Legal Series: How to Effectively Deal with an SEC Investigation in 2014 LIVE Webcast

Speaker Firms and Organization:
Orrick, Herrington & Sutcliffe LLP
Elaine C. Greenberg
Partner
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Presented By:
November 10, 2014
1
Partner Firms:
Schulte Roth & Zabel LLP
Jeffrey F. Robertson
Special Counsel
U.S. Securities & Exchange Commission
Paul T. Chryssikos
Senior Counsel, Division of Enforcement
Fortis Law Partners LLC
Stephen DeHoff
PartnerFortis Law Partners LLC
Julie Herzog
Partner
U.S. Securities &
Exchange Commission

November 10, 2014
2
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Partner Firms:
November 10, 2014
6
Orrick, Herrington & Sutcliffe LLP is a leading global law firm with a particular
focus on serving companies in the technology, energy and financial
sectors. It is recognized worldwide for delivering the highest-quality,
commercially-oriented legal advice and for its culture of innovation and
collaboration. Founded in San Francisco a century and a half ago, Orrick
today is named by Law360 as one of the “Global 20” leading firms. Its
platform offers clients a distinctive combination of local insight and global
reach across 25 offices. Orrick is recognized by Chambers Global for
strengths across 43 transactional, litigation and regulatory practice areas in
the United States, Asia and Europe. Orrick practices in five core areas:
Corporate, Energy & Infrastructure, Finance, Intellectual Property and
Litigation.
U.S. Securities &
Exchange Commission

Partner Firms:
November 10, 2014
7
A multidisciplinary law firm with offices in New York, Washington, DC and
London, Schulte Roth & Zabel serves a wide range of local, national and
international clients, including public and private corporations and their
officers and directors, investment banking firms, brokerage firms,
commercial banks, investment advisers, public accounting firms, insurance
companies, law firms, partnerships, individuals and public interest
organizations. With nearly 100 litigators, our litigation practice includes a
number of former Assistant U.S. Attorneys and SEC Enforcement Division
attorneys. We regularly assist clients in matters involving antitrust, securities
law, complex corporate litigation, trust and estates litigation, real estate
litigation, white collar criminal defense/regulatory enforcement, and
bankruptcy, reorganization and creditors’ rights litigation. We also work
closely with company officials, audit committees, and special committees of
boards of directors in the planning and conducting of internal investigations
involving suspected wrongdoing by employees, management and/or third
parties.
Fortis Law Partners specializes in corporate/securities, complex commercial litigation,
real estate & development, tax law and employment law. One of the leading
transactional law firms in Colorado, Fortis negotiated and closed over 40 transactions
valued at over $1 billion in 2013 alone. Fortis represents domestic and international
clients, ranging from start-ups to Fortune 50 companies. Its legal team is licensed to
practice law in multiple states including Arizona, Colorado, California, Illinois, New York
and Wyoming and acts as regional and national litigation counsel for several clients.
The corporate/securities department has extensive experience in structuring and
organizing legal entities from start-up companies to multi-national joint ventures and
has represented businesses in complex securities regulation and compliance matters,
financings, mergers and acquisitions, reorganizations and management buyouts.
The commercial litigation department handles a broad range of complex commercial
matters in state and federal courts and administrative agencies throughout the
country. They have experience litigating complex securities cases, business matters,
real estate/property disputes, complicated contract disputes and collection cases,
stock option cases, insurance disputes and trade secrets and unfair competition
matters.

