A bank executive served with an investigative testimonial subpoena by a bank regulator often faces a difficult decision, particularly when the executive believes that he or she may be a target of the investigation. If the executive testifies, the regulator may elicit statements that will be used against the executive in a subsequent criminal proceeding. If the executive refuses to testify, this refusal can be used against the executive by the regulator in a civil proceeding. In addition, because a bank executive typically will have to interact with banking regulators throughout his or her career, resisting a regulator’s subpoena can be daunting.
Because of the serious implications of this decision, it is critical for attorneys advising bank executives (or board members) in regulatory investigations to understand the legal terrain. A mistake made at an early stage of what appears to be a civil regulatory investigation can haunt a defense team for years.
