Internal investigations rarely arrive at a convenient moment. More often, they surface just as a quarterly or annual filing is due—and how a company handles those first days can determine whether it meets its deadline.
Writing in Bloomberg Law's Professional Perspectives, WilmerHale Partner Nicole Rabner, Counsel Emily Gomez and Associate Rachel Mendelson offer a framework for that scenario in "Internal Investigations Require Thoughtful Auditor Engagement."
The piece centers on a stakeholder companies sometimes overlook until it's too late: the external auditor. Under Section 10A of the Securities Exchange Act, auditors have their own obligations when potential illegal acts come to light, and an auditor may withhold the sign-off needed for a public filing until satisfied that an appropriate investigation is underway.
The authors offer five recommendations, including structuring the engagement to maximize independence, resourcing the review realistically, developing contingency plans and anticipating parallel litigation or regulatory inquiries. They also flag a distinction that can carry lasting consequences: while sharing attorney work product with an auditor generally does not waive protection, the attorney-client privilege can be waived if the substance of legal advice is disclosed.
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