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FCPA Compliance Report

Tom Fox has practiced law in Houston for 30 years and now brings you the FCPA Compliance and Ethics Report. Learn the latest in anti-corruption and anti-bribery compliance and international transaction issues, as well as business solutions to compliance problems.
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Nov 23, 2018

In today’s edition of Daily Compliance News:

  • Think things can’t get worse for Goldman, think again. (New York Times)
  • First ever Pentagon audit finds bureaucratic ‘non-compliance’.(Washington Post)
  • In its Happy Thanksgiving message, Facebook admits to using Oppo research against detractors. (New York Times)
  • In some good news, NY branch of Standard Chartered will end corporate monitorship at end of this year. (The Guardian)
Nov 23, 2018

In today’s edition of Daily Compliance News:

  • Think things can’t get worse for Goldman, think again. (New York Times)
  • First ever Pentagon audit finds bureaucratic ‘non-compliance’.(Washington Post)
  • In its Happy Thanksgiving message, Facebook admits to using Oppo research against detractors. (New York Times)
  • In some good news, NY branch of Standard Chartered will end corporate monitorship at end of this year. (The Guardian)
Nov 9, 2018

NOVEMBER 9, 2018 BY TOM FOX

In today’s edition of Daily Compliance News:

  • What happens when the regulators question your tech solutions? (Wall Street Journal)
  • Are Chinese companies being targeted for FCPA prosecutions?(FCPA Blog)
  • KPMG (finally) begins to address conflicts of interest. (Financial Times)
  • In the wake of a massive employee walkout, Google modifies its company policies around harassment. (New York Times)
Nov 1, 2018

The Boston Red Sox thrashed the LA Dodgers in World Series, bringing the trophy back to Boston for the 4th time in 15 years. What’s it like to support such a loveable winner? Jay shares some of the secrets as the lads look at some of the week’s top compliance and ethics stories.

  1. What are some of the lessons from the Boston Red Sox World Series win for the compliance practitioner. Joe Mont considers in Compliance Week. (sub req’d)
  2. Maryland football coach is reinstated by the Board of Regents, then fired the next day by the school’s President. What does it all mean? See reports in the New York Times, Sports Illustratedand ESPN.
  3. Cognizant sets aside $28 million for FCPA settlement. Kelly Swanson reports in GIR (sub req’d)
  4. Wal-Mart settles shareholder action over FCPA matter. Could full resolution be close? Sarah Nassauer reports in the WSJ.
  5. GIR announces the top investigative firms and doles out awards to at its 4thannual awards dinner. See here.
  6. How much does a reputational hit impact the bottom line. Mengqi Sun explores on the WSJ Risk & Compliance Journal.
  7. Is Michigan State serious about compliance? Matt Kelly explores more changes at the troubled university in Radical Compliance.   
  8. More sentences in the ongoing PdVSA corruption scandal. Sam Rubenfeld details this week’s guilty pleas for corruptionand money laundering. All in the WSJ Risk and Compliance Journal.
  9. In a rare anti-corruption sting, a US business is indicted for offering bribes to a Haitian government official. Sam Rubenfeld reports in the WSJ Risk & Compliance Journal. Harry Cassin weighs in on the FCPA Blog.
  10. Is compliance still critical to the DOJ?Leslie Caldwell and Christopher Ting provide an emphatic yes in aLaw360 (sub req’d)
  11. Big news in the 1MDB scandal. Ex-Goldman banker Tim Leissner pleadsguilty to FCPA and AML violations, ex-Goldman banker Roger Ng is indictedfor FCPA and AML violations. Finally the big kahuna himself Jho Low is indicted. Dick Cassin reports in the FCPA Blog. Nicole Hong, Liz Hoffman and Bradley Hope report in the Wall Street Journal.
  12. Looking for the top training on how to operationalize your compliance program? Tom announces a new Compliance Master Class to be held in NYC November 12 & 13, hosted by Jonathan Marks and Baker Tilly. For agenda, more information and registration details click here.
  13. Want to attend a top compliance conference but have no travel budget? Navex Global has the answer for you with its virtual conference. Check out details and registration here.
  14. Tom premiers new podcast offering, the Daily Compliance News on the Compliance Podcast Network. Have cup of coffee and catch up on the day’s top compliance stories.
  15. Interested in the intersection of Sherlock Holmes and compliance? Check out the podcast series Adventures in Compliance. This week’s offerings: A Study in Scarlet and Exercising Power; the Valley of Fear and Virtual Teams; The Hound of the Baskervilles and 90 Days to Innovation; Sherlock Holmes as a Teacherand the Sign of Four and Innovation.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

Oct 25, 2018

Welcome to the only roundtable podcast in compliance. The genesis of Everything Compliance was our first podcast three years ago at SCCE in Chicago. We reconvene for this  week’s episode at the SCCE 2018 Compliance and Ethics Institute. This year we record in Las Vegas. We have a potpourri of topics and free flowing conversation, including the following: 

  1. Reflections on the 2018 SCCE Compliance and Ethics Institute.
  2. The SEC tenure of Chairman Jay Clayton.
  3. How a 360 degree of communication facilitates organizational justice and why that is critical for the compliance professional.
  4. The compliance implications from Brexit.
  5. Rants and/or shout outs (and sometimes both) from the panelists.