Brief Speaker Bios:
Paul T. Chryssikos
Paul T. Chryssikos is Senior Counsel in the U.S. Securities & Exchange Commission’s Philadelphia Regional Office and a member of
the Division of Enforcement’s Market Abuse Unit (MAU). In coordination with other attorneys, securities industry experts and
accountants, Paul investigates possible violations of the federal securities laws including insider trading, market manipulation, and
violations by registered broker-dealers and investment advisers, and brings enforcement actions where appropriate on behalf of the
Commission in federal district courts and in administrative proceedings.
November 10, 2014
8
Elaine C. Greenberg
Elaine C. Greenberg, a partner in the Washington, D.C., office of Orrick, Herrington & Sutcliffe LLP, is a member of the firm’s
Securities Litigation & Regulatory Enforcement Group. Ms. Greenberg’s practice focuses on securities and regulatory investigations
and enforcement actions, securities litigation, public finance, and white collar and corporate investigations. She has more than 25
years of securities law experience and possesses deep institutional knowledge of SEC policies, practices, and procedures. As a
Senior Officer in the SEC’s Enforcement Division, she served in dual roles as Associate Director for the Philadelphia Regional Office
where she oversaw the SEC’s enforcement program for the Mid-Atlantic region, and as the first National Chief of the Specialized Unit
for Municipal Securities and Public Pensions, where she was responsible for building and maintaining a nation-wide unit, and oversaw
the SEC’s enforcement efforts in the U.S.’s $4 trillion municipal securities and $3 trillion public pension marketplaces.

Brief Speaker Bios:
Jeffrey F. Robertson practices in the Washington, D.C. office of Schulte Roth & Zabel LLP, where he represents clients in high-stakes
securities enforcement and litigation matters. These include SEC investigations and litigated enforcement actions; shareholder class
actions, derivative suits, and other securities-related litigation and arbitration; FINRA and PCAOB investigations; and criminal inquiries
by the Department of Justice and state attorneys general.
November 10, 2014
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Stephen DeHoff
Stephen M. DeHoff is a Partner at Fortis Law Partners, LLC. Steve’s practice focuses on commercial, employment and securities-
related litigation, and he has represented businesses of all sizes, ranging from small, closely held corporations to Fortune 50
companies. He represents clients in a range of complex commercial disputes, including securities enforcement and litigation
matters. Steve is frequently called upon to conduct internal investigations and to provide compliance advice and risk assessments for
financial services industry clients.
► For more information about the speakers, you can visit: http://theknowledgegroup.org/event_name/legal-series-how-to-effectively-deal-with-an-sec-investigation-in-2014-live-webcast/
Julie Herzog
Ms. Herzog leads Fortis’ corporate/securities practice. She has handled transactions valued at over $4 billion for major public
companies and investment banks and enjoys working with a diverse clientele that ranges from Fortune 100 corporations to startups,
family offices, and venture capital and private equity funds. Before joining Fortis in 2003, Julie practiced corporate and securities law
at major international firms in Chicago, Denver and Hong Kong. She has been honored by the Denver Business Journal as a "40
under 40" and a finalist in the "Mile Hi Leader" category for “Outstanding Women in Business,” by LawWeek Colorado as a “Woman of
Accomplishment” and as a finalist for “Top Woman Lawyer” and by InterContinental Finance Magazine as one of “100 Leading
Female Lawyers.” In 2014 Julie was selected to the Colorado Super Lawyers list.

In a two hour live webcast, a panel of thought leaders and practitioners assembled by The
Knowledge Group will discuss the significant issues and latest insights on how to strengthen
your strategies with respect dealing with SEC Investigations in 2014.
Some of the major topics that will be covered in this course are:
• SEC Investigation 2014: an overview
• Emerging trends and issues
• Enforcement, investigation process and recent cases
• Compliance and best practices
• Latest regulatory updates
November 10, 2014
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Featured Speakers:
November 10, 2014
11
SEGMENT 1:
Paul T. Chryssikos
SEGMENTS 4:
Julie Herzog
Partner
SEGMENT 2:
Elaine C. Greenberg
Partner
SEGMENT 3:
Special Counsel
SEGMENTS 4:
Stephen DeHoff
Partner

