By Pamela J. Bethel
Corporate Counsel magazine just published a very important article by Scott N. Wagner and Joseph Mamounas of Bilzin Sumberg Baena Price & Axelrod in Miami on the steps that in-house counsel should take when he or she receives a call out of the blue from the Securities and Exchange Commission, asking if company executives would like to have a “background talk” about some recent transactions.
“Years ago, there was little risk in returning the enforcer’s call to get the lay of the land,” the article read. “Does the government suspect your company or any of its employees of wrongdoing? By and large, the typical experience was to receive straightforward responses to these questions — even if the government lawyers simply told you that they were not going to answer them. There was a mutual benefit to this candor: You knew where your company stood—without any expense—and the government could try to secure your cooperation in the investigation.”
But now things have changed, the article says, and government lawyers are keeping their cards much closer to the vest. Since “there is no such thing as a casual chat with a government enforcer,” in-house counsel should turn to an outside lawyer right away in these situations.
The number of these investigations is on the rise; the government thinks nothing of inserting a prosecutor or FBI agent into a meeting with the SEC; and outside counsel who are highly experienced in these matters can handle them best. You are doing your company a disservice if you are using this call from the SEC or some other agency to “learn on the job.”