The Defender - Fall 2009

In this issue of the Defender, we provide an update on the continuing explosion of Foreign Corrupt Practices Act (FCPA) enforcement activity, including record-setting fines and several individual indictments with potential prison sentences; a primer on what to expect and how to protect your rights when responding to search warrants or subpoenas; guidance in accessing your insurance coverage when faced with a securities class action or derivative suit, or a government investigation; and an insurance coverage checklist to assist with a quick and straightforward review of your coverage.

Whether an investigation is commenced by a state government or the federal government, the defense costs associated with the investigation can be very significant. In many cases, insurance policies will cover the defense costs relating to an investigation. Consequently, one of a companies top priorities when faced with an investigation – after hiring excellent defense counsel – should be accessing their insurance coverage.

It is essential for a corporation to review its insurance coverage to ensure that the company, including its Officers and Directors, are adequately covered in this environment of increased regulatory oversight and follow-on civil litigation. The following is a checklist of critical issues that can arise in typical securities class action and derivative lawsuits, and government investigations; and the milestones where sophisticated coverage counsel can assist to protect you and your company against the inadvertent and unnecessary loss of an important corporate asset: its insurance. In addition, companies may be able to recover their costs of internal investigations, if they follow the right procedures, ensure proper notice, and respond when insurers raise their inevitable coverage defenses.

As we approach the end of the third quarter of 2009, the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) are making good on their 2008 promises to continue to increase enforcement of the Foreign Corrupt Practices Act (“FCPA”). This year already has seen penalties assessed (some of record-setting proportion) against both public and private corporations, and continued governmental pursuit of companies associated with the U.N. Oil-for-Food program.

Federal search warrants and grand jury subpoenas are standard law enforcement tools used in most federal investigations. It is important to be prepared in advance so that you can quickly, effectively, and appropriately respond to the government’s investigation in the event a search warrant is executed at your business premises or a grand jury subpoena is served. Set forth below is a quick guide which can be used as a primer for implementing a protocol for responding to a search warrant or subpoena.