Be Prepared for an SEC Investigation

• Posted by Geoffrey G. Gussis on June 29th, 2005


• Filed in Corporate/M&A, Risk Management & Compliance

For inhouse attorneys, there is nothing that puts a lump in your throat like finding out that your company is being investigated by the Securities and Exchange Commission.  Whether you are a general counsel or a staff attorney, responding to an SEC investigation may be one of the most important things that you will do in your career - and it will certainly be a giant blip on the radar of all other corporate officers and directors at your company.  Fortunately, there is help, and his name is Derek M. Meisner of Kirkpatrick & Lockhart Nicholson Graham, LLP.  Derek has two insightful articles on the topic of SEC investigations that will help you get up to speed, and they are brought to you as free downloads from the Practising Law Institute (if you don’t know about PLI you are really missing out - their publications and conferences are top notch).

The first article is The ABC’s of an SEC Investigation: 20
Essential Questions and Answers, which "runs the gamut from the
preparatory, e.g. How does an SEC investigation begin, to the
responsive, e.g. Should a company notify its employees of the SEC’s
investigation?".

The second article "is geared toward Chief Compliance
Officers, offering suggestions on how to survive the investigation." Living Through an SEC Investigation: A Primer for Chief Compliance
Officers sets out Meisner’s forumla as follows:

     "1. Understand the facts
     2. Establish who will authorize and supervise the investigation
     3. Decide whether the company will retain independent, outside
counsel
     4. Determine how or if the company will communicate with its
employees about the investigation and whether it will publicly
disclose the investigation
     5. Figure out how to coordinate and conduct employee interviews
     6. Maintain documents and computer files
     7. Take prompt disciplinary and/or remedial action if necessary"

If you find out that your company is the subject of an SEC investigation, you should start the coffee brewing and download these articles.