What does the SEC expect from an internal investigation? It’s a topic that Nick Morgan, partner, Paul Hastings and Andy Dunbar, Chief Compliance Officer, Herbalife Nutrition tackle in this podcast and will be addressing at the 2021 SCCE Compliance & Ethics Institute.
So what makes for a good internal investigation? It starts before the investigation even begins with a robust whistleblower program, speak-up culture and easily accessible reporting opportunities.
It also includes a disciplined investigation process. That means someone need to be monitoring it to ensure that matters don’t fall through the cracks, that they get assigned efficiently, and that all investigations are moving forward. In addition, someone has to be designated to review the final outcome of the investigations and determine if the right people were spoken to and the right documents examined.
And while the emphasis and effort will be placed on those tips that seem to have merit, It’s important to remember that the vast majority of them will not. Yet, even for those that are unsubstantiated, take the time to document what was done and how conclusions were reached.
No matter if a claim does or doesn’t have merit, they advise ensuring that an adequate program is in place to protect whistleblowers from retaliation. That includes a documented anti-retaliation policy and processes available for both employees to turn to and regulators to see. Be sure also to let whistleblowers know that the same channels they used to report wrongdoing can be used to report retaliation as well.
It is also advisable for the compliance team to stay in contact with the whistleblower, even checking in a couple of months after an investigation concludes to make sure he/she is doing okay. That can be very reassuring to the whistleblower and demonstrate that the compliance program is trustworthy.
Finally, they address what the compliance team can do, should the matter escalate to the point that the organization self-report, or if the SEC or DOJ comes knocking. These include:
- Reviewing hotline data to see if there were any early indications of the problem
- Amassing the data to demonstrate the effectiveness of the compliance program
- Preparing a plan to remediate
Listen in to learn more, and be sure to attend their session What the SEC Expects from Your Internal Investigation: Former SEC Enforcement Attorneys Share Their Insights at the 2021 SCCE Compliance & Ethics Institute.