It’s important for defrauded investors to understand that the Securities and Exchange Commission, the federal agency tasked with holding people accountable for violations of U.S. securities laws, does not actually pursue criminal charges against organizations and individuals.
Rather, the SEC’s power rests primarily in its ability to pursue civil cases against these parties in federal court or before a federal administrative law judge, seeking remedies ranging from large fines and disgorgement to injunctions prohibiting further illegal acts and corporate officer bans.
While this reality is certainly encouraging to those investors who were harmed by such violations of federal securities laws, they naturally have questions about how they can recover the funds they’ve unjustly lost.
The good news is that there are a variety of mechanisms through which this can be accomplished.
One of the most effective of these mechanisms is a receivership, which the SEC frequently seeks in civil cases filed against entities or individuals accused of violating federal securities laws.
Once appointed by the judge, the receiver’s primary responsibility is to recoup and protect those funds and assets secured by the defendant through illegal means. Once this is accomplished and a determination of liability is handed down, the receiver will then be tasked with distributing the seized assets among injured investors.
It’s important to note that the SEC indicates that this process and the other mechanisms through which injured investors may seek to recover lost funds can take a considerable amount of time.
We’ll continue to explore this topic in future posts …
If you would like to learn more about preserving and protecting the value of assets via federal court receiverships or state court receiverships, consider consulting with an experienced legal professional.