"In 2008, not only did the number of investigations increase, but we witnessed a change in how investigations are conducted," said Barefoot Bankhead, a partner in Forensic & Dispute Services practice of Deloitte Financial Advisory Services LLP. "The SEC is increasingly partnering with the Department of Justice, state attorneys general and even Congress to launch sweeping investigations that target industry-wide problems that are contributing to today's economic crisis, as opposed to targeting one or two companies within a sector."
Nearly 60 percent surveyed think that self-reporting the results of an internal investigations will help mitigate the repercussions of a potential federal investigation.
"It seems executives do not yet have a firm grasp on when to self-report the findings of an internal investigation to authorities and when to handle internally," continued Bankhead. "Judging from the increased level of government and regulator enforcement activity, we suspect investigations will more than likely increase in the upcoming months, pushing companies to involve larger groups of executives and board committees to help navigate the investigative process."
Only 5.6 percent of respondents' organizations place the responsibility for conducting preliminary investigations with the board of directors or audit committee. Most respondents' organizations hold internal audit committees (20.9 percent) and general counsel (18.6 percent) responsible.
"Audit committees are becoming more aggressive, proactive and involved in internal investigations and regulatory matters," added Bankhead. "They, along with other executives, need to roll up their sleeves, ask the hard questions and monitor the major investigations and litigation facing their companies."
More than 1,100 executives from the banking and securities, financial services and investment management industries responded to the survey questions during the webcast, titled "The Storm Over Wall Street: Weathering a Corporate Investigation in Financial Services."