Introduction
Paul T. Chryssikos is Senior Counsel in the U.S. Securities & Exchange Commission’s Philadelphia Regional Office and a
member of the Division of Enforcement’s Market Abuse Unit (MAU). In coordination with other attorneys, securities industry
experts and accountants, Paul investigates possible violations of the federal securities laws including insider trading, market
manipulation, and violations by registered broker-dealers and investment advisers, and brings enforcement actions where
appropriate on behalf of the Commission in federal district courts and in administrative proceedings.
Prior to joining the SEC in 2010, Paul was in private practice in Philadelphia for over 10 years, primarily at Morgan Lewis &
Bockius LLP, where he focused on representing broker-dealers, securities issuers and financial services companies in
litigation in state and federal courts, securities industry arbitrations, internal investigations, and related business matters.
Paul graduated from Georgetown University with a B.S.F.S. in 1995 and obtained his law degree, cum laude, from the
Villanova University School of Law in 1999. He is admitted to practice law in Pennsylvania and New Jersey.
November 10, 2014
12
SEGMENT 1:
Paul T. Chryssikos

Disclaimer
“The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private
publication or statement by any of its employees. The views expressed herein are those of the author and
do not necessarily reflect the views of the Commission or of the author’ s colleagues on the staff of the
Commission.”
November 10, 2014
13
SEGMENT 1:
Paul T. Chryssikos

Early communications with the staff
• Engage in discussions early and often regarding the scope of requests and subpoenas.
• Ask for clarifying information with respect to the categories and time periods of documents sought in
requests and subpoenas.
• Be up front about how you plan to search for and gather documents and memorialize agreements with
the staff as to how to proceed.
• This includes identifying email and instant message custodians, discussing whether the use of search
terms is appropriate, and discussing whether archive or backup systems must be searched.
November 10, 2014
14
SEGMENT 1:
Paul T. Chryssikos

Open communications
• Provide detailed cover letters with document productions identifying the requests to which documents
are responsive.
• Don’t wait for the staff to ask for a privilege log. Provide one with each production and discuss
privilege-related issues with the staff.
• Engage in calls with the staff to explain findings you have made.
• Don’t wait to bring issues or documents to the staff’s attention that are going to come to light
eventually.
• Keep the staff apprised of logistical, technological and timing issues.
November 10, 2014
15
SEGMENT 1:
Paul T. Chryssikos

Proactive communications
• Schedule calls or meetings with the staff to discuss the scope of investigations, your findings, and
your analysis of the facts.
• Organized presentations that include references to specific documents or document binders and
references to relevant legal precedent are the most helpful types of presentations.
• Follow up after presentations to respond to any questions of the staff and cite to specific documents
and legal precedent.
• Prepare high quality white papers or Wells submissions.
November 10, 2014
16
SEGMENT 1:
Paul T. Chryssikos

Whistleblower Program
• The Dodd-Frank Act established a whistleblower program that permits the Commission to pay an
award – between 10 and 30 percent of the monetary sanctions collected – to eligible whistleblowers
who voluntarily provide the Commission with original information that leads to a successful
enforcement action in which the SEC is awarded over $1 million in monetary sanctions.
• The Act also prohibits retaliation by employers against whistleblowers for providing information to the
Commission, assisting in a Commission investigation, or for making disclosures required by law.
• Whistleblower award of over $30 million announced in Sept. 2014.
• First case including claims under the retaliation provisions filed in June 2014.
November 10, 2014
17
SEGMENT 1:
Paul T. Chryssikos

Use of Technology in Fraud Investigations
• In the insider trading context: the Commission has developed advanced analysis tools to identify
suspicious trading patterns that suggest relationships among traders within large amounts of trade
data.
• In the asset management area: the Commission has developed a program that identifies aberrant
returns in investment funds.
November 10, 2014
18
SEGMENT 1:
Paul T. Chryssikos

Specialized Units and Task Forces
• Market Abuse Unit
• Foreign Corrupt Practices Act Unit
• Complex Financial Instruments Unit
• Municipal Securities and Public Pensions Unit
• Asset Management Unit
• Financial Reporting and Audit Task Force
• Microcap Fraud Task Force
• Broker-Dealer Task Force
November 10, 2014
19
SEGMENT 1:
Paul T. Chryssikos

