Business Litigation Alert: "Did They Really Say That?"

more+
less-
more+
less-

E-Mails Continue to Be the Modern "Smoking Gun"

The recent financial collapse and bankruptcy of former mega-law firm Dewey & LeBoeuf has captivated the attention of the legal industry, but are there lessons to be learned for a broader audience?

Answer: “Yes.”

Earlier this month, the SEC charged five former Dewey & LeBoeuf executives, including the firm’s former chairman, with misrepresenting and manipulating the firm’s financial condition prior to a $150 million private debt offering that they hoped would fix the firm’s financial problems.

In a parallel proceeding, the Manhattan District Attorney’s Office announced a 106-count indictment of several of the same individuals.

What makes this particularly instructive, however, is the fact that most of the incriminating evidence comes from e-mails. The New York Times reported that the e-mails openly discuss “fake income,” “accounting tricks,” and “cooking the books.”

In discussing the firm’s outside auditor, one e-mail asks: “Can you find another clueless auditor for next year?” The response, “That’s the plan. Worked perfect this year.”

According to the New York Times, “[e]ven agents with the FBI were surprised by the brazenness with which the former law firm executives discussed their plan in e-mails.”

The lesson here: Common sense should always be used when communicating electronically, as any electronic communication is subject to discovery and often to misinterpretation. Specifically:

  1. Talk, Don’t Type: When discussing sensitive or confidential information, set up a face to face meeting or pick up the phone. This helps ensure that nothing is lost in translation, and it prevents an e-mail from being viewed by prying eyes.
  2. Who Needs to Know: Consider who you are sending information to electronically. We are all used to the “reply to all” button, but you should carefully select the recipients of any information you send out.
  3. Train Employees: Make sure that anyone who has access to confidential information is properly trained on how to distribute that information, when it should be distributed, and who it should be distributed to.

Remember, e-mails and other types of electronic communication are always subject to discovery. Be wary of sensitive information sent through e-mail, as your intended recipient may not be the only one ultimately reading it.

Written by:

Published In:

SEC

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Porter Hedges LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×