In an informative Q&A roundtable with Corporate Disputes Magazine, Guidehouse Managing Director and Financial Services Advisory and Compliance Practice Leader Ellen Zimiles and Managing Director Claiborne (Clay) Porter discuss understanding rights, obligations, and challenges as it relates to dawn raids.
Q: Prior to a dawn raid, what kind of plan should organizations have in place to ensure directors, managers, and staff members know how to respond and avoid inadvertently causing obstruction or impediment?
When a company is the subject of a dawn raid, instead of receiving a grand jury subpoena for documents, the government has concluded that there is a significant risk of evidence spoliation or does not believe that the company is willing to cooperate. Consequently, the company’s reaction to the dawn raid will be heavily scrutinized and law enforcement will develop a first impression of the company that will dictate the tone of the search. Dawn raids are also highly disruptive to business operations. For these reasons, companies, especially those in highly regulated industries or industries that have had historical criminal issues, should maintain a detailed corporate response plan and dedicate high-level employees to a dawn raid response team. A well-developed corporate response plan will help put the company in the best light with the government and illustrate to law enforcement that the company is organized and cooperative. It will also guide employees in the ‘do’s and do not’s’ during a dawn raid. A plan will also preserve a company’s rights and put it in the best position to challenge the search and minimize any disruption to business operations.
Q: In the event of a dawn raid, what immediate actions should a company take?
Employees should be instructed to contact the team leader when law enforcement first presents a warrant to the company. The team leader and employees will begin to execute the process outlined in the corporate response plan. The corporate response plan will detail all immediate and long-term steps and should include protocols for obtaining a copy of the warrant — including all attachments — to understand the scope of the warrant. The attachments to the warrant are highly important because they describe the items that the court has authorized law enforcement to search for and seize. The team leader should understand the scope of the warrant, which would include where law enforcement has authority to search and what they are authorized to seize, and ensure that privileged documents are marked and protected. For example, the warrant may give authorization to search suites A, B, and C of the company but not suites D and E. By knowing those details upfront, the team leader will be able to better guide the law enforcement personnel and protect the company’s rights.