The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) was established by Congress in 2008 to investigate cases of fraud, waste and abuse of TARP funds and programs.
SIGTARP is not just waiting for whistleblowers to deliver potential fraud cases. Its agents review examination reports prepared by regulators of institutions that received TARP funds, proactively looking for red flags such as significant loan losses. If those exam reports pique the interest of the agent, SIGTARP may open an investigation and serve a subpoena for documents. That subpoena might be the last thing a bank hears from SIGTARP after it produces responsive documents, or it could be the beginning of a criminal prosecution (or something in between).
SIGTARP has its own investigative resources, but it also partners with other law enforcement agencies, including the Department of Justice and the Securities and Exchange Commission, to identify potential cases of fraud and to pursue enforcement actions against the people and institutions that it suspects committed that fraud.
SIGTARP has had more visible success than other law enforcement agencies in pursuing fraud cases against financial institutions (in its short life, its investigations have led to 122 criminal convictions) and it remains on the lookout for potential fraud to investigate.
What To Do If You Receive a SIGTARP Subpoena
The first steps in responding to an investigative subpoena may have a significant impact on whether the investigation follows a smooth or bumpy road. Banks that receive an investigative subpoena from SIGTARP should:
- Take It Seriously. This may be a routine inquiry, but it also may not.
- Immediately engage experienced counsel to handle the response, including obtaining information from SIGTARP about the nature of the investigation and negotiating the scope of the subpoena and the schedule for producing documents.
- Take steps to ensure that all documents that may be responsive to the subpoena are preserved, including by circulating a “legal hold notice” directing employees not to destroy documents, and suspending the automatic deletion of electronic data.
- In consultation with counsel, determine whether an internal investigation is warranted.
- If the TARP recipient is an SEC-reporting company or is in the process of raising capital, evaluate whether the investigation should be disclosed to investors.