Internal Investigations

Sonnenschein’s attorneys regularly conduct internal investigations of potential misconduct on behalf of corporations, partnerships, boards of directors, independent board committees, and audit committees, including handling sensitive issues involving the confidentiality of reports and information in such investigations.  In addition, we advise clients seeking to implement or update compliance programs, ranging from records retention policies to specific regulatory requirements under the Foreign Corrupt Practices Act (FCPA), securities laws and Sarbanes-Oxley, and monitorships and compliance oversight. 

We also represent clients in a wide range of other investigatory contexts, ranging from grand jury investigations conducted by state and federal prosecutors to regulatory investigations by the Securities and Exchange Commission, Congressional Committees, Federal Election Committee, State Departments of Insurance (DOI) and Offices of Attorneys’ General, Internal Revenue Service, New York Stock Exchange and the National Association of Securities Dealers (NASD).  These defenses and investigations cover a wide spectrum of substantive areas, which include securities, health care fraud and abuse, Foreign Corrupt Practices Act, money laundering, options timing and backdating, accounting and commodities fraud, tax, banking and insurance.

Representative Engagements

• We served as national coordinating and lead trial counsel to Prudential Financial in one of the most complex investigation, litigation and regulatory matters in American corporate history involving the company’s life insurance sales practices.  We counseled the company’s board of directors and senior management in navigating more than two dozen putative nationwide class actions, a federal multi-district litigation in New Jersey, multiple state regulatory investigations (including a 35-state task force effort plus individual investigations by several other state DOIs and Attorneys General), a Southern District of New York U.S. Attorney’s Office inquiry, a formal NASD-R probe and multi-year negotiation, more than 1,300 individual federal and state court actions, and dozens of NASD agent arbitrations.  The successful resolution of all of these investigations and suits enabled Prudential to proceed with the company’s demutualization plans.
• We represented the special committee to the board of Biomet, Inc., investigating allegations of stock option back-dating.  The investigation followed shareholder suits alleging misdating and took place against the backdrop of a $12 billion privatization.
• We advised an independent board committee of a manufacturing company with respect to alleged accounting improprieties.
• We represented a Fortune 500 electronic component manufacturer in an accounting internal investigation and SEC enforcement investigation.  In the accounting internal investigation matter, the company’s auditor resigned after a dispute with the company’s CEO and CFO.  The company restated five years of financial statements and went through a NASDAQ delisting proceeding.  With respect to the SEC enforcement investigation, we represented the company through the internal investigation conducted by the board and defended the company before the SEC Enforcement Division and NASDAQ. 
• As part of a special committee investigation for a bank, we investigated alleged pressure on a loan officer to re-classify real estate loans.
• We represented the audit committee of the Fleming Companies, a major grocery wholesaler, in an internal investigation of alleged accounting violations.  We worked with the forensic accounting group at PricewaterhouseCoopers.  Our representation included presentations to the SEC relating to the investigation.  No action was taken against the audit committee or the independent directors.
• We conducted an internal investigation for the audit committee of a major utility company with respect to alleged irregularities in reporting certain investments.  The allegations had been made by the outgoing controller of the company.
• We conducted an internal investigation for the Prudential board relating to whistleblower allegations of value manipulation of real estate assets involving the chief appraiser of the company.
• We represented the board of First Merchants Acceptance Corporation, a NASDAQ traded corporation, in conducting an investigation relating to financial fraud, and in connection with the related SEC investigation.
• Sonnenschein represented an independent committee of the board of directors of another NASDAQ listed company, CCA Industries, in connection with the proposed buyout of the CEO’S and COO’s respective employment agreements and equity interests in the face of a challenge by activist hedge fund.
• We represented a Fortune 500 utility company in a financial fraud investigation by the SEC and Department of Justice.  During the course of this representation, we managed production of more than one million documents, defended more than a dozen witnesses in SEC testimony, drafted and submitted a Wells response and negotiated a tentative settlement with the staff.
• Sonnenschein represented a large public advertising firm in a Sarbanes-Oxley auditor independence inquiry conducted by the client’s audit firm and the SEC Enforcement Division.  Following our own internal investigation, we persuaded SEC Enforcement, the Division of Corporation Finance and the Office of the Chief Accountant not to pursue action.
• We did an internal investigation of a major chemical manufacturing company and represented the company in a subsequent federal investigation of alleged false claims made in connection with a government contract.
• Sonnenschein conducted an internal investigation for a health care grant recipient regarding an employee’s misappropriation of federal grant funds and disclosed the misappropriation to affected federal agencies.
• We represented the CFO of Team, Inc. in connection with a board and SEC investigation relating to financial fraud.