New Admissions Policy in Settlements
• New policy regarding admissions in settlements with the Commission in certain cases. Modification of
no admit/no deny settlement protocol.
• Admissions considered in cases where: (1) the violation of the securities laws includes particularly
egregious conduct, (2) large numbers of investors were harmed, (3) the markets or investors were
placed at significant risk, (4) the conduct obstructs the staff’s investigation, (5) an admission can send
a particularly important message to the markets, or (6) the wrongdoer poses a particular future threat
to investors or the markets.
November 10, 2014
20
SEGMENT 1:
Paul T. Chryssikos

Introduction
Elaine C. Greenberg, a partner in the Washington, D.C., office of Orrick, Herrington & Sutcliffe LLP, is a member of the firm’s
Securities Litigation & Regulatory Enforcement Group. Ms. Greenberg’s practice focuses on securities and regulatory
investigations and enforcement actions, securities litigation, public finance, and white collar and corporate investigations.
She has more than 25 years of securities law experience and possesses deep institutional knowledge of SEC policies,
practices, and procedures. As a Senior Officer in the SEC’s Enforcement Division, she served in dual roles as Associate
Director for the Philadelphia Regional Office where she oversaw the SEC’s enforcement program for the Mid-Atlantic region,
and as the first National Chief of the Specialized Unit for Municipal Securities and Public Pensions, where she was
responsible for building and maintaining a nation-wide unit, and oversaw the SEC’s enforcement efforts in the U.S.’s $4
trillion municipal securities and $3 trillion public pension marketplaces.
November 10, 2014
21
SEGMENT 2:
Elaine C. Greenberg
Partner

Enforcement Division’s Specialized Units
• Five Specialized Units
» Asset Management Unit
» Market Abuse Unit
» Municipal Securities and Public Pensions Unit
» Foreign Corrupt Practices Act Unit
» Complex Financial Instruments Unit
• Structure and Organization of Units
• Recent Enforcement Actions and Initiatives of Units
November 10, 2014
22
SEGMENT 2:
Elaine C. Greenberg
Partner

Enforcement Division’s Task Forces
• Three Task Forces
» Financial Reporting and Audit Task Force
» Microcap Fraud Task Force
» Broker-Dealer Task Force
• Structure and Organization of Task Forces
• Recent Enforcement Actions and Initiatives of Task Forces
November 10, 2014
23
SEGMENT 2:
Elaine C. Greenberg
Partner

Referrals to Enforcement Division from
Office of Compliance, Inspections and Examinations
• Examination Process
• Interaction with Enforcement Division
• OCIE Priorities and Initiatives
• OCIE Risk Alerts
• Recent Enforcement Actions Resulting from OCIE Referrals
November 10, 2014
24
SEGMENT 2:
Elaine C. Greenberg
Partner

Parallel Investigations by Criminal Authorities or Other Regulatory Agencies
• Parallel investigations have become increasingly common
• Access Requests and Information Sharing
• Grand Jury matters
• Coordination with other Agencies
• Referrals to and from Enforcement Division
November 10, 2014
25
SEGMENT 2:
Elaine C. Greenberg
Partner

SEC’s Cooperation Tools
• Frameworks for Evaluating Cooperation
» By Individuals
» By Companies
• Cooperation Tools
» Proffer Agreements
» Cooperation Agreements
» Deferred Prosecution Agreements
» Non-Prosecution Agreements
» Immunity Requests
November 10, 2014
26
SEGMENT 2:
Elaine C. Greenberg
Partner

SEC’s New Settlement Position Requiring Admissions of Liability
• Change from historical “Neither Admit Nor Deny” Settlement Policy
• Will be considered in cases that meet certain criteria:
» Particularly egregious conduct
» Large numbers of investors harmed
» Markets or investors placed at significant risk
» Conduct obstructs SEC investigation
» Admission can send a particularly important message to the markets
» Wrongdoer poses a particular future threat to investors or the markets
• Recent Settled Actions containing Admissions
November 10, 2014
27
SEGMENT 2:
Elaine C. Greenberg
Partner

