1. Identify the Authority Behind the Investigation
The statute cited in an investigative demand determines the Attorney General’s authority and the conduct under review. The Martin Act addresses securities and certain commodities, while Executive Law § 63(12) reaches repeated fraudulent or illegal business acts. Both authorize investigative subpoenas, but neither makes receiving a demand proof of wrongdoing. Identifying the legal basis helps the recipient evaluate relevance, potential exposure, and available objections.
The Martin Act and Securities Fraud
General Business Law § 352 authorizes subpoenas for relevant records and sworn testimony concerning potential fraudulent practices. Civil Martin Act enforcement does not require proof of intent to defraud. An absence of deliberate wrongdoing therefore does not resolve the inquiry. A securities enforcement review should examine the statements, omissions, and transactions investigators have identified.
Executive Law § 63(12) and Business Conduct
Executive Law § 63(12) authorizes court applications for injunctions, restitution, and damages involving repeated fraud or illegality in business. Civil penalties require an applicable additional legal basis rather than arising automatically under this provision. Criminal prosecution also requires separate authority and proof of the charged offense. The response should distinguish the civil allegations from any potential criminal exposure.
2. Respond to the Subpoena before Producing Records
Read the subpoena for its recipient, requested records, testimony requirements, and return date before sending documents or answering substantive questions. Preserve relevant emails, messages, and business files, including records subject to automatic deletion. For government and internal investigations, a focused factual review helps identify responsive material and separate ordinary business records from potentially privileged communications.
Negotiate Scope and Production Timing
Counsel can request narrower dates, fewer custodians, or phased production when demands create substantial collection burdens. Investigators need not accept those proposals, so explain the practical problem and offer a workable alternative. Confirm any revised deadline or production arrangement in writing. Ongoing discussions should not be treated as an agreed extension.
Seek Prompt Review of a Disputed Demand
CPLR § 2304 requires a motion to quash, modify, or impose conditions on a subpoena to be made promptly. If the subpoena is not returnable in court, first request withdrawal or modification from its issuer. Supreme Court review may follow that request. Identify specific objections rather than assuming that a broad demand is automatically invalid.
3. Protect Privilege and Assess Testimony Risks
Document production and witness testimony raise different legal issues, even when investigators request both in the same inquiry. Attorney-client privilege concerns qualifying confidential legal communications, while the privilege against self-incrimination protects individuals from compelled incriminating testimony. Neither creates a blanket exemption from responding. Review each category of records and each witness’s position before deciding what to produce or how to answer.
Separate Legal Advice from Business Records
CPLR § 4503 protects qualifying attorney-client communications, and CPLR § 3101(c) protects attorney work product. Copying a lawyer does not automatically protect a business email or its attachments. Voluntary disclosure of protected material can waive protection, so assess investigative findings before sharing them. An internal review should distinguish underlying facts and records from confidential legal analysis.
Distinguish Individual Rights from Corporate Duties
The federal Fifth Amendment and New York Constitution Article I, § 6 protect individuals against compelled self-incrimination. Corporations have no Fifth Amendment privilege, and custodians generally cannot withhold corporate records through a personal privilege claim. An individual’s oral testimony requires separate analysis. A court may draw an adverse inference from a party’s refusal to answer in civil proceedings.
4. Evaluate Exposure and Available Resolutions
The investigation’s outcome depends on the evidence, applicable claims, and relief the Attorney General pursues. Possible responses include presenting factual corrections, contesting legal allegations, or negotiating a civil resolution. A state attorneys general defense assessment should examine the proposed obligations and the scope of any release. Resolving one proceeding does not automatically resolve separate claims or investigations.
Keep State and Federal Proceedings Separate
An SEC inquiry or federal criminal investigation does not replace the Attorney General’s state authority. Each proceeding has its own legal elements and remedies. CPLR § 213(9) provides a six-year limitations period for Attorney General actions under the Martin Act or § 63(12). That period does not determine subpoena deadlines, and separate criminal or federal claims require their own limitations analysis.
Review Court Orders and Settlement Terms
An investigative demand is not itself an asset-freeze order. The Attorney General may seek preliminary judicial relief under applicable law, including Martin Act § 353. Executive Law § 63(15) also permits an assurance of discontinuance as a civil resolution. Before accepting terms, review payments, business restrictions, reporting duties, and whether separate criminal exposure remains unresolved.
01 Oct, 2026
