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Navigating Multiple Civil Investigative Demands Across Different Corporate Entities
Contents
When multiple regulators bring enforcement actions, businesses and their employees face complex challenges in responding. A company may receive Civil Investigative Demands (CIDs) or other requests for information from various government agencies related to the same issue. Successfully navigating these parallel investigations requires carefully balancing the company’s legal exposure against the burdens of compliance across different regulators.
Key Factors in Responding to Multiple Regulators
Several key factors should guide a company’s strategic decisions when facing investigations by multiple regulators:
- Assess the company’s potential civil and criminal liability based on the regulators’ areas of focus
- Consider the possibility of mitigated penalties or settlement by cooperating with regulators[1]
- Weigh the monetary, reputational, and other costs of responding to broad information requests[2]
- Determine whether to handle responses through outside counsel to protect attorney-client privilege[3]
While no approach eliminates legal risk entirely, balancing these factors can lead to the best possible resolution across different regulators.
Responding to expansive requests for information poses substantial burdens. For example, Civil Investigative Demands (CIDs) used by agencies like the FTC often demand huge volumes of documents
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. Companies should consider negotiating the scope of CIDs by:
- Narrowing the time period covered
- Limiting geographic location of responsive records
- Reducing the number of custodians searched
Though agencies have broad authority over CID relevancy, pushing back on overly broad demands shows good faith cooperation. Focused responses also reduce compliance costs
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.
Mitigating Collateral Consequences
Multi-agency investigations increase collateral risks beyond civil fines or criminal penalties. For example:
- Information gathered for civil cases may enable criminal prosecution[1]
- Regulatory scrutiny can damage business relationships and revenue streams
- Reputational harm from legal issues causes additional financial losses
Internal investigations, prompt remediation efforts, and crisis management resources can help mitigate these collateral consequences across different regulators.
Successfully navigating multi-regulator investigations requires strategic decisions at each stage:
Initial Contact
Upon receiving a CID or inquiry, businesses should promptly:
- Notify in-house counsel, outside counsel, and senior management
- Assess scope of potential legal violations
- Identify other regulators likely to investigate issue
Early strategic planning allows coordinated responses as additional regulators engage.
Meet and Confer
Attend meet and confer discussions in person with both legal and IT staff
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. Be prepared to discuss:
- True focus of regulators’ investigation
- Possibilities for narrowing information requests
- Technical details around data collection and production
These meetings build credibility and provide opportunities to reduce compliance burdens.
Responding to Information Requests
Carefully craft written responses to avoid penalties for incorrect or incomplete information. Consider involving outside counsel to preserve privilege
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. Responses should:
- Provide accurate certifications about records produced
- Answer interrogatories fully and truthfully
Meticulous responses demonstrate good faith cooperation with regulators.
Assessing Liability Risk
Continuously evaluate potential civil fines and criminal penalties as regulators share findings. Also assess collateral risks, and take prompt action to mitigate harm. Understanding overall liability exposure guides settlement strategies.
Pursuing Settlement
At any stage, companies can pursue settlement if negotiations seem beneficial. Factors favoring settlement include:
- Significant legal liability or collateral harm
- Limited resources for sustained multi-agency battles
- Desire for expedient resolution
Settlement allows control over penalty terms and ends resource-draining investigations.
Key Takeaways
Responding to multiple regulators is challenging but strategic decisions can mitigate risks:
- Assess liability exposure and collateral consequences
- Weigh legal costs against benefits of cooperation
- Narrow the scope of expansive information requests when possible
- Promptly remedy issues to show good faith
- Settle when appropriate to control penalty terms
With careful navigation of each phase, businesses can resolve multi-agency cases while minimizing legal and financial harm.
Additional Resources
For more information, check out these additional resources: