Remarkably, we issued the advisory notice below a decade ago to serve as a guide for avoiding and managing the most sensitive matters before increasingly ambitious US state prosecutors – guidance that, following years of public corruption, pay-to-play and other high-profile financial matters, particularly in New York and California, is every bit as apt now as it was then. Replace Andrew Cuomo’s name with Letitia James (or any other of the active state AGs) and financial crisis with COVID crisis, and this notice could have been written yesterday. Idiosyncrasies still abound, as noted before, and each matter requires a bespoke solution to avoid unnecessary exposure, but these considerations are their best starting point.

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Since the investment analyst conflict-of-interest cases and the mutual fund market timing scandals, federal law enforcement officials have been faulted for their lack of speed and oversight in addressing a variety of Wall Street matters. That criticism has become pronounced in the last year, particularly in view of the SEC’s missed opportunities regarding Bernard Madoff and the Department of Justice’s focus on international matters.

Given the openings presented by that void, a number of state prosecutors have stepped to the fore and become players on the national stage. Their success has been a product of their ability to move quickly and creatively in enforcing the law and applying their visions of proper corporate conduct, often launching investigations and settling matters against institutions far beyond the traditional range of their jurisdictions.

The Office of the New York Attorney General has become the model for this approach. Building on the expansive law enforcement endeavors of his predecessor, Attorney General Andrew Cuomo has taken the work of that office to new heights. As we should all remember, Mr. Cuomo ran for the office on the message that one of the central facets of the NYAG’s job is to enforce the law when the federal government cannot, or simply will not. He quickly made good on that promise after being elected, leading nationwide investigations and actions that reformed the student loan industry.

With a new Administration in Washington, however, many expect a strong resurgence in federal law enforcement; some predicting unprecedented efforts regarding financial and white-collar matters. While much remains to be seen, we are inclined to agree given the clear mandate of the 2008 election and the natural swing of the regulatory pendulum – especially given that a lack of regulatory oversight is widely viewed as a cause of our nation’s current financial crisis.

Leaders in the business community might be tempted, then, to focus on federal regulators going forward and expect state investigations to recede in importance. That is a temptation to resist. Now that state prosecutors and policymakers have seen what they can do, they are unlikely to relinquish their leadership roles.

New York is the leading case in point. As the financial crisis unfolded, Attorney General Cuomo has consistently led all enforcement authorities, state and federal, in exploring problems and finding solutions. For example, when the market for auction rate securities disappeared and investors could not sell, his office was the first to pursue claims that the risks associated with those securities were not properly disclosed. The result:  more than $60 billion in enforcement action settlements with Wall Street’s leading institutions. More recently, the NYAG has been investigating the use of federal bailout funds as well as the quality of corporate disclosures regarding executive compensation.

How is it that the New York Attorney General can claim jurisdiction over the use of federal bailout payments? Many have pondered that and other legal questions about the office’s use of its powers over the years. In dealing with the NYAG, however, those queries often prove to be beside the point.

The primary reason is Mr. Cuomo’s approach to these matters. He is, by experience, more policymaker than prosecutor, and the success of his investigations has turned not on matters of jurisdiction or the details of discovery, but on the end-game of whether the office believes something is amiss and, if so, how it should be remedied. Many fail to appreciate how dramatically that orientation can change the character and scope of an investigation by his office, and they miss important and often fleeting opportunities to mitigate and shape the way in which matters proceed and may be resolved.

His speed in taking action is the other leading reason. Indeed, the motto of the New York Attorney General’s Office is that it solves real problems in real time. To be sure, Mr. Cuomo and his staff have mastered the art of quickly finding plausible claims under state law as a means of exposing what they perceive to be questionable practices to public scrutiny. The resulting sprints often leave those unfamiliar with the workings of his office far behind and at a great disadvantage, frequently amidst a sea of bad press.

To stay apace, and to best protect themselves, we advise public companies and other leading institutions to anticipate where Mr. Cuomo and his office may be going next – and when he comes calling, to be ready to engage on the policy merits of corporate practices and conduct from the outset. While work of this kind takes great effort and foresight, in our experience, its return on investment is often beyond measure.