SEC Investigations: A Primer

Receiving notice of an SEC investigation is not only a stressful moment for any public company—it is one that requires prompt and diligent action. This guide provides an overview of the stages of an SEC investigation and some key considerations along the way, including best practices to avoid regulatory scrutiny in the first instance.

How Does an SEC Investigation Start?

An SEC investigation can start in one of two ways: (1) a "matter under inquiry" (MUI) that may or may not lead to a formal investigation; or (2) a formal investigation without an MUI. An MUI is a more informal method of beginning an investigation. In an MUI, the SEC cannot subpoena companies or individuals. Instead, the SEC relies on voluntary cooperation to gather information and assess whether a securities law violation has occurred. After 60 days, the SEC must decide whether to close the MUI or convert it into a formal investigation.