What do external and internal investigations and reports entail?
External and internal investigations and reports examine misconduct allegations within a corporation or its board of directors. An independent third party typically conducts external investigations, while internal investigations are carried out by the company or its designated representatives.
In the context of Florida corporate governance, external and internal investigations and reports are essential for maintaining compliance with legal and regulatory requirements and preserving the integrity of the organization. Two examples of when corporate executives or boards of directors may require counsel on external and internal investigations and reports under Florida and federal law include:
- Allegations of financial fraud or accounting irregularities conflicting with securities laws and regulations; and
- Claims of workplace misconduct, such as harassment or discrimination.
Need help with a matter related to external and internal investigations and reports? Schedule your consultation today with a top corporate and board of directors governance and operations attorney.
Which laws and regulations apply to external and internal investigations and reports?
Several laws guide external and internal investigations and reports in corporate governance and operations matters. Some essential Florida and federal laws include:
- Florida Statutes, Chapter 448, addresses workplace misconduct, including discrimination and harassment.
- Florida Statutes, Chapter 517, outlines requirements for companies involved in securities transactions, including investigating potential financial fraud or accounting irregularities.
- The Sarbanes-Oxley Act of 2002 requires public companies to establish procedures for handling whistleblower complaints and conducting internal investigations.
What are common issues regarding investigations and reports that lead to litigation?
The following issues are among the most common in litigation involving external and internal investigations and reports:
- Inadequate Investigation Scope: Failing to investigate all relevant aspects of an allegation thoroughly may lead to incomplete or inaccurate findings, increasing the risk of litigation.
- Breach of Confidentiality: Confidentiality is crucial during investigations. If sensitive information leaks, it may result in defamation or invasion of privacy litigation.
- Conflicts of Interest: If an investigator has a personal or professional connection to the parties involved, the investigation’s objectivity may suffer, leading to potential legal challenges.
- Non-Compliance with Regulatory Requirements: Failing to follow the appropriate state and federal regulations during an investigation can lead to legal consequences and potential litigation.
- Retaliation Against Whistleblowers: If a company retaliates against an employee who reported misconduct, the company may face litigation under whistleblower protection laws.
- Inadequate Documentation: Failing to properly document the investigation process, findings, and remedial actions may leave a company vulnerable to legal challenges.
What are effective measures to minimize the risk of litigation over external and internal investigations and reports?
Implementing the following strategies may help mitigate risk:
- Develop a Clear Investigation Policy: Establishing a comprehensive investigation policy helps ensure consistency, fairness, and compliance with legal requirements.
- Conduct Thorough, Impartial Investigations: Ensure that investigations are comprehensive, impartial, and free from conflicts of interest, utilizing external investigators when necessary.
- Maintain Confidentiality: Protect the confidentiality of all parties involved in the investigation, including the accused, the accuser, and witnesses.
- Train Investigators and Employees: Provide regular training for investigators and employees on proper investigation procedures, regulatory requirements, and best practices.
- Document the Investigation Process: Maintain detailed and accurate records of the investigation process, including findings, interviews, and any remedial actions taken.
- Follow Applicable State and Federal Regulations: Adhere to the relevant Florida and federal laws and regulations governing investigations in corporate governance and operations matters.
- Protect Whistleblowers from Retaliation: Implement policies and procedures to protect whistleblowers from retaliation and ensure their concerns are addressed promptly and fairly.
- Seek Legal Guidance: Consult with legal counsel to ensure investigations follow and comply with applicable laws and address potential legal issues.
When a set of facts is appropriate to meet litigation requirements, there are many paths a claimant may take. We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path to seek appropriate remedies.
To determine whether your unique situation may necessitate litigation, please contact our office to set up your initial consultation.
What strategies can be employed to implement external and internal investigations and reports?
Based on the circumstances, the following strategies may be impactful:
- Develop a Comprehensive Investigation Plan: This includes defining the scope of the investigation, identifying potential witnesses, and outlining the steps needed to gather relevant information.
- Engage Experienced Investigators: Employ qualified internal or external professionals with experience conducting investigations in corporate governance and operations matters.
- Maintain Clear Communication: Regularly update stakeholders, such as board members, management, and employees, regarding the progress and findings of the investigation.
- Ensure Compliance with Laws And Regulations: Familiarize yourself with applicable Florida and federal laws, statutes, codes, rules of procedure, and regulations related to corporate governance, and consult with legal counsel when necessary.
- Preserve and Review Relevant Documents: Collect, analyze, and retain all information related to the investigation, such as emails, financial records, and contracts.
- Conduct Thorough, Impartial Interviews: Interview all parties involved, including witnesses, and maintain a neutral tone to ensure that interviewees feel comfortable providing accurate information.
- Prepare Comprehensive and Accurate Reports: Document the findings and conclusions of the investigation, including any recommended corrective actions, in a detailed report for appropriate stakeholders.
Frequently Asked Questions
- Can a company conduct its internal investigation, or should it hire an external investigator?
A company can choose to conduct its internal investigation, but hiring an external investigator for sensitive or complex matters may be beneficial. External investigators can bring a fresh perspective, specialized expertise, and impartiality to the process.
- What should a company do if it discovers potential misconduct during an investigation?
Upon discovering potential misconduct, the company should consult with legal counsel to determine the appropriate course of action, including reporting the misconduct to the relevant authorities, implementing disciplinary measures, or making operational changes to prevent future misconduct.
- How can a company protect itself from liability during an external or internal investigation?
To minimize liability, a company should conduct thorough, impartial investigations in compliance with applicable laws and regulations. It should also maintain accurate documentation of the investigation process, findings, and any remedial actions taken. In addition, consulting with legal counsel throughout the investigation can provide valuable guidance and help ensure that the company’s activities align with legal requirements.
Have more questions about governance or operations for your business?
Crucially, this overview of external and internal investigations and reports does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.
Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.
Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain a tireless advocate every step of the way. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.
If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to schedule a consultation.
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