August 26, 2019 Articles

United States v. Connolly: District Court Scrutinizes Longtime Corporate Practices for Internal Investigations

The decision marks the first time that a court has held that when a corporation works closely with regulators, the corporation is effectively acting as an agent of the government.

By Randall R. Lee and Michael J. Berkovits

On May 2, 2019, the chief judge for the Southern District of New York, the Honorable Colleen McMahon, issued a decision that pointedly criticized certain long-standing practices by which corporations conduct—and the government directs—internal corporate investigations. In United States v. Connolly, No. 16-cr-0370 (S.D.N.Y. May 2, 2019), the court found that the federal government had “outsourced” to Deutsche Bank an investigation into possible LIBOR manipulation and thus that Deutsche Bank had acted as an “agent” of the federal government in carrying out its internal investigation.

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