The members of the Everything Compliance panelist are:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Mike Volkov– One of the top FCPA commentators and practitioners around and the Chief Executive Officer of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly– Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong– Rounding out the panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com

Joining us as a guest on this episode, was Louis Sapirman, in from the bullpen as the thespian, left-handed closer for Mike Volkov.

The host and producer (and sometime panelist) of Everything Compliance is Tom Fox the Compliance Evangelist. Everything Compliance is a part of the Compliance Podcast Network.

Sep 21, 2018

As Tom and Mrs. Compliance Evangelist trek to Ann Arbor MI to attend his law school reunion, Go Blue and watch the Wolverines trounce Nebraska and enjoy some cool autumn weather, he and Jay are back with a look at some of the week’s top compliance and ethics stories. 

  1. Due diligence is not a nice to have, it's a mandatory. Scott Shaffer explains in the FCPA Blog.
  2. Kavanaugh and compliance? Matt Kelly considers in Radical Complaince. Tom and Matt explore in this week’s Compliance into the Weeds.
  3. Why does a law firm admit its internal investigation was designed to be a whitewash (in the internal investigation report)? More on the very strange Dansk Bank money laundering imbroglio. Patricia Kowsmann and Drew Hinshaw report in the Wall Street Journal. Tom dishes on the FCPA Compliance and Ethics Blog.
  4. Mark Cuban makes $10MM donation. Is it enough to make up for 15 years of toxic corporate culture of sexual abuse and harassment? Kaelne Jones reports in Sports Illustrated.
  5. Big oil on trial in the UK. What will be the fallout? Mara Lemos Stein reports in the WSJ Risk and Compliance Journal.
  6. KPMG study finds slow adoption of tech in compliance. See full report here.
  7. Matthew Stephenson continues his two-part consideration of the Hoskins decision. In the Global Anti-Corruption Blog.
  8. SEC proposal to limit whistleblower awards draws withering criticism from commentary period. Sam Rubenfeld reports in the WSJ Risk & Compliance Journal.  
  9. Want the top compliance training from the guy who wrote the book on compliance? Tom will put on a Compliance Master Class in Boston, September 25 & 26, hosted by Affiliated Monitors. Registration and information, click here.
  10. Want a 50% discount to one of the top compliance conferences around? Join Tom and AMI’s Eric Feldman at CONVERGE18 in Denver on October 9-11. I hope you can join me at the event. For information on the event, click here. As an extra benefit to fans of This Week in FCPA, CONVERGE18 is offering a 50% discount off the registrationEnter discount code TOMFOXVIP.
  11. In this week’s podcast series I internview Rebecca Turco and Paul Johns from SAI Global on their current innovations in compliance learning. Part 1-the changing marketplace; Part 2-adaptive learning; Part 3-EthicsAnywhere; Part 4-trends in compliance; and Part 5-integrated risk management.

Check out the week's top compliance and ethics stories (and more) on This Week in FCPA-the Go Blue edition. 

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

Sep 19, 2018

Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. In this episode, Matt Kelly and I take a very deep dive into the process surrounding the allegations made against Supreme Court nominee Brett Kavanaugh by Christina Ford. We consider these allegations from the compliance perspective.  

Some of the highlights from this podcast are:

  1. Why investigation protocols are mandatory before an event arises so you are not making things up on the fly.
  2. What is the evidentiary standard you employ? Are you consistent in your approach? If a candidate lies, what does that tell you about their propensity to engage in illegal conduct going forward?
  3. What is redemption? Should it be considered when allegations of long-ago misconduct arise? Should you be required to show contrition?

We unpack of all these points and consider strategies going forward.

For more reading: see Matt’s piece The Kavanaugh Compliance Lesson

Sep 4, 2018

In this episode of the CONVERGE18 Preview Podcasts, I visit with Ellen Hunt, Senior Vice President, Audit, Ethics & Compliance Officer at AARP. We discuss the role of the Board of Directors and compliance. Some of the issues we tackle in this podcast are:

  • The role of the Board and the C-Suite and why is it important to running an effective ethics and compliance program.
  • A CCO must build trust with your Board and your C-Suite that you are a practical and reasonable business person who is there is help resolve problems not unnecessarily embarrass them.
  • Why E&C expert is needed on the Board.
  • The role of the CCO and Board is that of a partnership and for it to work there has to be education, understanding and communication.

In what is fast becoming one of the top ethics and compliance conferences around, I hope you can join me at CONVERGE18, hosted by Convercent. (I perform consulting work for Convercent.) This year’s event will be October 8-11 at the Omni in Bloomfield, Colorado. The line-up of this year’s event is simply first rate with some of the top ethics and compliance practitioners around.

