A House bill mandating criminal search warrants before e-mail could be obtained from an Internet service provider would hinder SEC probes, SEC Enforcement Division Director Andrew Ceresney says in written testimony prepared for the House Judiciary Committee.

When the SEC conducts an investigation, it generally seeks e-mail through administrative subpoenas, but sometimes they are ineffective because a suspect deletes e-mail, loses or destroys hardware, or flees to another jurisdiction, says Ceresney. The SEC will then contact an ISP for e-mail communications, he said. The SEC and other civil law enforcement agencies don't have the authority to obtain criminal warrants, so requiring one for an ISP to turn over e-mail would prevent the SEC from getting critical evidence, he said.

If it became law, the bill -- which updates the Electronic Communications Privacy Act -- would also encourage suspects to be less cooperative with SEC investigations because they would know the e-mails could not be found and used against them, Ceresney added.

The SEC’s enforcement head said the restriction would particularly harm investigations into Ponzi schemes and “pump and dump” operations that target the elderly and other retail investors.

“In these types of frauds, illegal acts are particularly likely to be committed via personal (e-mail) accounts and parties are more likely to be non-cooperative in their document production,” says Ceresney.

Ceresney is scheduled to testify orally before the Judiciary Committee Tuesday, but his longer written testimony is already on the judiciary committee’s website.