November 10, 2014
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November 10, 2014
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Introduction
Jeffrey F. Robertson practices in the Washington, D.C. office of Schulte Roth & Zabel LLP, where he represents clients in
high-stakes securities enforcement and litigation matters. These include SEC investigations and litigated enforcement
actions; shareholder class actions, derivative suits, and other securities-related litigation and arbitration; FINRA and PCAOB
investigations; and criminal inquiries by the Department of Justice and state attorneys general.
Jeff also conducts internal investigations and advises clients throughout the financial services industry on securities-related
compliance and regulatory matters.
He has been recognized as a leading securities litigator by several peer-review publications, including Washington DC
Super Lawyers, The Best Lawyers in America and The Legal 500. He is a frequent speaker at professional seminars.
Jeff is a graduate of Columbia Law School where he was a Harlan Fiske Stone Scholar.
November 10, 2014
31
SEGMENT 3:
Special Counsel

SEC INVESTIGATIONS:
BEST PRACTICES AND EMERGING ISSUES
November 10, 2014
32
SEGMENT 3:
Special Counsel

Presentation Overview
– Best practices in SEC investigations
– How emerging trends impact SEC investigations
November 10, 2014
33
SEGMENT 3:
Special Counsel

Best Practices
o Initial considerations
 Early assessment
 Hiring the "right" counsel
 Representation issues
 Disclosure issues
November 10, 2014
34
SEGMENT 3:
Special Counsel

Understand the issues
 Internal investigation
 Remediation
 New policies/procedures
 Compensate victims
 Assess collateral impacts
November 10, 2014
35
SEGMENT 3:
Special Counsel

Understand the investigation
 Learn about investigation and investigators
 Back-channels/informal networks
 Industry contacts
 Counsel for other parties
 Obtain formal order
 Source of inquiry
November 10, 2014
36
SEGMENT 3:
Special Counsel

Negotiating SEC production demands
 Preliminary considerations
 Data retention policies and practices
 IT expertise
 Understand practical implications
 Meet and confer
 Scope
 Timing
November 10, 2014
37
SEGMENT 3:
Special Counsel

Setting the Right Tone
 Dealing with SEC Staff
 Establish relationship/credibility
 Contain investigation
 Cooperation
 Getting ahead of the investigation
 Internal investigation
 Experts/consultants
November 10, 2014
38
SEGMENT 3:
Special Counsel

Setting the Right Tone (cont.)
 Meetings/presentations to SEC Staff
 Provide context
 Promote dialogue
 Understand concerns
 Cooperation
 Corporations: Seaboard report
 Individuals: SEC policy statement
 What is cooperation, really?
 Cooperation tools
November 10, 2014
39
SEGMENT 3:
Special Counsel

Testimony
 Identifying witnesses
 Preparing witnesses
 Objective of testimony
 Counsel’s role
November 10, 2014
40
SEGMENT 3:
Special Counsel

Wells Process
 Pre-Wells discussions
 Strategic considerations
 Representation issues
 Whether to make submission
 Objective of submission
 Access to investigative record
 Benefits of transparency
 Non-SEC sources
November 10, 2014
41
SEGMENT 3:
Special Counsel

Wells Process (cont.)
 Focus of Wells submission
 Law, facts, policy
 Expert submissions
 Audience
 Post-Wells discussions
 Follow up
 Supplemental submissions
 Internal appeals
November 10, 2014
42
SEGMENT 3:
Special Counsel

Settlement Discussions
 Timing
 Be realistic, practical, credible
 Value of precedent
 Understand SEC/client objectives
 Ability/willingness to litigate
 Strategic considerations
November 10, 2014
43
SEGMENT 3:
Special Counsel

Settlement Terms
 Understand context/precedent
 Corporate penalties
 Creative resolutions
 Other considerations
 Public statements/timing
 Managing collateral consequences
November 10, 2014
44
SEGMENT 3:
Special Counsel