With the acceleration of the speak up culture and organizational accountability that social media is enabling and amplifying, companies need to incorporate integrity into every level of the organization. CONVERGE18 will help you do just that by addressing this ethical transformation head-on. Get the insights, information and solutions you need to put ethics into action. Join compliance executives from Salesforce, Kimberly Clark, Avis, U.S. Bank, AARP, Wells Fargo, Cheesecake Factory and many others to:

  • Network with 300 of your peers, including C-suite executives, legal professionals, HR leaders and ethics and compliance visionaries.
  • Gain insights from 35 speakers including Ethics and Compliance advocate Hui Chen, ECI’s CEO Pat Harned, NBA’s Deputy Chief Compliance Officer Steph Vogel, President at OCEG Carole Switzer and more.
  • Bring actionable takeaways back to your program from various session types including 2 keynotes, 5 general sessions, 12 discussion-based roundtables, 18 interactive breakout sessions for you to listen, learn and share.
  • The goal of CONVERGE18 is to arm you with information, strategy and tactics to transform your organization and your career by connecting ethics to business performance through process augmentation and data visualization.

I hope you can join me at the event. For information on the event, click here. As an extra benefit to readers of this blog, CONVERGE18 is offering a 50% discount off the registration price. Enter discount code TOMFOXVIP.

CONVERGE18 is a production of Convercent, which is the sponsor of this podcast series.

Aug 31, 2018

You can put away your all white linen suits and your seer sucker suits as well. With that hint of fall in the air, we are upon the (unofficial) end of summer with the Labor Day Weekend, Tom and Jay are back with a look at some of the week’s top compliance and ethics stories. 

  1. Second Circuit affirms most of Hoskins dismissal. Dick Cassin reports in the FCPA Blog.
  2. With a nod to Dwight Eisenhower, Hui Chen says compliance is about process not outcomes. Check out her article in Bloomberg.
  3. The 1MDB scandal only gets weirder. First Malaysian spies are linked to the scandal, Dick Cassin writes in the FCPA Blog. Next it turns out Chris Christie is representing Jho Low on a forfeiture case. Bradley Hope, Tom Wright and Rebecca Davis O’Brien report in the Wall Street Journal.
  4. Legg Mason bookends it NPA with a settlement with the SEC on its FCPA violations in Libya. Jack Hagel reports in the WSJ Risk and Compliance Journal. Tom reports in a tribute to Ed King on the FCPA Compliance and Ethics Blog. Dick Cassin reports in the FCPA Blog.
  5. Jaclyn Jaeger details some of the lessons learned from the Wynn scandal in Compliance Week. (sub req’d)
  6. Why is it important for integrity to a part of your brand. Nelson Pratt explains on Navex’s blog, Ethics and Compliance Matters. Tom tackles integrity in a tribute to John McCain on the FCPA Compliance and Ethics Blog.
  7. Does power corrupt or simply change you? Caterina Bullgarella explains why you must pay attention in a piece on com.
  8. Microsoft in trouble for its distributor network? Dick Cassin reports in the FCPA Blog. Tom details how to manage the distributor risk in Compliance Week. (sub req’d)
  9. Now former Cleveland Browns linebacker Mychal Kendricks indicted for insider trading. Tom Schad reports in USA Today. Once again demonstrating why they are the worst run organization in all of pro football, Browns only find out about the facts after then indictment and then cut him.Reported by Charlotte Carrol in Sports Illustrated.
  10. On this week’s featured podcast series, Tom explored the interestion of King Arthur and compliance. In Part 1 it was Arthuian leadership. In Part 2 it was the Pentecostal Oath and a Code of Conduct. In Part 3 it was the Round Table and whistleblowing. In Part 4 it was the Green Knight and whistleblower protection. In Part 5 it was the quest for the Holy Grail and a compliance defense for the FCPA.
  11. As the play off race begins to take shape, Astros lead the West by 2.5 games after taking 2 of 3 from the A’s in Houston. After being swept by the Rays, the Sox take it out on the Marlins and their lead is back to 7.5 games over the Yankees.
  12. The Compliance Master Class is coming to Boston on September 25 & 26. Learn how to create, design and implement a best practice compliance program from Tom Fox, the Compliance Evangelist. For information, click here. For registration click here.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

Jul 6, 2018

As we begin the post-holiday portion of our 4thof July week, Jay Rosen and myself are back in the saddle again to take a look at some of the top compliance stories from the past week.

