Problem: Within two of weeks of a new CEO assuming office, several suspicious business practices came to light that appeared to favor a particular supplier and certain members of the executive team. Subsequently, a number of other improper activities, such as backdating options, was discovered.
Action: Fairfax, which had worked for the CEO at another company in the past, first analyzed the scope and depth of the problem. As senior management was implicated, it was not possible for high-level company executives to participate in evaluating any improprieties. Working with independent outside counsel, Fairfax was able to develop a plan to examine documents, interview key employees, and meet with suppliers to review possible transgressions. This was done quickly and quietly so as not to affect ongoing business operations.
Result: Several members of the executive team left the company after making financial restitution of improper benefits. The company was required to amend its SEC filings to more accurately reflect its business operations. By making such voluntary disclosures following an independent investigation, the company avoided possible fines and other consequences for past improper practices.