How to Speak Regulator
In September 2017, the U.S. Food and Drug Administration sent an official “Warning Letter” to the owners of a bakery in Concord Massachusetts, informing them that listing “love” as an ingredient in their granola was a violation of federal law. News of the letter spread quickly, with various news outlets describing the FDA as joyless, humorless and shaming. Kai Ryssdal, NPR’s Marketplace host, summed up my reaction to the letter best with a simple, “C’mon, Man?”’
Sometimes regulators take themselves too seriously. They can seem stubborn and inflexible. Targets of regulatory inquiries may feel as though they are being singled out, the victim of government overreach, powerless in the face of a bureaucratic monster dangling a license, permit, or fine in front of them as a carrot or a stick. In this scenario, it is easy to get emotional –angry– and to allow that anger to turn to defiance when responding to a regulator’s request.
Defiance is rarely the right approach.
Regulators are, of course, people, too. Most regulators I know are hard-working, intelligent, and motivated by a deep commitment to public service (and not by a desire to joylessly meddle in others’ affairs). A part of a regulator’s job is to enforce the law uniformly, which at times calls for requiring even the best-intentioned businesses to jump through regulatory hoops to demonstrate that they are in compliance.
If you are one of those businesses asked to do the jumping, it is important to keep in mind that your communication style can have an enormous impact on the outcome of that interaction. There is a time and place for defiance—regulators should not go unchallenged when exceeding their authority or jurisdiction— but often simply being timely and respectful in your response can go a long way in getting you through an investigation or audit relatively unscathed.
Kill ‘em with kindness, as they say… or love… just don’t call it that if you’re baking granola, apparently. And if you are having trouble communicating, give me a call. I speak Regulator.
Brian Edstrom is a Shareholder and Attorney at Avisen Legal, P.A. He brings to Avisen seven years of experience working for federal and state regulators. As the former Director of Securities at the Minnesota Department of Commerce, Brian is especially familiar with state enforcement investigations and examinations involving investment advisers, broker dealers, and businesses raising money through crowdfunding and other securities offerings. Brian can be reached at 612-584-3407 or [email protected].