Why Would The Government Investigate And Take Enforcement Action Against A Business?
The greater the level of publicity and the greater the level of potential harm to individuals and the public at large, the greater the likelihood of an investigation by the federal or state government, and potentially a court action. For instance, if there are multiple reports of people sustaining injuries from a brand-new transportation device that’s sold at a local chain of stores, that’s going to draw a lot of publicity, and may lead to an investigation or more serious governmental action.
Our Business Is Being Investigated By The Government; What Assistance Can Your Firm Provide?
Upon being notified of an investigation, the decision-makers in the company should contact and provide the relevant information and documents to experienced counsel, such as myself. The earlier the attorney receives that information, the more options the attorney will have for developing strategies and addressing concerns.
Investigations can be at a very low level, such as an agency asking what chemicals are in a product and whether there should be warning labels on shipping boxes before they go onto an airplane. An investigation can also be more serious, such as an agency investigating reports of injury or sickness.
Let’s consider a completely different example involving a business that is regulated by the Securities and Exchange Commission (SEC). If that business were to be investigated for selling a product that people claim was advertised as something that would provide a guaranteed level of income, then the inquiry may be as simple as providing copies of documents and information about the third-party vendor who is offering the product. Other investigations can be more extensive.
Some agencies have a great deal of power, such as the case with the SEC, which may have the rights under statute and by rulemaking to access a broker-dealer’s customer list and other information in a way that is very invasive and potentially very harmful to the business.
How Should Our Business Respond To Enforcement Actions By The Government?
The way in which a business should respond to an enforcement action by the government will depend upon the stage of the enforcement action, the things being investigated and the statutes that provide for the agency’s authority. At first, the enforcement action might be as simple as a cease-and-desist letter, initial investigation, or interim order to change labelling or packaging for products. The earlier experienced counsel such as myself gets involved, the more options there will be for addressing concerns of the government, and potentially even talking the government out of an action that they took.
Sometimes the government is looking for so-called “bigger fish” in the chain, so the more information the business has about someone upstream who has greater involvement in the prohibited practice or the activity that is of concern to the government, the better the chance of cutting off that kind of severe or crippling government enforcement action.
In both the securities and banking industries, I have been able to get the government to take the heat off my client by providing the government with information about someone with a higher level of culpability than my client. Every situation is going to be a little bit different, and the lesson that we repeatedly learn is to get experienced and capable counsel, such as myself, involved early.
For more information on Government Enforcement Action & Investigation, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (424) 380-6662 today.
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