  1. Credit Suisse settles with DOJ and SEC for its illegal hiring of family members of Chinese government officials, in violation of the FCPA. See Justice Department NPA here. Dick Cassin reports ion the SEC settlement in the FCPA Blog. See SEC Administrative Order here.
  2. What is Homeland Security Investigations and how does it help in FCPA Investigations. Clara Hudson reports in Just Anti-Corruption.
  3. ZTE starts its come back by changing its senior management. Sam Rubenfeld reports in WSJ Risk and Compliance Journal.
  4. Jim Beam goes down harshly with a FCPA violation in India. Henry Cutter reports in the WSJ Risk & Compliance Journal. See SEC Adminstrative Orderhere.
  5. The former Prime Minister of Malaysia is arrested for corruption around the 1MDB scandal. Hannah Beech and Austin Razmy report in the New York Times.
  6. Matt Kelly explores two parts of compliance in a discussion of Michigan State and Larry Nassar. The first is escalation and tone at the top. The second is institutional repair through procedure and transparency. See his article in Radical Compliance.
  7. Should there be a difference reimbursement/remediation program in the Och-Ziff matter. Africo Resources says yes and makes their case to the DOJ. Kelly Swanson reports in GIR. (sub Req’d)
  8. Why should investigators prepare for Artificial Intelligence? Peter Humphreys explores in Global Investigation Review(sub req’d)
  9. Two great compliance events in Houston next week and both events are free. First the Greater Houston Business and Ethics Roundtable holds in members’ only summer workshop Thursday July 12. For information and registration, click here. Second Jonathan Marks will present to the Houston Compliance Roundtable on Friday July 13 at 8-9 AM. For more information, contact Tom Fox.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

Jun 20, 2018

Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. In this episode, Matt Kelly and I take a deep dive back into the issue of the ZTE monitorship announced recently as a part of the settlement with the Department of Commerce on the death penalty sanctions levied on the company in April.  

That sanction was an export denial which barred American companies from selling components to ZTE and its subsidiary. American companies, such as the San Diego-based chipmaker Qualcomm supplied critical parts for ZTE’s its networking gear and smartphones. This sanction came on the heels of a $891 million fine and penalty the company agreed to in March 2017 for its first round of export control violations. The second sanction was for failing to live up to the terms of the DPA the company agreed to in 2017.

In the 2017, the company agreed to a monitor, who was appointed by the District Court which accepted the company’s guilty plea. Under the May 2018 supplemental sanction, ZTE agreed to pay an additional $1 billion in penalties, put $400 million in escrow, and accept a U.S.-appointed compliance department. According to the Department of Commerce Press Release, the new agreement requires ZTE "to retain a team of special compliance coordinators selected by and answerable to" the Commerce Department for ten years. This new compliance function will essentially serve as the Department of Commerce’s monitor at ZTE as the Press Release noted, "Their function will be to monitor on a real-time basis ZTE’s compliance with U.S. export control laws.”

Matt and I take a deep dive into the DOC resolution, the monitorship and how it might work and the use of a sanctions regime by the administration as a tool to brow beat other countries. We discuss in detail on this bizarro arrangement of U.S. regulators appointing an in-house compliance executive to act as a monitor to the Chinese telecom firm. The concept is intriguing, and the job could be the professional challenge of a lifetime — except for all those pesky details, including the ones this settlement still leaves unaddressed.

For more reading: see Matt’s piece on “FAQs on ZTE’s Compliance Settlement” and “Trade War! Trade War! Man the Barricades!”,both on Radical Compliance. See Tom’s piece, “The ZTE Department of Commerce Monitor: unchartered waters” in Compliance Week.  

Jun 15, 2018

With both VW and ZTE having very bad weeks, Jay Rosen and myself are back in the saddle  again to take a look at some of the top compliance stories from the past week.

  1. Having a bad week-Part 1, Volkswagen. First the head of its Audi unit is announced to be under investigation (here). Then Germany fines the company €1 bn for the emissions-testing fraud (here). Finally German prosecutors rejct the myth of “rogue engineers” in the scandal, saying the company is responsible as a whole (here). All reported in the New York Times.
  2. Having a bad week-Part 2, ZTE. After having reached a settlement between ZTE and the Department of Commerce, Congress moves to block the settlement. Michael C. Bender,  Siobhan Hughes and  Kate O’Keeffe report on the political perspective in the Wall Street Journal. From the compliance angle, many questions abound. Gerry Zack, writing in the FCPA Blog, says don't call the persons reporting to the DOC mandated compliance officers as they are monitors. Matt Kelly offers up informative FAQs on the monitorship in Radical Compliance. Tom considers the uncharted waters of the settlement in Compliance Week(sub req’d)
  3. The court evisserates the DOJ’s argument against the AT&T purchase of Time Warner. Henry Cutter uses the merger go-ahead from Judge Leon to explore the compliance challenges in mega-mergers (and small ones too). In the WSJ Risk & Compliance Journal.
  4. Bill Steinmann says (yet again) that FCPA enforcement is not dead. It’s not that he’s tired of saying it, he just wishes the nay-sayers would unplug their ears and start to listen. On the FCPA Blog.
  5. Goldman Sachs made $600 peddling 1MDB bonds. The new Malaysian government wants some of that money back. Alexandra Stephenson and Hannah Beech report in the New York Times.
  6. CCO’s behaving badly. The Standard Chartered CCO has left the bank for inappropriate behavior. Sam Rubenfeld reports in the WSJ Risk & Compliance Journal.
  7. Looking to do business with Trump’s newest buddy North Korea? Dick Cassin says be careful, be very careful in the FCPA Blog.
  8. Anti-piling on is a two-way street, as it requires responsible actions by companies as well. Michael Griffiths reports in GIRon remarks by Justice Department FCPA Unit Chief Dan Kahn.
  9. Need some CLE or Compliance know-how? Join Tom’s Compliance Master Class, which next week Houston on June 21 & 22. Just a couple of seats left. Information and registration is available here. Learn about compliance from the guy who wrote the book on compliance.
  10. Support your local book sellers! River Oaks Bookstore, 3270 Westheimer, in Houston is now stockingThe Complete Compliance Handbook. Tom will be on hand for a book signing on Thursday, June 28 from 5:30 to 7.
  11. Tom’s new book The Complete Compliance Handbookremains a hot seller. It is available oncom. Purchase an autographed copy here. It is reviewed in the FCPA Blog, Radical Complianceand Corruption, Crime and Compliance.
  12. Serving up some Breakfast and Compliance. Join Tom in Boston on June 25 at the offices of Affiliated Monitors to learn here about show the story of compliance is the story of innovation. For more information and registration, click here.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

