A former CEO is cleared in a federal investigation
The Client — The former chief executive of a NYSE-listed enterprise software company, facing personal exposure across two federal proceedings tied to the company's revenue recognition practices over a three-year reporting period.
The Situation — A parallel SEC enforcement investigation and a DOJ Fraud Section grand jury inquiry were both active. The exposure included scienter-based securities fraud charges, a permanent officer-and-director bar, and the prospect of an indictment for the client personally.
The Challenge — Parallel proceedings give regulators leverage that no single matter provides. Information shared with one agency can shape charging decisions at the other, and the timing of internal disclosures determines whether the defense can influence the eventual theory of liability or only respond to it.
What We Did — The team conducted a privileged internal review in coordination with the company's audit committee, then engaged early with both regulators on a single, transparent factual record. By volunteering attorney work-product summaries under a non-waiver protocol, the defense moved the focus from scienter to controls — a far less personal exposure for the client.
The Results — The Department of Justice closed its file without charges. The SEC settled on a no-fraud Section 13(a) reporting-control basis with a civil penalty paid by the company. No officer-and-director bar was sought and no admissions were required.
“The team understood that the months before the first subpoena would decide everything. They were right, and they had a plan for those months that nobody else even discussed.”
