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N post-Enron America, corporate public relations are more important now than ever. Congress is eager to protect workers and stockholders from white-collar criminals, and new laws are being passed that put public financial disclosures under increased scrutiny. The SEC, under pressure to abandon its former, laissez-faire attitude and enforce its own regulations, is launching more investigations into corporate finances. And it’s not just the feds that companies have to worry about, either. Shareholders and potential investors also are paying close attention to businesses’ public filings. With SEC actions reverberating in page one headlines from coast to coast, companiesunder the watchful eyes of their general counselneed to prepare themselves for the possibility of a federal probe and the press coverage that goes with it. Merely assuming that your company did nothing wrong isn’t enough. You have to prove it in the court of public opinion. So let’s assume the worst: Your company’s bean counters have let you down big-time, and that dreaded SEC call has finally come. Nosy reporters can’t be far behind. Here, then, are ten rules for protecting your company’s reputation if it comes under investigation. 1. Recognize a potential crisis early. If you know your corporation will have to restate earnings this quarter, expect a call from the SEC and at least an informal investigation. If you don’t have a crisis procedure in place, create one. Your crisis management team should include senior management, internal and external professionals in investor relations and public relations, internal legal counsel, and outside litigation/regulatory legal counsel. The team will need to address both the specifics of the SEC investigation and public relations issues. 2. Cooperate, cooperate, cooperate. The SEC often begins an inquiry into possible corporate wrongdoing with an informal investigation. Though your corporation and its individuals are under no obligation to comply, from a public relations standpoint, it is almost always in your best interest to do so. By cooperating, you may avoid a formal investigation, in which case your company need not disclose the matter on its 10Q or 10K. Your corporation will maintain some control over the situation, putting itself in a more favorable light in the eyes of the SEC. 3. Get your facts straight. Financial disclosure must be truthful and accurate. Erroneous information can damage your company’s credibility. Failure to ferret out misconduct will reflect poorly on the quality of the company’s self-surveillance and provide unpleasant ammunition to the media. In contrast, a candid acknowledgment of some impropriety to the SEC or the National Association of Securities Dealers may prompt a quick resolution of the informal investigation without media exposure. 4. Determine your message. Should a formal investigation lead to an enforcement action by the SEC, your crisis team needs to be ready to act. Media-savvy spokesmen should be prepared to address the allegations in both the SEC complaint and the press release. And because your window of opportunity may be briefwith newspaper and wire service reporters putting their stories to bed within hours after the news breaksit’s a good idea to prepare a basic press release in advance, filling in any necessary additional information at the last minute. 5. Avoid responding with a “no comment.” Executives under regulatory investigation typically fear saying the wrong thing. Yet while there is merit in avoiding inaccurate or misleading comments, refusing to respond to a reporter’s questions concedes the entire story to the opposing view. 6. Return reporters’ calls. If you do not yet know what you are going to say, tell reporters: “We want to respond to your request for an interview, but we want to make sure we get you the right answers from the right people.” Ask them for an idea of the questions they’ll be posing, and be sure to ascertain their deadline. Can they wait 24 hours? At the least, you’ll have more time to gather your thoughts. 7. Fix the problem. The SEC is often critical of a company’s failure to report problems, once they’re discovered, or the business’s failure to implement remedial measures. If you do find an error, take corrective action immediately. Coming forward early with a strong, positive media message demonstrates good faith and may negate SEC enforcement. Martha Stewart’s approach to the media during the ImClone Systems insider trading investigation is a model of what not to do. In the midst of a cooking segment on CBS’s Early Show, anchor Jane Clayson asked Stewart about her 2001 sale of stock in the drug company. The domestic doyenne reacted badly: Chopping away at a head of cabbage, she flippantly retorted that she just wanted to focus on her salad. In that one sound bite, she utterly vilified herself. Because there is no Fifth Amendment when it comes to public opinion, her company’s stock price began to plummet right after this summer’s interview. It hasn’t recovered. 8. Have your company principals speak as one. Funnel all media responses through a central source to eliminate multipleand possibly contradictoryspokesmen. The poorly chosen comments of Linda Lay, wife of ex-Enron Corp. CEO Kenneth Lay, show what can happen when this advice isn’t followed. Her statement that she and her husband had “lost their liquidity”a bid for her husband to be considered just another unfortunate Enron em-ployeewas hardly accurate. Not only that: It sounded rehearsed. In short, the public didn’t like Mrs. Lay. 9. Prepare your message points. Getting ready for a media blitz entails writing short, on-point answers to questions you expect reporters to ask. The general counsel is best positioned to anticipate those questions: The GC knows the facts and the legal issues or standards involved. So work with your crisis team to outline likely queries and responses. Be sure your press representative is prepared to segue from a reporter’s question right back to a message point. No question from the media should ever receive a spontaneous answer. 10. Be proactive. Some media outlets grow tired of beating up on one company and may be receptive to positive story ideas. In the earliest days of a crisis, then, it’s wise to identify positive messages instead of always being on the defensive. One such message might concern a company’s corrective measures such as re-vamped accounting procedures or a new audit committee. Consider California Micro Devices Corporation, which was investigated by the SEC for financial irregularities in the 1990s. Even under investigation, the tech company issued public statements that continued to misrepresent its financials. Senior executives were later named as defendants in an October 1997 U.S. Department of Justice actionon top of the SEC investigation. (A spokesman says the company has long since parted ways with its disgraced officials. The CEO and CFO eventually pled guilty to insider trading.) Had the corporation released a revised financial report and separated itself from its errant officials earlier, the Justice Department reaction might have been avoided, and the company might have preserved its reputation. Remember, you don’t want to make the SEC or the media work any harder than they have to. It’s bad for business. Richard S. Levick is president of Levick Strategic Communications. Susan M. Kozacik is senior manager of business development for the Washington, D.C.- based communications firm. Levick has handled such high-profile matters as the presidential election recount in Florida (for law firms representing the GOP) and the crisis in the Catholic Church (for a Catholic order). A longer version of this column appeared in Legal Times, a sibling publication of Corporate Counsel.

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