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Subpoena Do's and Don'ts

In the last few weeks the Securities and Exchange Commission (SEC) has issued subpoenas to as many as 80 cryptocurrency companies.  There is every indication that the SEC is not done issuing subpoenas, nor focusing on companies and individuals involved in commercial activity involving blockchain and cryptocurrency.  The Commodities and Futures Trading Commission (CFTC) is also active in the blockchain space and pursuing investigations, as are state-level regulators and attorneys general.  These agencies can pursue either criminal, administrative or civil actions, or a combination of any of them. So, what does this mean?

It is important to understand that the government may have been investigating long before they reach out to you or your company. The first you may hear about the investigation is a subpoena to the company, knocking on your door, or calling and asking to speak with you. In an extreme case, the government may execute a search warrant at the company’s offices. 

What can your company do now to be prepared for receiving a subpoena or other government inquiry?  Here are some dos and don’ts:

DO have a plan, and communicate it to all employees. The plan should include:

  1. The designation of a point person responsible to receive any subpoena, request for information, or telephone calls from government (“government inquiry”). The point person should have already spoken with an attorney to get guidance on how to address the approach from law enforcement
  2. Except as required by law, no employees should answer any questions or provide any information without explicit direction from the point person or their designee.  All government inquiries should be referred to the point person; 
  3. Except as required by law, any employee that receives such a government inquiry should not discuss it with any person except the point person, or a person designated by the point person;
  4. Employees who know of a government inquiry should not sell any shares, tokens coins or otherwise engage in activity that might appear to be ”insider trading.” (trading on material non-public information).  If you aren’t sure if you can sell or trade, DON’T until you consult with an attorney experienced in government investigations.
  5. Employees who know of a government inquiry should not delete or otherwise destroy any information that may relate to the government inquiry.  This includes information in any form on any device including emails, text messages, IMs, Whatsapp or Wechat messages, etc.
  6. If the government has a search warrant, and seeks to execute it, do not interfere with them, but call your white collar attorney immediately.

DO immediately consult an attorney with experience handling government investigations. 

DON’T respond without consulting an attorney with experience handling government investigations, even if you think you haven’t done anything wrong.  An experienced attorney will be a trusted bridge between you and the government agency.  The attorney will able to negotiate the scope and timing of the response, review the information with a view to potential violations so you are prepared, and give you a road map of the process and set expectations.

DON’T provide any information to the government before you have consulted an attorney.  Even if you receive a phone call, do not respond to questions from the government.  Instead, let the government employee know you will contact them after consulting with an attorney. 

DON’T provide false information. If you are unsure, wait until you are sure (and until you have an attorney) to respond.

DO preserve all relevant information.  In consultation with your attorney, prepare a plan to preserve any information, in any format, on any device that may be related to the government inquiry.  Your attorney will likely also advise you to issue a “hold notice” to all custodians of relevant information to instruct them on their obligation to preserve data.

DO dig up your insurance policies and be prepared to discuss with your attorney and your insurer whether the costs associated with responding to the subpoena will be covered under the policy.

At CKR Law, we have a team of seasoned attorneys with decades of experience representing companies and individuals in government investigations.  For more information, reach out to your contact at CKR Law or any of the attorneys in the CKR White Collar Group at the information below:

Robert Appleton -  rappleton@ckrlaw.com

Alan Arkin -  arkin@ckrlaw.com

Kristie Blase - kblase@ckrlaw.com

Jill Williamson -  jwilliamson@ckrlaw.com