26.20 - 4. Upjohn And Practical Challenges

JurisdictionNew York

4. Upjohn and Practical Challenges

One of the practical challenges of the Upjohn warning is that an employee may be less cooperative with an in-house investigation, rather than more, upon learning that he or she does not own the privilege. This is especially true if the employee is facing personal legal consequences for his or her actions. The reality is that most regulatory and law enforcement actions against a corporation usually settle. A settlement may be more likely where the corporation is cooperative, and this cooperation is often manifested by the corporation waiving the privilege as to key facts in the case, including potentially damaging statements by employees.

For example, the Foreign Corrupt Practices Act (FCPA) is a law very familiar to companies that do business abroad. The law prohibits “certain classes of persons and entities” from making “payments to foreign government officials to assist in obtaining or retaining business.”3779 This law is generally enforced by the Department of Justice and the SEC. While most high profile investigations usually involve charges against the companies themselves, employees can be and are charged personally for violations of the FCPA. For example, in 2014, the SEC charged two sales representatives for violations of the FCPA.3780 The SEC fined one of them $50,000 and the other $20,000.3781 In 2017, the SEC charged a company’s former vice president with violating the FCPA...

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