INVESTIGATIONS AND PROCEDURE

Investigations

100

When can an agency open an investigation? 

1. ensure compliance 

2. act on suspicion 

200

What is the person being investigated entitled to? 

An adjudicatory hearing before an ALJ 

300

Why does the court refuse to create a "selective waiver" of A-C privilege for disclosure to US Attorneys office? 

Selective waiver does not serve the purpose of encouraging full disclosure to one’s attorney in order to obtain informed legal assistance; it merely encourage voluntary disclosure to govt agencies, thereby extending the privilege beyond its intended purpose.

400

What are the seaboard factors? 

• Self-reporting of misconduct when it is discovered
• Remediation, including dismissing or appropriately disciplining wrongdoers, modifying and improving internal controls and procedures to prevent recurrence of the misconduct, and appropriately compensating those adversely affected; and
• Cooperation with law enforcement authorities, including providing the Commission staff with all information relevant to the underlying violations and the company’s remedial efforts.

500

What are the 6 ways to challenge a subpoena 

Basis for challenging a subpoena: 

1. Whether the subpoena is within the statutory authority of the agency

2. Whether the information is reasonably relevant to the inquiry – tendency to show that a fact of consequence in the case is more or less likely. 

3. Whether the demand is unreasonably burdensome. 

4. Privileged information is generally not subject to disclosure – parties must produce a privileged log. 

5. Recent cases have suggested there may be privacy interests in information held by third parties. 

6. The “act of production” doctrine can provide some 5A protection for individuals (Hubbel).

Investigations 2

100

What are the pros of voluntary disclosure? 

Seaboard factors and maintain a good relationship with the agency 

200

What are the cons of voluntary disclosure? 

Records might now be accessible via a FOIA request and might waive privilege 

300

When might you have privacy interests in information held by third parties? 

• However, the 4A could be implicated if the information is so invasive that you do have an expectation of privacy (Carpenter v. United States).
• Bank secrecy act which creates a right to financial privacy.

400

Can you file a claim if you believe the subpoena you were issued is improper? 

The Court held administrative subpoenas are not self-executing and the issuer must resort to district action to compel enforcement thereof. Noncompliance is not subject to prosecution when the summons is attacked in good faith. TLIE v. RTC

EXCEPTION 

If the penalties for noncompliance are so enormous that persons affected are prevented from resorting to the courts for the purpose of determining the validity of the statute and are thereby denied the equal protection of the law, and their property rendered liable to be taken without due process of the law, the Court has jurisdiction over the pre-enforcement challenge (Ex Parte Young).

500

What is the Act of Production doctrine? 

Under the Act of Production Doctrine, the act of an individual in producing documents or materials may have a testimonial aspect for purposes of the individual’s right to assert 5A privilege against self incrimination.

• To the extent that the individual’s act of production provides information not already in the hands of law enforcement personnel about the (1) existence; (2) custody; or (3) authenticity, of the documents or materials produced.

Fisher; Hubbel 

Whistleblowers

100

What is the holding of D.E.Shaw ?

The Court held that a company cannot prohibit an employee from whistleblowing.

This is also contained in the SEC whistleblower program. 

200

What was the holding of Doe v. SEC? 

The Court held Doe could not receive a whistleblower reward because his disclosure was not permitted by his state’s rules of professional conduct.

300

What are the requirements to receive compensation for whistleblowing under the SEC whistleblower program?

1. original information 

2. led to successful enforcement of a covered judicial or admin action 

3. monetary sanctions > $1 mil 

400

What is original information and what info is not considered original under the SEC whistleblower program? 

Original information: information that is derived from the independent knowledge or analysis of a whistleblower

Info is not considered to be derived from independent knowledge or independent analysis if:

• Employee whose principal duties involve compliance
• Employee/associate conduct an inquiry or investigation into possible violations
• Employee/associate of public accounting firm
• Info subject to A-C privilege
• Info obtained in connection with legal representation of client, unless disclosure would be permitted

500

Who cannot receive an award at all under the SEC whistleblower program? 

• Whistleblower who is or was at the time they acquired the info an appropriate regulatory agency, the DOJ, a self-regulatory organization, the PCAOB, or law enforcement org.
• Whistleblower who is convicted of a criminal violation related to the judicial or admin action.
• Whistleblower who gains the info through the performance of an audit of financial statements

APA

100

What is the definition of rulemaking under the APA? 

Agency process for formulating, amending, or repealing a rule 

200

How must an agency respond to comments? 

Agency must consider and respond to all significant comments. 

300

What must notice include under the APA? In general, what do agencies typically include? 

The notice shall include:

• A statement of the time, place, and nature of public rule making proceedings;
• Reference to the legal authority under which the rule is proposed; and
• Either the terms or substance of the proposed rule or a description of the subjects and issues involved.

Agencies typically publish the entire rule, so that it is not challenged down the road for lack of notice/comment. 

400

What is the logical outgrowth test? 

The final rule the agency adopts must be a logical outgrowth of the rule proposed.

• The interested parties could have anticipated that a change to the final rule was possible and had an opportunity to comment on the subject.

500

What was the holding/rule from Vermont Yankee? 

APA established the maximum procedural requirements. The Court may review rulemaking as the APA provides, and not require more. 

APA 2

100

When does notice/comment not apply under the APA? 

1. interpretive rules 

2. good cause 

200

When must good cause be invoked to be excused from notice and comment? 

Contemporaneously with the rule 

300

How many days in advance must a rule be published before its effective date? What are the exceptions?

Not less than 30 days before its effective date 

Except:

• A substantive rule which grants or recognizes an exemption or relieves a restriction;
• Interpretive rules and statements of policy; or
• As otherwise provided by the agency for good cause found and published with the rule.

400

What is the definition of an interpretive rule? 

An interpretive rule simply states what the administrative agency thinks the statute means and only reminds affected parties of existing duties.

500

What was the test from Warshauer and how was it applied in that case? 

General principles to be used in determining whether a rule is interpretive:

• Although not dispositive, the agency’s characterization of the rule is relevant to the determination (deference).
• An interpretive rule simply states what the administrative agency thinks the statute means and only reminds affected parties of existing duties. On the other hand, if by its action the agency intends to create new law, rights, or duties, the rule is properly considered to be a legislative rule.

Here, the Court held the Secretary’s interpretation of “employer” and “insubstantial value” were interpretive rules, and therefore, not subject to notice and comment -- agency considered them interpretive and it merely reminded affected parties of their existing duties.