May 29, 2018

The call, e-mail or tip comes into your office; an employee reports suspicious activity somewhere across the globe. That activity might well turn into a FCPA issue for your company. As the CCO, it will be up to you to begin the process which will determine, in many instances, how the company will respond going forward. 

This scenario was driven home in a FCPA enforcement action brought by the SECin July 2015 involving Mead Johnson Nutrition Company. In that case, the company performed two internal investigations into allegations that its Chinese business unit was engaged in conduct which violated the FCPA. Unfortunately, the first investigation, performed in 2011, did not turn up any evidence of FCPA violations. It was not until 2013, when the SEC made an inquiry to the company that it performed an adequate internal investigation which uncovered FCPA violations.

Your company should have a detailed written procedure for handling any complaint or allegation of bribery or corruption, regardless of the means through which it is communicated. The mechanism could include the internal company hotline, anonymous tips, or a report directly from the business unit involved. You can make the decision on whether or not to investigate with consultation with other groups such as the Audit Committee of the Board of Directors or the Legal Department. The head of the business unit in which the claim arose may also be notified that an allegation has been made and that the Compliance Department will be handling the matter on a go-forward basis. Through the use of such a detailed written procedure, you can work to ensure there is complete transparency on the rights and obligations of all parties, once an allegation is made. This allows the Compliance Department to have not only the flexibility but also the responsibility to deal with such matters, from which it can best assess and then decide on how to manage the matter.

To purchase a copy of The Complete Compliance Handbook on Amazon.com click here.

To purchase an autographed copy of The Complete Compliance Handbook from the author click here.

 

Apr 27, 2018

After being joined by Jay’s girls to celebrate our 100th  anniversary episode, Jay Rosen and myself take a look at some of the top compliance stories over the past week.

  1. Dun & Bradstreet settles FCPA with first declination under new DOJ FCPA Corporate Enforcement Policy. Dick Cassin reports in the FCPA Blog. Henry Cutter reports in the WSJ Risk and Compliance Journal.
  2. Will there ever be transparency in the corporate monitorship process with the DOJ? There will be if Dylan Tokar gets his way. Veronica Root reports in the NYU Compliance and Enforcement Blog.
  3. What is ISO 37001 certification worth? Not much in the eyes of SEC FCPA unit chief Charles Cain. Kelly Swanson reports in GIR Investigative(sub req’d)
  4. SEC fines Yahoo $35 million for failing to disclose data breach. Dick Cassin reports in the FCPA Blog.
  5. Former Justice Department FCPA unit chief Pat Stokes hits back on DOJ requests for statute of limitations tolling. Kelly Swanson reports in GIR Investigative(sub req’d)
  6. Starbucks took a huge black eye for its treatment of two African-American men waiting on a friend. Matt Kelly considers from the policy angle in Radical Compliance. Tom considers from the risk management perspective in the FCPA Compliance & Ethics Blog. They debate these and other topics in Episode 79 of Compliance into Weeds.
  7. Was Facebook’s monitor(s) asleep on the job? Does FB’s repeat misconduct even matter? Tony Romm explores the former question in the Washington Post. Veronica Root explores the latter question in the NYU Compliance and Enforcement Blog.
  8. What is Brady laundering? Dan Portnov explores this question on Grand Jury Target.
  9. Tom announces presales of his next book, the Complete Compliance Handbook, which will be published by Compliance Week in May 2018. It is available for PreSale here.
  10. Tom has a busy May planned. Join him at Brazil’s largest compliance conference, the 6th International Compliance Congress, held by LEC – Legal, Ethics and Compliance, May 8 to 10, in São Paulo, Brazil. Registration and information here; Hear him speak to the Houston chapter of ACAMS, from 11:30 -2 PM on Thursday May 17thin Houston on “Driving Compliance and Ethics through Data Analysis”. Information and registration here;and join in a session on Using Frameworks to Prove Compliance Competency at Compliance Week 2018 in Washington DC, May 20-23. Information and registration are here.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at www.affiliatedmonitors.com.

