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FTC Revamps Investigation and Attorney Misconduct Rules

Posted  January 20, 2012

The U.S. Federal Trade Commission (the “FTC”) has issued proposed changes to streamline its rules relating to investigatory procedures and alleged misconduct of attorneys.

The proposed changes deal with Parts 2 and 4 of the FTC’s Rules of Practice and are designed to improve investigations and to keep up with changes in electronic discovery.

The agency noted that the Part 2 rules were in need of reform because of concerns that modern discovery has become a source of delay in its investigations, especially because “information is no longer accurately measured in pages, but instead in megabytes” and because “parties can no longer complete searches by merely looking in file cabinets and desk drawers.”  The FTC is re-examining the rules to “not only account for the widespread use of ESI, but also to improve the efficiency of investigations.”

Specific changes include:

* requiring parties to meet and confer with the FTC on an accelerated schedule to resolve electronic discovery issues related to civil investigative demands (“CIDs”) and subpoenas;

* streamlining the procedure to resolve disputes over FTC subpoenas and CIDs;

*  expediting the pre-merger review process by authorizing FTC General Counsel to initiate enforcement proceedings when a party fails to comply with the Hart-Scott-Rodino second request process;

* relieving a party of the obligation to preserve documents for an FTC investigation if a year has passed without any written communication from the FTC.

The FTC is also proposing to amend Rule 4.1(e) regarding attorney disciplinary procedures by providing additional guidance regarding the appropriate standards of conduct and procedures to address any alleged violations.

The proposed rule changes will be published in the Federal Register and subject to public comment until March 23, 2012.

The FTC has separately approved Rule 2.17 to aid in maintaining the confidentiality of its investigations.  This new rule delays notifying targets of FTC investigations that the FTC has requested information about them from third parties, when such disclosure would tip them off or otherwise jeopardize the investigation.

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