Defending organizations and individuals in white collar cases
January 15, 2014
Every major white-collar prosecution involves parallel civil, administrative and criminal proceedings. Clients facing parallel proceedings are in a difficult position because an effective defence in one proceeding may compromise their position in others. The risk is heightened where the target individual or company has not been notified, formally or informally, that a criminal investigation is taking place. These are difficult and complex problems that require the assistance of counsel who is capable of navigating through the labyrinth of issues that arise in these types of cases. Although every case is different, our Firm has identified the range of concerns and considerations when representing clients subject to possible white-collar parallel proceedings.
Our Firm is usually retained after triggering events such as:
1. receipt of an anonymous or “whistleblower” communication alleging misconduct by a company or employee of a company;
2. allegations of misconduct raised by the media;
3. allegations of misconduct raised by auditors;
4. suspicion of misconduct raised by management;
5. execution of search warrants on company premises or the homes of employees;
6. receipt of administrative demands for information by regulatory organizations such as the Canada Revenue Agency, the BC Securities Commission, or Financial Institutions Commission of British Columbia;
7. notice of complaints made to self-governing professional bodies such as the Investment Industry Regulatory Organization of Canada, the Society of Notaries Public of British Columbia, Law Society of British Columbia, Real Estate Council of British Columbia, Institute of Chartered Accountants of British Columbia, and within the health professions (for instance, the College of Physicians and Surgeons of British Columbia, the College of Dental Surgeons of British Columbia, the College of Pharmacists of British Columbia, the College of Psychologists of British Columbia, the College of Massage Therapists of British Columbia, the College of Traditional Chinese Medicine Practitioners and Acupuncturists of British Columbia and others);
8. receipt of a summons to appear in criminal court or a notice of hearing to appear before an administrative tribunal;
9. following arrest, or
10. an actual or threatened derivative action by shareholders and other civil actions.
What triggers our engagement will provide us with an initial context for our representation, but the first issue is determining who our client is. In the context of investigations and proceedings that arise within business organizations, we may be engaged by the corporation, the board of directors, the audit committee, a special committee, or by an individual employee. We ensure that our engagement letter and retainer agreement clearly sets out who we represent as the defence strategy may differ and we must remain vigilant in preserving solicitor-client privilege. For instance, when representing a corporation, we may need to conduct an internal investigation and conduct interviews with employees. The internal investigation may be for the purpose of determining the validity and seriousness of the alleged circumstances and what action, if any, the Company should take. A company may decide to share the results of their internal investigation through market disclosure or have obligations to disclose certain information to government agencies. The decision on whether to share the results will depend on what would be in the best interests of the shareholders and whether, in our assessment, the company should keep the material privileged and confidential in order to defend future or potential criminal prosecution, regulatory action or civil lawsuits, while bearing in mind all legal duties in the various proceedings. This is a critical decision and must be made after careful consideration of all of the circumstances.
When defending an individual within a business organization, the considerations are very different. The stakes are also much higher as an individual may be facing imprisonment or at the very least loss of employment or membership within a profession. It is a rare occasion when counsel will advise an individual suspected of wrongdoing within an organization to share the information with an investigating agency, or even to internal investigators, before obtaining legal advice. Often, these targeted individuals are not fully aware of the nature of the allegation or the position and posture of senior management conducting an internal investigation. For instance, these individuals may not understand at the outset who a lawyer conducting an internal investigation is acting for and that the information given by the individual to the company or committee can be provided to criminal investigators or regulatory agencies or be the basis of internal disciplinary measures. In our experience, disclosure of any information by an individual without the benefit of legal advice and representation will prove to be detrimental. We understand all of these issues and appreciate that it is essential, when acting for individuals, to carefully consider all angles before agreeing to participate in any type of investigation, including internally. Employees may have a contractual obligation to cooperate with internal investigators but there is nothing preventing individuals from obtaining legal advice to protect themselves from negative repercussions. With respect to investigations conducted by self-regulatory organizations, although the individual may be obliged to cooperate and respond fully to allegations, it is still important to obtain legal advice to determine the best course of action to protect their interests.
Our Team is available around the clock to represent organizations or individuals through all of the stages of the various proceedings.