A few years ago, we wrote a piece about responding to civil investigative demands ("CID") issued by regulators as part of their investigations into alleged violative business practices. Below, we discuss CIDs generally, steps to take if your company receives a CID, and best practices for responding to CIDs.
What Are CIDs?
Like subpoenas, CIDs are legally enforceable demands for information. To assist their pre-complaint investigations of companies believed to be violating the law, federal agencies, such as the Federal Trade Commission ("FTC"), and state Attorneys General may issue CIDs in an effort to obtain information to determine whether companies are in fact violating the law. Subpoenas and CIDs are similar insofar as both may be used to obtain existing documents and/or oral testimony. However, CIDs may also require that recipients "file written reports or answers to questions." Recipients of subpoenas or CIDs may object to specific requests for information, or in their entirety by filing a petition to limit or quash the subject subpoenas or CIDs.
Upon receiving a CID, communication, document preservation, and timely compliance are vital. Because CIDs typically are issued during the course of a pre-complaint investigation, these proceedings are non-public. Failing to respond to a subpoena or CID may result in the filing of a formal complaint, at which point the public may become aware that a regulatory agency is alleging that your company may have violated the law.
Help, I Received a CID!
First and foremost, receiving a CID is not the end of the world. After complying with a CID, regulators often end their investigations without imposing any monetary fines or commencing legal proceedings. However, complying with a CID is a serious matter that requires hiring experienced attorneys who can strike the right balance between fully cooperating with the CID and protecting your company's interests. Experienced legal counsel will: (1) quickly identify the focus of the investigation; (2) immediately narrow the scope of the regulatory agency's investigation; (3) determine how best to respond to the inquiry to obtain a prompt and cost-effective resolution; and (4) help implement best practices to avoid receiving CIDs in the future.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
