Resources to assist an employer in conducting an internal investigation.
With today's increasingly complex and aggressive regulatory environment, there is a new urgency for companies to know how to properly respond to allegations of wrongdoing.
The Sarbanes-Oxley Act of 2002 (www.practicallaw.com/8-382-3784) has steadily increased the number of government investigations and enforcement actions. Securities and Exchange Commission (www.practicallaw.com/9-382-3806) (SEC) investigations alone have increased from 776 in 2007 to 890 in 2008 and to 944 in 2009. As part of this growing trend, the SEC launched an initiative in early 2010 to encourage individuals and companies to cooperate and assist in investigations to strengthen the SEC’s enforcement program.
In addition to government investigations, companies also regularly face exposure from employee complaints ranging from discrimination and harassment to wage and hour violations and health and safety law compliance problems. From 2007 to 2008, the Equal Employment Opportunity Commission (www.practicallaw.com/4-501-5853) saw a 15% increase in employment claims. The 2009 statistics are comparable, and practitioners predict that this trend will continue. If not handled appropriately, each allegation of wrongdoing, even those that initially appear insignificant and isolated, can result in significant losses to the company.
An effective internal investigation may provide enough information for a company to allow it to assess its potential exposure and make strategic decisions to mitigate its losses. The company may be able to stop any improper conduct from continuing, and will likely have a solid basis for taking disciplinary action against persons responsible for the wrongdoing.
However, conducting an internal investigation also involves various potential risks. Companies must be prepared to handle a wide variety of issues, such as:
Who should conduct an internal investigation.
When to conduct an internal investigation.
What is the proper scope of the investigation.
How to collect information during an investigation.
Whether to enter into a joint defense agreement (www.practicallaw.com/3-501-9762).
What are the appropriate actions in response to an investigation.
Having the right answers to these questions may limit the company’s exposure to damages and save valuable resources.
The Conducting Internal Investigations Toolkit provides a number of continuously maintained resources designed to help counsel prepare for and conduct an effective internal investigation.