Kelly Bowers
Hector Gonzalez
Michael Quinn
Thomas Zaccaro
May 9, 2008
Responding to Investigations by Regulators
The Current Regulatory Environment & Important
Regulator Initiatives
Steps To Take In Response To Government
Investigations
Key Issues in Internal Investigations
What To Do When Responding To Subpoenas &
Issues Unique To Multi-Agency Investigations
The Current Regulatory Environment &
Important Regulator Initiatives
Regulators investigating/bringing action in
connection with subprime issues
Joint enforcement initiatives
Scope of resources dedicated to subprime issues
Who is being investigated?
What conduct/practices are being investigated?
Who Is Being Investigated?
Mortgage lenders
Mortgage brokers
Real estate brokers
Investors
Borrowers
Closing attorneys
Appraisers
Securitizers
Credit rating agencies
What Conduct/Practices Are Being
Investigated?
Lender product design
Lender product marketing
Underwriting
Marketing fraud
Origination fraud
Reliance on unsupervised brokers
Compensating brokers misconduct
Steps To Take In Response To Government
Investigations
The current enforcement climate demands
cooperation
Potential pitfalls of cooperation
The Current Enforcement Climate Demands
Cooperation
Statements On Cooperation
The Securities and Exchange Commission
New York Stock Exchange
National Association of Securities Dealers
United States Sentencing Commission
The Current Enforcement Climate Demands
Cooperation
Waiving Attorney-Client Privilege
The Thompson Memorandum
The McNulty Memorandum
Potential Pitfalls of Cooperation
Considerations when waiving privileges
Deputizing corporate counsel to conduct internal
investigations
Payment of attorneys fees
Deferred prosecution agreements
Selection of counsel
Determining scope of investigation
Joint defense agreements
Implications of an amended Rule 408 for settlement offers
made in the context of civil negotiations
Key Issues in Internal Investigations
When should an internal investigation be
conducted?
Who should conduct the internal investigation?
Who should control the investigation?
Should in-house counsel be involved in
conducting the internal investigation?
How should an internal investigation be organized
and initiated?
How should privileges be maintained?
Key Issues in Internal Investigations (cont d)
Should notice of the internal investigation be given
to employees?
How should documents and other materials be
preserved?
How important are e-mails?
When and how should interviews be conducted?
Should interviews be recorded?
Can an employee have a lawyer present at an
interview?
Key Issues in Internal Investigations (cont d)
Should a company pay for lawyer for an
employee?
Should employees be offered the opportunity to
submit a white paper or similar materials?
Should a written report be prepared?
Should the company or employees be allowed to
review the report before it is finalized?
What To Do When Responding To Subpoenas
& Issues Unique To Multi-Agency Investigations
Issues unique to multi-agency investigations
The appropriate response to investigators
Practical tips for responding to document
subpoenas
The Appropriate Response To Investigators
Public and private responses
Interacting with investigators
Assemble legal team
Do not abandon or forego any valid legal
defenses