Knowing who is asking and with what power
Enforcement investigations come from many places: the Justice Department and U.S. Attorneys, the SEC and CFTC, the FTC, banking regulators, the New York Department of Financial Services, and the New York Attorney General. Each has different tools, from grand jury subpoenas and civil investigative demands to examination findings and informal requests, and the tool chosen says something about the stage and seriousness of the inquiry. The New York Attorney General has broad investigative powers over securities, fraud, and business practices, and state legislation has expanded its authority to cover unfair and abusive practices, not only deceptive ones. Agencies frequently coordinate, so one inquiry can signal others.
Preservation and the first response
As soon as an inquiry arrives, suspend routine deletion and issue a written hold to the people and systems likely to have relevant records, including messaging apps and personal devices used for business. Response deadlines can often be extended and the scope narrowed through discussion with agency staff, and those conversations are also a useful opportunity to learn what the inquiry is about. Producing documents carelessly can waive privilege, so privileged material should be identified and logged. If employees are contacted directly, they should understand that they may consult counsel, and the company should avoid any appearance of discouraging cooperation.
Strategic choices that come early
Early in an investigation, a company often has to decide whether to conduct its own internal review, whether to self-report or cooperate, and whether individuals need separate lawyers. Those decisions affect how the agency views the company and can matter significantly in how a matter resolves. Insurance policies covering directors and officers or regulatory investigations may require prompt notice, so check them right away. Public companies also have to consider disclosure obligations to investors. Throughout, the goal is to make each decision deliberately rather than in reaction to the latest letter. We begin by reading the request, identifying which agencies may be involved, and setting a plan for the first conversation with staff.
