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Financial Services Law Insights and Observations

How to Handle a Government Investigation: 13 Things You Should You Do Immediately If the Government Comes Knocking

Enforcement Investigations

Federal Issues

Actions you take, or don’t take, in the early hours of a government investigation can have costly and far-reaching consequences for a company. At the root of this is the importance of having a plan in place should your company come under investigation, as the last thing you want to be is caught flat-footed. Do your key employees and legal department staff know what to do immediately if the government initiates an investigation?

Below, BuckleySandler’s Government Enforcement and White Collar attorneys identify 13 steps a company and its employees should take immediately when it becomes aware of a government investigation.

  1. Inform your in-house counsel. Establish a protocol to ensure that counsel is contacted immediately.
  2. Preserve documents. Inform all necessary employees of the need to retain documents, including electronic documents, with a document hold memo that replaces standard document retention policies for potentially responsive materials.
  3. Establish early dialogue with the investigating agency. Communication is critical to understanding the scope of the investigation and to establishing a working relationship with the government.
  4. Assume a parallel investigation will be initiated. Questions about self-reporting, production, and other strategic decisions should be made under the assumption that a parallel criminal or civil suit will follow.
  5. Alert the Board of Directors and/or Audit Committee. Schedule a meeting with key executives to carefully review the situation and discuss possible remedies and corrective actions. Be mindful that meeting minutes, notes, or emails may be discoverable.
  6. Consider implementing internal restrictions on the trading of company stock. Be sure all rules regarding insider trading are upheld.
  7. Evaluate disclosure issues and formulate a plan to address. With the commencement of a government investigation, a number of governance issues will arise. Carefully consider any and all disclosures that may be necessary and take appropriate action.
  8. Put your insurance carrier on notice. Put your insurer on notice early to increase your chances of having insurance pay for some or all of the investigation and/or litigation costs.
  9. Determine if actions are needed with respect to employees who are possible wrongdoers. This may involve implementing restrictions or additional oversight of their activities or even dismissal. All issues involving employees need to be carefully considered from a variety of angles, including employment laws, anti-retaliation provisions, and possible future civil litigation.
  10. Identify remedial measures if needed. It may be necessary to conduct a gap analysis of existing compliance programs and make changes to avoid a future recurrence.
  11. Prepare for any anticipated media coverage. Any and all public statements will be carefully scrutinized by the media, the public-at-large, and the investigating agency. Therefore, it is critical that sufficient care and attention is given to any public comments by the company or its spokespeople.
  12. Notify employees of possible contact by the investigating agency and advise them of their rights and obligations. It is important to remind employees of their responsibility to be truthful when speaking with agents of the government, but that they may choose to have an attorney present if they do decide to be interviewed. You should also reiterate your company’s policy on cooperating with investigations and request that employees inform the legal department of any discussions or contacts with the government.
  13. Commence an internal investigation if necessary. An internal investigation can help your company determine whether the allegations have merit or not, and if they do, the cause and extent and possible corrective actions.

You may also be interested in reading our related blog post on How to Respond to a Subpoena: 10 Things You Should Do Immediately.

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