEC alleges that the respondents instructed vendors to send invoices to a shell company in an effort to overstate the BD’s net capital. The SEC also charges that the respondent tried to mislead examiners by providing falsified documents to support the net capital calculations. Andrew Ceresney, director of the SEC’s Division of Enforcement warned, “We will continue to work with our law enforcement partners to pursue parties that try to obstruct or delay the SEC’s critical work in overseeing broker-dealers and other regulated entities.”
OUR TAKE: Don’t lie to SEC examiners. What may have been an exam deficiency or, at worst, an Enforcement Action, could turn into a criminal prosecution. Moreover, lying to the examiners is tantamount to an admission that you knew you were doing wrong.