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Speed to Knowledge: Critical in White Collar Cases

With the impact of COVID-19 increasing the likelihood of white collar crime, corporate vigilance and a quick response can mitigate downside consequences.  

There has been a notable uptick in white collar matters the past several years. Starting with the financial crisis over a decade ago to more recent scandals involving data privacy breaches, opioid marketing, and “#metoo” allegations, the increasing number and diversity of corporate investigations has developed into a  substantial risk area for companies to manage.

In the H5 2019 Corporate Investigations Survey, nearly half of the respondents surveyed said their companies face more than 50 potential investigations of various types each year, and nearly a quarter (22%) of all respondents reported facing more than 100. That number is likely to go up substantially as the fallout from the COVID-19 pandemic adds a new wave of investigations related to corporate negligence, federal aid fraud, and insider trading.

With this knowledge, companies must increase their vigilance and be on the alert for bad actors, taking all necessary steps to identify any malfeasance as quickly as possible. Stakes are high, and the negative downside consequences to a slow reaction can be steep.

Wells Fargo, for example, was hit earlier this year with a $3 billion fine by federal authorities in response to the fraudulent deposit accounts and credit card applications submitted by their employees over the years in order to hit unrealistic sales targets. At the executive level, the former head of Wells Fargo, John Stumpf, incurred a lifetime ban from the banking industry. Seven other executives were also personally fined approximately $70 million each for their insufficient oversight.

In addition to these fines, the Federal Reserve handed down sanctions limiting Wells Fargo as a corporation from growing its balance sheet beyond $2 trillion. Through all of this, Wells Fargo stock—once a winner in the banking industry—has also taken a beating at a time when rivals like JPMorgan Chase and Bank of America have seen their stock prices dramatically increase.

In any corporate setting, there is potential for bad actors to abuse privileges and behave recklessly. Clarity and fortification of company policies coupled with strong compliance practices provides a good first line of defense, and there are a wide range of measures that can be taken proactively to identify bad behavior, from auditing to data monitoring. In light of the pandemic, all proactive measures that can be taken should be taken.

But when these fail to prevent or catch abuses in time, it is important to have an investigative capacity to retroactively suss out and document what can be known about the potentially infringing abuse, fraud, or negligence. Time is of the essence in these situations in order to mitigate reputational harm, financial liabilities, and overall legal exposure. (Notably, 44% of respondents in the H5 Investigations Survey cited reputational harm specifically as their top concern for white collar matters.)

It is not just the financial hit that should be considered. Penalties for white collar abuse can go well beyond fines, leading to prison time for executives. Earlier this year, a federal court sentenced former executives of Insys to prison for irresponsible marketing of the painkiller Subsys.

Quickly Identify Key Information for a Quick Response

While white collar matters can touch on a diversity of legal issues, the majority are similar in being highly records-intensive  and time sensitive. Whether it is an internal investigation, or one involving a government agency, there is a similar imperative to quickly identify key information and documents to help develop a robust fact-based account of the matter at hand. With a quick accounting, the true level of exposure comes to light, and the appropriate mediation and response plan can be developed.

Yet quickly researching the issues requires technical data infrastructure and expertise. In addition to the same type of textual data you would find in a litigation, including emails, documents, spreadsheets, and presentations, white collar matters often depend on comprehensive access to media sources like chat messages, mobile texts, and audio/video files (some of which are only to be found on encrypted devices and files). Effectively harvesting and exploring these various sources of potential evidence requires tight coordination across a cross-disciplinary team of data processing and search experts, and the provisioning of a robust review and search platform for these experts to conduct their work.

With the right expertise and resources in place, corporate legal teams can quickly gain a comprehensive understanding of the issues in question and the risk at play for the corporation.  And while different types of investigations call on different types of legal expertise, the underlying data capabilities required largely stay the same across investigations. Preparing from a technical data and expertise angle early on allows you to respond and strengthen your approach for other matters down the road.

Learn how H5 can help find key documents quickly for a rapid response in investigations.



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