When Should the General Counsel Recommend that the Board Conduct an Independent Investigation? – June 2, 2016
Cahill Gordon & Reindel
Description
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Independent counsel is counsel
that has not previously done
work for the company.
ABA Model Rule 1.13
(Organization as Client).
Sally Quillian Yates, Deputy Attorney
General, Remarks at the American
Banking Association and American
Bar Association Money Laundering
Enforcement Conference, (Nov. 16,
2015), available at www.justice.
gov/opa/speech/deputy-attorneygeneral-sally-quillian-yates-deliversremarks-american-banking-0.
IAP Worldwide Services, Inc.
Resolves Foreign Corrupt Practices
Act Investigation (Jun. 16, 2015),
available at www.justice.gov/opa/pr/iapworldwide-services-inc-resolves-foreigncorrupt-practices-act-investigation.
Alstom Pleads Guilty and Agrees to
Pay US$772 Million Criminal Penalty
to Resolve Foreign Bribery Charges,
(Dec. 22, 2014), available at www.
justice.gov/opa/pr/alstom-pleads-guiltyand-agrees-pay-772-million-criminalpenalty-resolve-foreign-bribery.
See also Plea Agreement, United States
v.
Alstom S.A., No. 3:14-cr-0246-JBA, at 13 (D. Conn.
Dec. 22, 2014). Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, Exchange Act Release No. 44,969 (Oct. 23, 2001) (“Seaboard Report”), available at www.sec.gov/ litigation/investreport/34-44969.htm. A Resource Guide to the U.S.
Foreign Corrupt Practices Act, (Nov. 14, 2012), available at www.justice.gov/ sites/default/files/criminal-fraud/ legacy/2015/01/16/guide.pdf. The general counsel’s response to potential misconduct will be judged with the benefit of hindsight, so careful evaluation of the conduct and its potential consequences to the organization are critical to determining whether an independent investigation is warranted. 9 10 11 12 13 14 15 Andrew Ceresney, Speech by SEC Staff: The SEC’s Cooperation Program: Reflections on Five Years of Experience (May 13, 2015), available at www.sec.gov/news/speech/ sec-cooperation-program.html. 16 Jamie Symington, Director in Enforcement, Financial Conduct Authority, Internal Investigations by Firms, (Nov. 5, 2015), available at www.fca.org.uk/news/speeches/ internal-investigations-by-firms-. 17 See Statement of Siemens Aktiengesellschaft: Investigation and Summary of Findings with respect to the Proceedings in Munich and the United States, (Dec.
15, 2008), available at www.siemens.com/ press/pool/de/events/2008-12-PK/ summary-e.pdf (citing Munich Prosecutorial Decree at 12). Biondi v. Scrushy, No. Civ.
A. 19896-NC, 2003 WL 203069 (Del. Ch. Jan.
16, 2003). 2015 Federal Sentencing Guidelines Manual, § 8. See Stone v. Ritter, 911 A.2d 362, 371 (Del. 2006). Siri Schubert and T.
Christian Miller, At Siemens, Bribery Was Just a Line Item, The New York Times, Dec. 20, 2008, www.nytimes.com/2008/12/21/ business/worldbusiness/21siemens. html?pagewanted=all. Tom Schoenberg and David Voreacos, Avon Bribe-Probe Tab Neared $500 Million as Sales Slumped, BloombergBusiness, May 2, 2014, www.bloomberg. com/news/articles/2014-05-02/ avon-bribe-probe-tab-neared-500million-as-sales-slumped. 2015 Federal Sentencing Guidelines Manual, § 8C2.5(g)(1). ACC EXTRAS ON… Internal investigations ACC Docket Workplace Investigations: the Role of the Office of the General Counsel (May 2016). www.acc.com/legalresources/ resource.cfm?show=1429437 Preparing Your Board Before Litigation: a primer on defending board actions, preserving confidential information, and managing risk (May 2016). www.acc.com/legalresources/ resource.cfm?show=1429218 72 Practice Resource Navigating the Minefield: Practical Considerations for Conducting Internal Investigations (June 2014). www.acc.com/legalresources/ resource.cfm?show=1370483 Boards of Directors, Corporate Governance and CyberRisks: Sharpening the Focus (June 2014). www.acc.com/legalresources/ resource.cfm?show=1420164 ASSOCIATION OF CORPORATE COUNSEL When Compliance Programs Fail: Best Practices for Investigating Potential Wrongdoing and Managing the Fallout (Oct. 2013). www.acc.com/legalresources/ resource.cfm?show=1355390 QuickCounsel Planning Ahead – The Board’s Role in Crisis Management (Feb.
