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Corporate Internal Investigations. Brad D. Brian. 896318v1. Why Conduct An Internal Corporate Investigation. Determine facts Identify wrongdoers, if any Assess company’s legal exposure, if any Determine whether there was wrongdoing Respond to government and media inquiries

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why conduct an internal corporate investigation
Why Conduct An Internal Corporate Investigation
  • Determine facts
  • Identify wrongdoers, if any
  • Assess company’s legal exposure, if any
  • Determine whether there was wrongdoing
  • Respond to government and media inquiries
  • Preserve or even enhance company’s reputation and customer relations
  • Take corrective action

First Steps in the Investigation

  • Deciding whether to conduct the investigation
  • Defining the scope of the investigation
  • Applying the rules of privilege and confidentiality, if applicable
  • Assembling the investigative team
  • Anticipating what can go wrong
  • Establishing lines of reporting and supervision

Factors in Deciding Whether To Conduct an Internal Investigation

  • Existence of government investigation or lawsuit
  • Existence/potential for whistleblower
  • Ability to learn facts and formulate defenses
  • Option to make voluntary disclosure
  • Duty to investigate report of material securities law violation (Sarbanes-Oxley)
  • Good corporate governance: Don’t ignore warning signs!
assembling the investigative team
Assembling the Investigative Team
  • Lawyers vs. non-lawyers
  • In-house personnel vs. outside firm
  • Roles of Non-Lawyers

Developing The Investigative Plan

  • Assemble and secure relevant documents
  • Identify relevant witnesses
  • Prioritize witness interviews
  • Identify key factual and legal issues
  • Identify and retain necessary experts, if any

Establishing Lines of Reporting and Supervision

  • To whom?
    • General counsel?
    • Management?
    • Board of Directors?
    • Audit Committee of Board of Directors?
  • Considerations
    • Type of investigation
    • Severity of matter
    • Involvement of employees/officers as witnesses or subjects
    • New post-Enron rules (Sarbanes-Oxley)
control and organization of documents
Control and Organizationof Documents
  • Written instruction to preserve documents
  • Get possession of relevant documents
  • Record where documents came from
  • Retain originals in the form sent
  • Organize documents by:
    • Subject
    • Witness

Employees’ Rights and Obligations

  • Duty to Cooperate in Investigation
    • Produce all company records
    • Consent to interview in internal investigation
  • Possible Employment Rights
    • Right to counsel
    • Right to have union representative present
    • Legal fees
    • Notice of investigation
    • Right to receive report of investigation?
witness interviews
Witness Interviews
  • Always have 2 persons attend each interview
  • Ways to memorialize witness interviews:
    • Handwritten notes
    • Memoranda of interview
    • Tape recording
    • Signed witness statement
  • Witness Admonitions
  • Potential application of FCRA
admonitions before interviews of company employees
Admonitions Before Interviews of Company Employees
  • Represent company, not individual employee
  • Retained to investigate facts and give legal advice
  • Interview is protected by attorney-client privilege
  • Employee should keep interview confidential
  • It is vital that employee tell the truth
  • Privilege belongs to company, not employee
    • Privilege can be waived without employee’s consent
    • Contents of interview can be disclosed to third parties (including government agencies) and to company management
internal report of investigation
Internal Report of Investigation
  • Whether to create a report – factors to consider
  • To whom should report be addressed
  • Content of report
  • Possible obligation to report under Sarbanes-Oxley
report to government
Report to Government
  • Factors bearing on whether to report
    • Legal obligation to disclose
    • Voluntary disclosure program?
    • Avoiding ongoing liability
    • Preserving company reputation
    • Likelihood facts will come out independently
  • Impact of disclosure on privilege
  • Oral vs. written submission
corrective actions
Corrective Actions
  • Measures to prevent recurrence
  • Revisions to company procedures and policies
  • Employee discipline
  • Correction to books and records
legal representation of employees
Legal Representation of Employees
  • Should company counsel represent employees
  • Separate representation for employees
  • Representation of multiple employees by single outside attorney
  • Joint Defense Agreements
  • Right of counsel to be present during government interviews
steps to prevent obstruction of justice claim
Steps to Prevent Obstruction of Justice Claim
  • Preserve documents
  • Have 2 people present at each witness interview
  • Advice to employees on response to investigators’ inquiries
  • Memorialize instructions to witnesses to “tell the truth”
  • Do not pressure or mislead witnesses
government investigations
Government Investigations
  • Be courteous
  • Cooperate, but preserve company’s legal rights
  • Maintain record of materials provided to government
  • Submissions to government respecting investigation

Do Not Lose Sight of Bigger Goal: To Preserve Company’s Reputation