Preserve Information
Does the company have an internal investigative function? Is there a process to engage with in-house legal and conduct a privileged investigation? Does the company have a process for collecting and preserving emails, electronic data, and other information? Should the company institute a legal hold to notify holders of relevant information to preserve it? Should the company immediately suspend the normal deletion of emails and other data for custodians with potentially relevant knowledge?
Investigate
Whether it’s clear that something illegal has taken place or not, the company will want to make sure it has all the facts. Figure out what happened and why. In doing so, the company needs to plan for the potential that at some point, the government may come knocking and will want to review how the company handled the issue when it learned of it. It’s not too early to think about whether outside counsel should assist.
Notify
Once the company knows the outlines of what happened, who needs to be informed? What format should that notification take? How does the company determine whether or not the event constitutes something that would be “material” under the securities laws? Should the company disclose what it has learned to the government? To investors? Who is going to make that decision? All of these questions should be answered with the assistance of competent counsel.
Engaging Counsel
If the SEC or DOJ (or, not infrequently, both agencies) begin an investigation, the lawyers and firms who usually handle a company’s legal affairs may or may not be who should handle such an investigation. Find out more about engaging counsel.