Apr 16, 2018

In March the SEC made its biggest-ever whistleblower award. It gave one person more than $33 million and in the same case split nearly $50 million between two others. The previous high for an SEC award to a single whistleblower was $30 million in 2014. All three whistleblowers were represented by the law firm of Labaton Sucharow and the awards were based upon SEC enforcement actions against Merrill Lynch. Today, I have with me Steve Durham, a partner at the firm to talk about the awards and its implications in light of the recent Supreme Court decision in Digital Realty Trust v. Somers. 

There are several key points to take away from the awards which we discuss. Initially the awards were divided into two separate awards; one to two individuals for $50 million and a second of $33 million to one individual. We discuss what is original information in the eyes of the SEC which can qualify for an award. In the award, the SEC noted the initial two whistleblowers could have received a higher amount if their information had been more timely delivered to the SEC, which is as soon as they were learned of the misconduct. This timing issue is critical not only to help set the amount of the award but also to establish a whistleblower is qualified to receive an award as there were other individuals who stepped forward later with the same or similar information.

We also explore where the SEC is in its overall whistleblower award program. Durham believes there are several large whistleblower awards in the SEC pipeline and that the SEC Whistleblower program has been an overall success. Even with the Congressional attacks on Dodd-Frank, there is no call to reform this part of the law.

Apr 5, 2018

The top compliance roundtable podcast is back with a wrap up of the some of the top compliance stories over the first quarter of 2018. Stayed tuned to the end for rants in this edition. 

  1. Matt Kelly considers the moves by the Congress to amend Dodd-Frank, considering the approaches by both the House and the Senate. He explores a couple of interesting side notes. First the Senate bill requires the Department of Treasury consider cybersecurity risks. Second, he notes the lack of movement against the Consumer Financial Protection Board. He also considers the Trump Administration’s claim of regulatory reduction; exploring my question: Is it real or is it Memorex? Matt rants on the manner of the firing of the Secretary of the Department of Veteran’s Affairs. 
  1. Mike Volkov considers the recent pronouncements by the Justice Department that it may extend the reach of the declination program first laid out in the new FCPA Corporate Enforcement Policy. Would such an approach work for other laws? If so, which ones are likely candidates? Is this a sop to big business or is there something else going on? What might be the reaction of the Congress? Mike rants on the corruption and conflicts of interest present in the current Administration.

 

  1. Jonathan Armstrong considers the Facebook/Compliance Analytica imbroglio from the UK/EU angle. He discusses where the EU and UK investigations currently lie, what the potential penalties might be, including criminal sanctions and next steps for all involved. It turns out the EU has been investigating Cambridge Analytica for over one year. Armstrong gives a shout out to the SCCE European Compliance and Ethics Institute and rants on travels who still don’t know to bag their liquids and take their shoes off at security in airports. 
  1. Jay Rosen considers the current state of monitorships. He begins with a review of monitorships over the past few years to explore whether the Justice Department and SEC cutting back on their use? If so, what are the implications for enforcement and compliance going forward? What are some of the tangible steps a company can take to make the case they do not need a monitor even after a FCPA violation? Jay explains remediation through a proactive monitorship can be a key step. Jay gives a shout out to the state Attorney’s Generals who brought the Emolument Lawsuit against the President. 

I take the opportunity to give a Happy Trails shout out to one of my boyhood heroes; Rusty Staub who recently passed away and rant on the New York Times for waiting almost a full week before running an Obituary on Phillp Kerr. 

The members of the Everything Compliance panel include:

  • Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
  • Mike Volkov – One of the top FCPA commentators and practitioners around and the Chief Executive Officer of The Volkov Law Group, LLC. Volkov can be reached at mvolkov@volkovlawgroup.com.
  • Matt Kelly – Founder and CEO of Radical Compliance, is the former Editor of Compliance Week. Kelly can be reached at mkelly@radicalcompliance.com
  • Jonathan Armstrong – Rounding out the panel is our UK colleague, who is an experienced lawyer with Cordery in London. Armstrong can be reached at armstrong@corderycompliance.com
Mar 17, 2018

March Madness is upon us, with the first ever #16 knocking off a Number 1 see. In the midst of this true madness, Jay Rosen and myself take a look at some of the top compliance stories over the past week.

 

