Page 5 - White-Collar Crime

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WHITE-COLLAR CRIME | MONDAY, FEBRUARY 8, 2016 | S5

sider treating authorities differently if/when enumerated criminal investigations); “Parallel views, sworn testimony against others, tutori- of their cooperation. First, those negotiations

the interests of DOJ, SEC, and CFTC do, in Civil and Criminal Proceedings,” 22 AM. CRIM. als to government agents to explain inancial will often be fruitless. Second, they could
fact, diverge.
L. REV. 613, 618 (1984-1985). Under certain products, undercover work, and/or document backire. For example, asking that the SEC
Beware of Constant Communications circumstances, the federal rules permit dis- review. The DOJ and the SEC/CFTC all use or CFTC not attend a proffer session may
Between Civil and Criminal Authorities. closure of grand jury materials, FED. R. CRIM. signiicant incentives to encourage coopera- achieve nothing—and can be harmful—as
While there is formal information sharing P. 6(e)(3), SEC v. Everest Mgmt., 87 F.R.D. 100 tion. Indeed, the SEC now frequently uses
both agencies will likely be able to review the
among the DOJ, SEC, and CFTC, there is (S.D.N.Y. 1980) (seeking additional informa- law enforcement agent’s report generated in
also signiicant informal interaction among tion in order to decide whether prerequisites the session, which is subject to human error
the staffs of these ofices, and data may low for disclosure had been met), but this is not of the drafter in a way that could be detrimen-
freely between them on a daily basis. Con- the default. Accordingly, the SEC/CFTC may There is also signiicant informal tal to one’s client. If the SEC or CFTC relies

sequently, it is almost impossible to ensure be unaware of certain evidence in a parallel interaction among the stafs of solely on the report, then the target loses the
that information specially given to the SEC action, but practitioners should assume that these oices, and data may low beneit of making an in-person statement to
or CFTC will not end up on a DOJ attorney’s a substantial amount of information is shared the enforcement attorneys. Third, negotiating
mobile device. See Mary Jo White, SPEECH, between the agencies.
freely between them on a daily the scope of cooperation will tend to aggra-
“All-Encompassing Enforcement: The Robust Finally, in order to coordinate and jointly vate the investigator, and may cause needless
Use of Civil and Criminal Actions to Police analyze evidence and information, criminal basis. Consequently, it is almost tension in the relationship. When one is in
the Markets” (March 31, 2014), available at authorities often rely on the SEC and other impossible to ensure that informa- cooperation mode, angering the government
http://www.sec.gov/News/Speech/Detail/ civil agencies to take the lead in obtaining doc- can only undermine the ultimate result.
tion specially given to the SEC or onsider the Non-Parallel Scope of Crimi-
Speech/1370541342996. Further, where a uments and testimony, particularly because C
potential defendant has been contacted by that material may be shared with the criminal CFTC will not end up on a DOJ nal and Civil Discovery. One practical effect
criminal but not civil authorities—or vice ver- authorities. Thus, depending on the nature attorney’s mobile device.
of the communications mentioned above is
sa—it should be assumed that both sides are of the matter, one should not automatically that DOJ, SEC, and CFTC may coordinate, and
pursuing and exchanging leads. See, e.g., Unit- assume a lack of criminal interest where sub- thereby may limit, when items are disclosed
ed States v. Kordel, 397 U.S. 1, 3 (1970) (noting poenas are from a civil investigative agency.
DOJ tools such as cooperation agreements, to a defendant. Although it may be counter-
litigation strategy discussions between FDA Make Cooperation Decisions Strategically.
non-prosecution agreements, and deferred intuitive, criminal discovery is narrower than
and DOJ attorneys); United States v. Stringer, Once a person is told they are a subject of prosecution agreements. SECURITIES AND civil discovery—requirements to divulge
408 F. Supp. 2d 1083, 1085 (D. Or. 2006) (not- an investigation, they should consult their EXCHANGE COMM’N, PRESS RELEASE, “SEC exculpatory evidence notwithstanding.

ing litigation strategy meetings between SEC attorney to make the decision whether to Announces Initiative to Encourage Individuals Thus, when both civil and criminal actions
and DOJ attorneys).
cooperate with the investigation. The best and Companies to Cooperate and Assist in are iled, criminal defendants might try to
There is a caveat to this information-shar- practice is generally to either cooperate fully Investigations” (Jan. 30, 2010), available at use civil discovery to learn about the parallel
ing network. Criminal Assistant U.S. Attorneys or not at all.
http://www.sec.gov/news/press/2010/2010-6. criminal case early on in the proceeding. For
are restricted in divulging certain material to While cooperation gives potential defen- htm. While the beneits of cooperation in a this reason, among others, DOJ may move
the SEC or CFTC—or even Civil AUSAs—like dants the opportunity to frame facts as the given case may be considerable, the costs to stay discovery in the civil action pending
grand jury material and wiretap evidence. government discovers them, not just at the of cooperation in another may be too high. the criminal proceeding. Fed. R. Civ. P. 24(a);
See Fed. R. Crim. P. 6(e) (restrictions on dis- conclusion of the investigation, choosing to The decision on whether to cooperate is a S.E.C. v. Chestman, 861 F.2d 49, 50 (2d Cir.
closure of grand jury materials); 18 U.S.C. cooperate is a weighty decision. Cooperation critical one that must be made at the outset.
1988) (denying writ of mandamus to vacate

§2516 (authorizing the collection of wiretap is very broad, requiring disclosure of good and We note that an individual under investiga- a stay of civil discovery pending a criminal
evidence in connection with only speciically
bad facts. It might encompass multiple inter-
tion should not attempt to debate the scope
proceeding); SEC v. One or More » Page S12

MAY 9, 2016
CITY BAR CENTER FOR CLE
MONDAY,
presents
WOMEN IN WHITE COLLAR
5TH ANNUAL
KICKOFF RECEPTION
WHITE COLLAR CRIME
6:30 PM - 8:30 PM
KICKOFF RECEPTION SPEAKER
DEIRDRE M. DALY

United States Attorney
District of Connecticut
INSTITUTE

TUESDAY, MAY 10, 2016

INSTITUTE FOLLOWED BY

NETWORKING RECEPTION
INSTITUTE CHAIR
9:00 AM - 5:00 PM
KAREN PATTON SEYMOUR
Sullivan & Cromwell LLP

CLE CREDIT: 7.0 (Breakdown TBD)

KEYNOTE SPEAKERS
LIVE PROGRAM: $799 Member | $899 Nonmember
HONORABLE ROBERT L. CAPERS
SPECIAL PRICING FOR
United States Attorney, Eastern District of New York
ATTORNEYS ADMITTED 5 YRS OR LESS:

$599 Member | $699 Nonmember
SPECIAL PRICING FOR
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EMPLOYEES OF GOV’T AND NON-PROFITS/
United States Deputy Attorney General
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