2013). www.acc.com/ legalresources/quickcounsel/ patbricm.cfm ACC HAS MORE MATERIAL ON THIS SUBJECT ON OUR WEBSITE. VISIT WWW.ACC.COM, WHERE YOU CAN BROWSE OUR RESOURCES BY PRACTICE AREA OR SEARCH BY KEYWORD. .
Alstom S.A., No. 3:14-cr-0246-JBA, at 13 (D. Conn.
Dec. 22, 2014). Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, Exchange Act Release No. 44,969 (Oct. 23, 2001) (“Seaboard Report”), available at www.sec.gov/ litigation/investreport/34-44969.htm. A Resource Guide to the U.S.
Foreign Corrupt Practices Act, (Nov. 14, 2012), available at www.justice.gov/ sites/default/files/criminal-fraud/ legacy/2015/01/16/guide.pdf. The general counsel’s response to potential misconduct will be judged with the benefit of hindsight, so careful evaluation of the conduct and its potential consequences to the organization are critical to determining whether an independent investigation is warranted. 9 10 11 12 13 14 15 Andrew Ceresney, Speech by SEC Staff: The SEC’s Cooperation Program: Reflections on Five Years of Experience (May 13, 2015), available at www.sec.gov/news/speech/ sec-cooperation-program.html. 16 Jamie Symington, Director in Enforcement, Financial Conduct Authority, Internal Investigations by Firms, (Nov. 5, 2015), available at www.fca.org.uk/news/speeches/ internal-investigations-by-firms-. 17 See Statement of Siemens Aktiengesellschaft: Investigation and Summary of Findings with respect to the Proceedings in Munich and the United States, (Dec.
15, 2008), available at www.siemens.com/ press/pool/de/events/2008-12-PK/ summary-e.pdf (citing Munich Prosecutorial Decree at 12). Biondi v. Scrushy, No. Civ.
A. 19896-NC, 2003 WL 203069 (Del. Ch. Jan.
16, 2003). 2015 Federal Sentencing Guidelines Manual, § 8. See Stone v. Ritter, 911 A.2d 362, 371 (Del. 2006). Siri Schubert and T.
Christian Miller, At Siemens, Bribery Was Just a Line Item, The New York Times, Dec. 20, 2008, www.nytimes.com/2008/12/21/ business/worldbusiness/21siemens. html?pagewanted=all. Tom Schoenberg and David Voreacos, Avon Bribe-Probe Tab Neared $500 Million as Sales Slumped, BloombergBusiness, May 2, 2014, www.bloomberg. com/news/articles/2014-05-02/ avon-bribe-probe-tab-neared-500million-as-sales-slumped. 2015 Federal Sentencing Guidelines Manual, § 8C2.5(g)(1). ACC EXTRAS ON… Internal investigations ACC Docket Workplace Investigations: the Role of the Office of the General Counsel (May 2016). www.acc.com/legalresources/ resource.cfm?show=1429437 Preparing Your Board Before Litigation: a primer on defending board actions, preserving confidential information, and managing risk (May 2016). www.acc.com/legalresources/ resource.cfm?show=1429218 72 Practice Resource Navigating the Minefield: Practical Considerations for Conducting Internal Investigations (June 2014). www.acc.com/legalresources/ resource.cfm?show=1370483 Boards of Directors, Corporate Governance and CyberRisks: Sharpening the Focus (June 2014). www.acc.com/legalresources/ resource.cfm?show=1420164 ASSOCIATION OF CORPORATE COUNSEL When Compliance Programs Fail: Best Practices for Investigating Potential Wrongdoing and Managing the Fallout (Oct. 2013). www.acc.com/legalresources/ resource.cfm?show=1355390 QuickCounsel Planning Ahead – The Board’s Role in Crisis Management (Feb.
2013). www.acc.com/ legalresources/quickcounsel/ patbricm.cfm ACC HAS MORE MATERIAL ON THIS SUBJECT ON OUR WEBSITE. VISIT WWW.ACC.COM, WHERE YOU CAN BROWSE OUR RESOURCES BY PRACTICE AREA OR SEARCH BY KEYWORD. .
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