  1. March Madness is here. So is corruption in NCAA basketball. Tom considers both stories in Compliance Week.
  2. Former FCPA Unit Head Chuck Duross says that self-reporting is still “probably not worth it”. See article in GIR (sub req’d)
  3. Elizabeth Holmes and Theranos were engaged in massive, years long fraud. She is fined, must return her Theranos stock and is banned from running public companies for 10 years. Sam Rubenfeld reports in the WSJ Risk and Compliance Journal. See SEC Complaint for full details.
  4. What are some of the compliance lessons to be learned from the Novartis journey? Jaclyn Jaeger considers them in Compliance Week. (Sub req’d)
  5. First DPA granted under new French anti-corruption law, Sapin II. See article in NYU Compliance and Enforcement Blog.
  6. SFO Director David Green pushed back on the myth that DPAs are sweetheart deals in the FCPA Blog.
  7. Are corporate monitorships on their way out? Adam Dobrik reports in GIR (Sub req’d)
  8. The Trace Global Enforcement Report is out.
  9. On Tuesday, March 20, Tom will premier an exciting new podcast Innovation in Compliance. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  10. Tom announces presales of his next book, the Complete Compliance Handbook, which will be published by Compliance Week in April 2018. It is available for PreSale here.
  11. Jonathan Armstrong will be in Houston on April 10 to put on a half-day GDPR workshop. You can find out more and register at the Greater Houston Business and Ethics Roundtable website, org.
  1. March Madness is here. So is corruption in NCAA basketball. Tom considers both stories in Compliance Week.
  2. Former FCPA Unit Head Chuck Duross says that self-reporting is still “probably not worth it”. See article in GIR (sub req’d)
  3. Elizabeth Holmes and Theranos were engaged in massive, years long fraud. She is fined, must return her Theranos stock and is banned from running public companies for 10 years. Sam Rubenfeld reports in the WSJ Risk and Compliance Journal. See SEC Complaint for full details.
  4. What are some of the compliance lessons to be learned from the Novartis journey? Jaclyn Jaeger considers them in Compliance Week. (Sub req’d)
  5. First DPA granted under new French anti-corruption law, Sapin II. See article in NYU Compliance and Enforcement Blog.
  6. SFO Director David Green pushed back on the myth that DPAs are sweetheart deals in the FCPA Blog.
  7. Are corporate monitorships on their way out? Adam Dobrik reports in GIR (Sub req’d)
  8. The Trace Global Enforcement Report is out.
  9. On Tuesday, March 20, Tom will premier an exciting new podcast Innovation in Compliance. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  10. Tom announces presales of his next book, the Complete Compliance Handbook, which will be published by Compliance Week in April 2018. It is available for PreSale here.
  11. Jonathan Armstrong will be in Houston on April 10 to put on a half-day GDPR workshop. You can find out more and register at the Greater Houston Business and Ethics Roundtable website, org.
Mar 1, 2018

In this episode I visit with Joel Solomon, author of “The Clean Money Revolution”. Solomon has worked in the investment community for many years, both in the United States and Canada. He heads Renewal Funds, which is Canada’s leading mission venture capital investment firm, with $98 million of assets under management in early growth stage Organics and EnviroTech companies in Canada and the USA. The Fund has over 150 individual, family, and foundation investors mostly split between Canada and the USA, with several in Europe and Asia. The goal is above market financial returns from a portfolio of companies offering positive societal advances. Renewal Funds dynamic team is led by Paul Richardson, President and CEO, and Joel Solomon, Chair, with crucial backing from Carol Newell. Renewal Funds has been named a "Best for the World Funds" by B the Change Media, for setting the measurement and management bar for impact investing. It has also been named a B Corp for "Best for the World Company."

We discuss what is mission venture capitalism and Solomon’s leadership in this field. We discuss his book, The Clean Money Revolution and explore how clean money investing is different than other types of investing. We explore the role of money managers in the clean money revolution and explore the broader role of money managers in environmental, social and governance investing and management. We consider the role of the Boards of Directors in public companies in contributing to the clean money revolution. We conclude with a fascinating exploration of the role of US government pull back in ESG and clean money investments; leaving a very large role for corporations to step in and fill going forward.

For more about Joel Solomon, check out his website, joelsolomon.org.

Feb 26, 2018

Last week the US Supreme Court issued its decision in Digital Realty Trust v. Somers (Somers). It was a closely watched case in the compliance community. Yesterday, I reviewed the Court’s decision. In this podcast, Roy Snell and I consider the impact of the Court’s decision on a variety of actors; including the SEC itself, Chief Compliance Officers (CCOs) and compliance practitioners, compliance programs and corporate America.

While we both agreed the Supreme Court came to the correct legal decision, there are several areas which this decision may well lead to negative impacts. The first is the message that it sends to potential whistleblowers; if you do not report to the Securities and Exchange Commission (SEC) you will not receive any legal protections against discrimination or retaliation.

Second, is the impact on every Chief Compliance Officer (CCO) or compliance practitioner. This decision will negatively impact attempts to create a best practices compliance program. A key part of any best practices compliance program is an internal reporting mechanism (Hallmark 8 of an Effective Compliance Program).

Third is that companies will be cut off from its best sources of information, that from its own employees, companies now will have less ability to detect and then remediate any problems before they become legal violations or keep legal violations from expanding.

Finally is the impact the decision will have on the SEC itself. Now there is no incentive to report internally because you are not eligible for any financial incentive nor will you receive any protections from discrimination or retaliation. It is possible the SEC will be literally inundated with potential securities-laws violations.

