Opinion ID: 381789
Heading Depth: 2
Heading Rank: 2

Heading: SEC Investigations

Text: 30 The case at bar concerns enforcement of the securities laws of the United States, especially the Securities Act of 1933 ('33 Act), 48 Stat. 74, 15 U.S.C. § 77a et seq. (1976), and the Securities Exchange Act of 1934 ('34 Act), 48 Stat. 881, 15 U.S.C. § 78a et seq. (1976). These statutes explicitly empower the SEC to investigate possible infractions of the securities laws with a view to both civil and criminal enforcement, and to transmit the fruits of its investigations to Justice in the event of potential criminal proceedings. The '34 Act provides in relevant part: The Commission may, in its discretion, make such investigations as it deems necessary to determine whether any person has violated, is violating, or is about to violate any provision of this chapter(.) Section 21(a) of the '34 Act, 15 U.S.C. § 78u(a) (1976). This investigative authority includes the power to administer oaths and affirmations, subpoena witnesses, take evidence, and require production of any books, papers, correspondence, memoranda, or other records which the SEC deems relevant or material. Id., Section 21(b), 15 U.S.C. § 78u(b). If it determines that a person is engaged or is about to engage in acts or practices constituting a violation of the Act, the SEC may bring an action in federal district court to enjoin such acts or practices. Id., Section 21(d), 15 U.S.C. § 78u(d). Under the same subsection of the '34 Act the SEC may transmit such evidence as may be available concerning such acts or practices    to the Attorney General, who may, in his discretion, institute the necessary criminal proceedings under this chapter. Id. The '33 Act is to similar effect. See Sections 19(b), 20(a), (b) of the '33 Act, 15 U.S.C. §§ 77s(b), 77t(a), (b) (1976). 22 31 Effective enforcement of the securities laws requires that the SEC and Justice be able to investigate possible violations simultaneously. Dissemination of false or misleading information by companies to members of the investing public may distort the efficient workings of the securities markets and injure investors who rely on the accuracy and completeness of the company's public disclosures. If the SEC suspects that a company has violated the securities laws, it must be able to respond quickly: it must be able to obtain relevant information concerning the alleged violation and to seek prompt judicial redress if necessary. Similarly, Justice must act quickly if it suspects that the laws have been broken. Grand jury investigations take time, as do criminal prosecutions. If Justice moves too slowly the statute of limitations may run, witnesses may die or move away, memories may fade, or enforcement resources may be diverted. See United States v. Fields, 592 F.2d 638, 646 (2d Cir. 1978), cert. denied, 442 U.S. 917, 99 S.Ct. 2838, 61 L.Ed.2d 284 (1979). The SEC cannot always wait for Justice to complete the criminal proceedings if it is to obtain the necessary prompt civil remedy; neither can Justice always await the conclusion of the civil proceeding without endangering its criminal case. Thus we should not block parallel investigations by these agencies in the absence of special circumstances in which the nature of the proceedings demonstrably prejudices substantial rights of the investigated party or of the government. See United States v. Kordel, supra, 397 U.S. at 11-13, 90 S.Ct. at 769-770.