Indicted Corporate Officer Can’t Claim Privilege for Statements Made During Internal Investigation
The Ninth Circuit Court of Appeals has ruled that a corporate officer could not claim privilege with respect to statements made to a law firm conducing an internal investigation for the company. The Ninth Circuit opined that the executive knew that any statements made to the law firm during the investigation would be communicated to the firm’s auditors and audit committee, thereby waiving privilege. The Court rejected the defendant’s argument that he would not have cooperated with the investigation had he known that the SEC could have used his statements in a criminal indictment. Significantly, the Court declared that the defendant bears the burden of proving privilege.
OUR TAKE: Think twice (or at least hire personal counsel) before cooperating with a corporate internal investigation that potentially involves personal misconduct. Your statements can, and will, be used against you.