Emerging Issues/Trends
o Enforcement priorities
 “Broken windows” approach
 Non-scienter charges
o Stealth investigations
 Whistleblowers
 Enhanced technology
 Examination referrals
November 10, 2014
45
SEGMENT 3:
Special Counsel

Administrative proceedings
 Dodd-Frank-Rakoff
 Procedural advantages for SEC
 Due process challenges
 Practical consequences
November 10, 2014
46
SEGMENT 3:
Special Counsel

DISCLAIMER
This information and any presentation accompanying it (the "Content") has been prepared by Schulte Roth & Zabel LLP
(“SRZ”) for general informational purposes only. It is not intended as and should not be regarded or relied upon as legal
advice or opinion, or as a substitute for the advice of counsel. You should not rely on, take any action or fail to take any
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As between SRZ and you, SRZ at all times owns and retains all right, title and interest in and to the Content. You may only
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November 10, 2014
47
SEGMENT 3:
Special Counsel

Introduction
Stephen M. DeHoff is a Partner at Fortis Law Partners, LLC. Steve’s practice focuses on commercial, employment and
securities-related litigation, and he has represented businesses of all sizes, ranging from small, closely held corporations to
Fortune 50 companies. He represents clients in a range of complex commercial disputes, including securities enforcement
and litigation matters. Steve is frequently called upon to conduct internal investigations and to provide compliance advice
and risk assessments for financial services industry clients.
Prior to joining Fortis, Steve worked for two New York City-based firms, primarily representing national and international
companies in state and federal litigation matters, handling class action defense, agency compliance investigations,
securities-related and employee-related arbitrations, and related business matters on behalf of financial industry clients.
Steve is a graduate of the University of California, Hastings College of the Law, where he received distinction in the fields of
commercial litigation and appellate advocacy.
November 10, 2014
48
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Introduction
Ms. Herzog leads Fortis’ corporate/securities practice. She has handled transactions valued at over $4 billion for major
public companies and investment banks and enjoys working with a diverse clientele that ranges from Fortune 100
corporations to startups, family offices, and venture capital and private equity funds. Before joining Fortis in 2003, Julie
practiced corporate and securities law at major international firms in Chicago, Denver and Hong Kong. She earned her juris
doctor, cum laude, at Southern Methodist University and bachelors of science in accounting and political science, with
honors, from Oklahoma State University. She has been honored by the Denver Business Journal as a "40 under 40" and a
finalist in the "Mile Hi Leader" category for “Outstanding Women in Business” and by LawWeek Colorado as a “Woman of
Accomplishment” and as a finalist for “Top Woman Lawyer.” In 2014 Julie was selected to the Colorado Super Lawyers list
and named one of InterContinental Finance Magazine’s “100 Leading Female Lawyers.”
November 10, 2014
49
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

When Investigations are More Likely
Circumstances that may attract the SEC’s attention
– Bad press
– Restatement of earnings
– Whistleblower
– Shareholder suit
– Change in auditors (especially if a perceived downgrade in quality)
– Insider trading
– FCPA issues
– Problems within a company’s industry
– Tips from other agencies
– …and numerous other possibilities
November 10, 2014
50
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Levels of Inquiry
November 10, 2014
51
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner
Informal (MUI)
• Typically the first step
• Broad requests for voluntary document
production
• Interview/testimony requests
• Opportunity to conduct internal investigation
• “Cooperation credit” can begin to accrue
• No duty for SEC to inform when/if inquiry is
terminated
Formal
• Often the second step, but can be first
• Indication of elevated concern
• Subpoena authority
• Review conflicts in representation of
employees/company
• Formal Order may provide insight into the
issue(s) being investigated

Initial Inquiry Response
• DO NOT PANIC
• DO
– Stop the potentially violative conduct
– Hire experienced counsel
– Strike a cooperative tone
– Preserve documents & attorney client privilege
– Notify your insurance carrier
– Gather facts
November 10, 2014
52
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

