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By: Charles J. Clark, Barry A. Bohrer, and Christian J. Ascunce, Schulte Roth & Zabel LLP
THIS ARTICLE PROVIDES GUIDANCE COVERING KEY questions that your organization may face as a result of a regulatory and enforcement inquiry during COVID-19, including a checklist to aid your response. Considering and approving these best practices is good; mastering and implementing them so that you may reflexively employ them is ideal. And a critical component of this is identifying outside counsel that you trust, that knows you and your business, and that can respond quickly to assist you in this high-stakes and fast-moving context.
As the financial industry continues to adjust to the effects of COVID-19, market participants should remain vigilant and prepared from a regulatory and enforcement perspective. If history is any indication, the extreme market volatility over the past several months will lead to a flurry of enforcement activity. The current volatility lends itself to the potential for regulatory and enforcement inquiries on a variety of topics, including participation in government-sponsored programs and the receipt of government funds, business continuity plans, redemption procedures, and valuation processes, not to mention the increased possibility of inquiries into potential fraud (including insider trading and accounting and disclosure failures). Now, more than ever, all market participants—be they public companies, private funds, financial institutions, or other regulated entities—need to be prepared to respond appropriately and effectively if confronted by an enforcement authority. Two weeks from now, it may be you sitting at your desk (wherever that may be these days) when an email attaching a subpoena or information request from the U.S. Securities & Exchange Commission (SEC) or Department of Justice (DOJ) hits your inbox, or worse, the Federal Bureau of Investigation (FBI) acting on behalf of the DOJ shows up with a search warrant. The first 72 hours are critical to putting your organization on a path to success. CLICK HERE TO READ THE FULL ARTICLE IF YOU ARE A PRACTICAL GUIDANCE SUBSCRIBER