Common Regulatory Matters FAQs

Lesley Brovner & Mark Peters
January 8, 2024

In an increasingly regulated environment, businesses and nonprofits often get inquiries — formal and informal — from government agencies at the municipal, state and federal level. Sometimes the issues raised by the government are quickly resolved with a letter or meeting and sometimes they evolve into a full blown, white collar, investigation that can divert time, resources and attention away from other business matters. It is important to have attorneys who can determine whether your organization is in compliance with all relevant rules and regulations, and manage formal investigations when they cannot be avoided.

What Is a Government Investigation?

Government investigations can take a number of different forms. Depending on the type of investigation, you could receive any of the following:

• An Informal inquiry letter
• Civil Investigative Demands (CID) or Civil Subpoena
• Criminal subpoena
• Search Warrant

What should you do if you are the subject of a Government Investigation?

There are several steps that you should consider taking if you are the subject of a Government Investigation. These include:

Seek Legal Advice and Representation
If your company or nonprofit is under investigation by a regulatory agency, it is essential to have experienced regulatory attorneys to represent you.

Cooperate With the Investigators
It is often beneficial to the person or entity being investigated to cooperate with investigators, rather than creating an antagonistic relationship. This provides the opportunity to educate the investigators about the business/nonprofit being investigated and possibly limit the inquiry.

Maintain Accurate Records
In many instances, the law requires the maintenance of certain records for a prescribed period of time. Moreover, to demonstrate compliance with relevant laws and regulations, it is imperative for businesses and nonprofits to maintain accurate records. Doing so will allow you to quickly and efficiently respond to government inquiries.

How can an attorney help you deal with a government inquiry?

If your company or nonprofit is under investigation by a regulatory agency, it is essential to have experienced regulatory attorneys to represent you. Not only can such counsel guide you through the process — and avoid common mistakes that make the situation worse — but they will have experience negotiating settlements with the agency involved and can try to minimize any penalty to be assessed.

In particular, it is important to gain an understanding of where the investigation is headed and what vulnerabilities exist. Attorneys can help with this in several ways, including:

• Speaking/meeting with the government regulators
• Analyzing written documents;
• Interviewing employees and other witnesses;
• Reviewing computer email and accounting systems as needed;
• Conducting legal research
• Creating a compliance program

What are Internal Investigations?

Internal investigations are procedures that review certain aspects of the conduct of an organization or employees of that organization. The purpose of the review is to determine whether external laws or regulations or internal policies have been violated and to allow either discipline of wrongdoers or changes to internal compliance policies. An internal investigation can help an organization to respond to inquiries from law enforcement and regulators, improve internal procedures and respond to public inquiries and manage reputational risk.

Would your organization benefit from an internal investigation?

Companies that can benefit from an internal investigation include those:
• Facing criminal or civil investigation by City, State or Federal law enforcement or regulatory agencies.
• In an industry where others are facing investigations by the government and want to get ahead of the curve.
• Companies that want to make sure that they are in compliance with all relevant laws, rules and regulations.

What is a Corrective Action Plan?

Sometimes, the government will agree to resolve an investigation with a Corrective Action Plan (CAP).

A CAP is an agreement with the government that the entity under investigation will take certain steps to make sure that whatever legal or regulatory violation occurred will not occur again.

A CAP lists detailed steps that the entity will take to prevent the recurrence and also lists penalties for failure to abide by the CAP. Additionally, it will likely have reporting requirements in which the entity must inform the government on a regular basis of its progress in implementing the steps called for in the CAP.

It is important to carefully negotiate a CAP since once you finalize it, you will be locked into taking the required steps and suffering the set out consequences for failure to do so.

What Is the Statute of Limitations on Contracts in NYS?

The statute of limitations (the time within which you can bring a claim) for a breach of contract in New York State is generally six years (though some shorter time periods especially related to government entities may exist). This time starts running as soon as the breach of contract occurs, even if you do not learn of the breach until later. While there are some circumstances where the limitations period can be tolled, it is best to assume that you will need to file and serve your action within the six year time frame.

What Happens if You Default on a Contract?

If you breach a contract you could be sued in court for that breach.

There are several kinds of damages which the other party to the contract could seek in such a lawsuit. The most common are Compensatory Damages — that is, payment to put the non-breaching party in the same position as if the contract had not been breached.

Sometimes, contracts will stipulate the damages that are available for a breach — such “liquidated damages” will usually be enforced if they are not unconscionable and provide an easy way to determine the damages for a breach.

Finally, in rare cases, where the breach is particularly outrageous, there could be additional punitive damages to punish the breaching party for his/her/their behavior. One thing that can affect damages is the concept of mitigation. The non-breaching party has an obligation to take reasonable steps to mitigate the damages from the breach and their failure to do so can affect the ultimate damage award.

Contact an Attorney Today

The attorneys at Peters Brovner have held senior positions in government and have extensive experience dealing with regulatory agencies and governmental investigations. The firm helps clients respond to governmental inquiries, conduct internal investigations, and create and implement compliance programs moving forward.

If you or someone you know needs representation before a regulatory agency, please reach out to the lawyers at Peters Brovner LLP for a consultation and case evaluation.