Demonstrating and ensuring independence in internal investigations is a critical issue for corporate counsel to consider, especially when facing or anticipating parallel regulatory probes. How to properly do so is a nuanced process. As this piece published by Corporate Compliance Insights explores, it is not as simple as the binary question of whether counsel conducting an internal investigation had a previous working relationship with the company.

Read the full article I co-authored with senior associate Nell Clement and associate Josh Malone: Rethinking Independence in Internal Investigations

person using touch screenIt doesn’t take a millennial to know that these days not all pertinent business-related communications are to be found on corporate e-mail servers. As we have increasingly seen in recent internal investigations, the most important written communications (especially between high-level executives), are now to be found in a place that most lawyers at the senior level have for years either ignored altogether or for some reason considered untouchable – cell phone text messages. The New York Times recently reported on the implications of this trend—which is hardly new— of executives at all levels taking sensitive communications off e-mail. See As Elites Switch to Texting, Watchdogs Fear Loss of Transparency.

The same potential loss of key communications from “the record” are present in internal corporate investigations where texts are left out of the investigation plan. If text messages and other forms of messaging are not fully considered, an internal investigation result may be at best incomplete or at worst incorrect. The worst mistake is when investigators assume that if communications are not found in corporate e-mail that they did not occur, and draw inferences based on that assumption. But text messages can be difficult to collect from individuals, and, due to a patchwork of inconsistent corporate policies regarding their preservation and use, may present privacy considerations on behalf of the individuals who are texting. Those difficulties begin to make it more understandable why most internal investigators would prefer to ignore their existence altogether and simply rely on easily attainable, and searchable, corporate e-mail. Continue Reading Use of Text Messaging Should Change the Nature of Evidence Gathering in Internal Investigations

people in meeting

In the present uncertain legal and regulatory environment, the role of shareholder activists in scrutinizing corporate behavior seems to be gaining steam. See, e.g., An Activist Investment in Whole Foods Exposes Shifting Power on Wall St. We are increasingly seeing corporate internal investigations being influenced, if not driven by, the presence of activists on the Board. It remains to be seen whether the role of activists in policing corporate governance and other corporate regulatory issues will continue to increase in an environment where SEC Enforcement is increasingly under pressure (budgetary and otherwise) from the current presidential administration.

The announcement that San Francisco private company Hampton Creek faces an SEC inquiry related to their alleged “buyback” program of vegan mayo comes as no shock. See reporting on Bloomberg. As soon as the facts were initially reported it seemed only a matter of time until the regulators, who have been looking for a poster child (or rather, a whole class of poster children) of private company enforcement in the Bay Area, swooped in. Continue Reading Developments in SEC Private Company Enforcement: Sophisticated VC’s in the Role of Victim