Deciding whether to cooperate with an internal investigation is a difficult call, one that depends on the circumstances, according to Meyers. Executives should consider such factors as the duration of the behavior in question, the existence of personal profits, and any probes by the SEC and the DOJ, he says. "The lesson one draws from the resignations you see now — people are balancing relative risks," says Meyers.
Others have an unequivocal perspective on what employees in the crosshairs should do: they should "either cooperate fully with the board or they can't continue to perform their functions at the company," says Daniel Kramer, a partner at law firm Paul, Weiss, Rifkind, Wharton & Garrison. "It's inconsistent for the employee" to refuse to communicate and want to remain in the job and in the trust of a public company, he explains. "If one of your choices is not to communicate because you don't want to incriminate yourself, that's fine, but that doesn't mean all your options are open," he says.
Still, those options may expand. For some, including Sen. Arlen Specter (R-Pa.), the McNulty Memo doesn't go far enough. Specter recently reintroduced a bill to protect the confidentiality of attorney-client communications; he initially introduced the bill in December as the last Congress was preparing to end.
"It would be a good idea if companies were able to communicate with regulators and the DoJ without fear that those communications would waive privilege in other contexts," says Kramer, who views the bill as a step in the right direction.
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