• DO
– Consider self-reporting to the SEC
– Document steps taken
– Determine who is involved and whether discipline is necessary
– Reassess internal controls and disclosure practices
– Consider negotiating breadth of documents requested by SEC
November 10, 2014
53
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

• DO
– Inform appropriate parties
• Board of Directors
• Auditors
• Executives
• Key employees
November 10, 2014
54
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

• DO
– Consider implementing a special committee:
• Efficiency
• Use of the audit committee
• Maintain independence
• Board must meet their duty to investigate
November 10, 2014
55
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

• DO
– Consider instituting blackout periods
• Facts & circumstances intensive inquiry
• Effectiveness of registration statements
• Effects of public disclosure
• Restrictions on employee benefit plan transactions
• 10b5-1 plans
November 10, 2014
56
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

• DO NOT
– Miss SEC Filing Compliance Deadlines
• Impact depends upon nature of SEC inquiry
• Are restatements required?
• Consider 8-K obligations
• Impact of late filings
November 10, 2014
57
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

• DO NOT
– Destroy, alter or fabricate documents
– Make intemperate remarks
– Conduct an incomplete fact-finding inquiry
– Submit inaccurate documents to the SEC
– Make public relations missteps
November 10, 2014
58
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Communicating with SEC Staff
• Strike cooperative tone
• Establish credibility
November 10, 2014
59
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Potential Benefits of Cooperation
• Reduced charges
• Reduced penalties
• Deferred or non-prosecution agreement
• Reduced public disclosure of issues by SEC
November 10, 2014
60
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Attorney Client Privilege
• All discussions and other forms of communication regarding the inquiry itself or the focus of the
inquiry may be discoverable unless conducted in the presence of an attorney
• Impact of external auditor and issues of voluntary disclosure
November 10, 2014
61
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Dual/Joint Representation
• Scope of inquiry and charges may change over the course of the investigation
• SEC concerned with whether or not individuals are being counseled properly about potential
cooperation agreements
November 10, 2014
62
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Ongoing Issues During Investigation
• Procedural/ministerial difficulties
• Expansion of issues under investigation
• Wells Notice
• Other potential problems
November 10, 2014
63
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Remedial Steps
• Implementation before completion of the investigation, when possible and appropriate, can be a
positive sign of cooperation
• Consider
– Discipline of implicated employees
– Future of the business unit involved
– New internal processes
– Enhanced disclosure
November 10, 2014
64
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Public Disclosure
• Consider public disclosure at each stage
– Informal inquiry
– Formal inquiry
– Wells Notice
– Litigation
November 10, 2014
65
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Cost Impacts
• Document retention
– Pro-active system development vs. reviewing millions of documents
– Some document retention consultants estimate legal review at $20 per document
• http://documentretentionpolicies.com/email_document_retention_practice/document_retenti
on_policy_consulting.aspx
• Legal fees
• Accounting experts
• Stock price
• Class action lawsuits
November 10, 2014
66
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

Prepare Ahead of Time
• Document retention policy
– Preparation for holds
• Playbook for all relevant personnel
– How to handle calls from the SEC
– Continuously updated compliance policies
• Immaculate record-keeping
• Tone of compliance from top officials
November 10, 2014
67
SEGMENTS 4:
Julie Herzog
Partner
SEGMENTS 4:
Stephen DeHoff
Partner

► You may ask a question at anytime throughout the presentation today. Simply click on the question mark icon located on the floating tool bar on the bottom right side of your screen. Type
your question in the box that appears and click send.
► Questions will be answered in the order they are received.
Q&A:
November 10, 2014
68
SEGMENT 1:
Paul T. Chryssikos
SEGMENTS 4:
Julie Herzog
Partner
SEGMENT 2:
Elaine C. Greenberg
Partner
SEGMENT 3:
Special Counsel
SEGMENTS 4:
Stephen DeHoff
Partner

November 10, 2014
69
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