An SEC Administrative Law Judge determined to infer adverse conclusions to questions that a respondent refused to answer by invoking his Fifth Amendment privilege against self-incrimination. The respondent refused to answer every question in the proceeding including background and foundational questions. He also did not invoke the Fifth Amendment during the SEC’s investigation. The ALJ explained that an administrative proceeding as well as a district court could draw such adverse inferences in order to prevent a witness from gaining an unfair litigation advantage.
The Fifth Amendment to the U.S. Constitution states that no person “shall be compelled in any criminal case to be a witness against himself” (emphasis added). A court or an ALJ cannot make you testify if it would compromise your case in a parallel criminal action, but the judge can draw negative conclusions from invoking the Fifth. In other words, don’t invoke the Fifth Amendment just to be petulant in front of an ALJ. Consult your counsel to determine whether invoking the Fifth makes litigation sense given your civil and criminal predicament.