Feb 8, 2018

In this episode, Matt Kelly and I take a deep dive into the events which led to the resignation of Steve Wynn as the CEO and Chairman of Wynn Casinos for sexual harassment and misconduct. We consider how quickly the scandal escalated after it was initially reported by the Wall Street Journal and the response (or lack thereof) by the Board of Directors to Wynn’s conduct which had been an open secret for almost 20 years. We review what structural inputs a company should have in place when it has a true charismatic leader. We consider the role of the Board of Directors in light of the recent Wells Fargo penalty levied by the Federal Reserve to limit growth and require the Wells Fargo Board to refocus its efforts on more robust corporate risk management.

For more on the Wynn scandal and corporate governance, see Matt’s blog post So Much Wynning You Can’t Stand It

For more on the Federal Reserve’s penalty on Wells Fargo and the Board of Director’s need for a compliance profession on the Board, see Tom’s blog post, Wells Fargo, Put a Compliance Professional on Your Board

Jan 24, 2018

The role of the Chief Compliance Officer (CCO) has steadily grown in stature and prestige over the years. In the 2012 FCPA Guidance, under Hallmark Three of the 10 Hallmarks of an Effective Compliance Program, the focus was articulated by the title of the Hallmark, Oversight, Autonomy, and Resources. In it the 2012 FCPA Guidance focused on the whether the CCO held senior management status and had a direct reporting line to the Board; stating “In appraising a compliance program, DOJ and SEC also consider whether a company has assigned responsibility for the oversight and implementation of a company’s compliance program to one or more specific senior executives within an organization. Those individuals must have appropriate authority within the organization adequate autonomy from management, and sufficient resources to ensure that the company’s compliance program is implemented effectively. Adequate autonomy generally includes direct access to an organization’s governing authority, such as the board of directors and committees of the board of directors.”

This Hallmark was significantly expanded in both the Evaluation of Corporate Compliance Program (Evaluation) and the new FCPA Corporate Enforcement Policy (Policy). Over the next two blog posts, I will be considering how the Department of Justice (DOJ) has increased the prestige, authority and role of both the CCO and corporate compliance function.

The DOJ’s Evaluation of Corporate Compliance Programs, made the following query about the CCO position: 

  1. Autonomy and Resources 

Stature – How has the compliance function compared with other strategic functions in the company in terms of stature, compensation levels, rank/title, reporting line, resources, and access to key decision-makers? What has been the turnover rate for compliance and relevant control function personnel? What role has compliance played in the company’s strategic and operational decisions? 

 Autonomy Have the compliance and relevant control functions had direct reporting lines to anyone on the board of directors? How often do they meet with the board of directors? Are members of the senior management present for these meetings? Who reviewed the performance of the compliance function and what was the review process? Who has determined compensation/bonuses/raises/hiring/termination of compliance officers? Do the compliance and relevant control personnel in the field have reporting lines to headquarters? If not, how has the company ensured their independence? 

In the Policy, the DOJ laid out additional factors around CCO authority: 

  1. The quality and experience of the personnel involved in compliance, such that they can understand and identify the transactions and activities that pose a potential risk;
  2. The authority and independence of the compliance function and the availability of compliance expertise to the board;
  3. The compensation and promotion of the personnel involved in compliance, in view of their role, responsibilities, performance, and other appropriate factors; and
  4. The reporting structure of any compliance personnel employed or contracted by the company.

There is a new requirement for compliance “independence”. The DOJ has not taken a position on whether a General Counsel (GC) can also be the CCO. However, this new language would seem to signal the death knell for the dual GC/CCO role. It may also signal the larger issue that the CCO should have a separate reporting line to the Board, apart from through the GC. While the DOJ’s stated position that it does not concern itself with whether the CCO reports to the GC or reports independently, it is more concerned about whether the CCO has the voice to go to the Chief Executive Officer (CEO) or Board of Directors directly not via the GC. Even if the answer were yes, the DOJ would want to know if the CCO has ever exercised that right. Yet the Evaluation comes as close to any time previously in articulating a DOJ policy that the CCO be independent of the GC’s office. Therefore, if your CCO still reports up through the GC, you must have demonstrable evidence of both CCO independence and actual line of sight authority to the Board.

The Evaluation and the Policy build upon the 10 Hallmarks of an Effective Compliance Program and demonstrate the continued evolution in the thinking of the DOJ around the CCO position and the compliance function. Their articulated inquiries can only strengthen the CCO position specifically and the compliance profession more generally. The more the DOJ talks about independence, coupled with resources being made available and authority concomitant with the CCO position, the more corporations will see it is directly in their interest to provide the resources, authority and gravitas to compliance positions in their organizations.

Three Key Takeaways

  1. How can you show compliance really has a seat at the senior executive table?
  2. What are the professional qualifications of your CCO?
  3. Does your CCO have true independence to report directly to the Board of Directors? 

This month’s podcast sponsor is Convercent. Convercent provides your teams with a centralized platform and automated processes that connect your business goals with your ethics and values. The result? A highly strategic program that drives ethics and values to the center of your business. For more information go to Convercent.com.

Jan 12, 2018

In this episode, Jay Rosen and myself take a look at some of the top compliance stories over the past week.

  1. Does Free Speech exist at the office? Can you tell your boss what you think of them? Ben DiPietro looks at a new Department of Labor approach in WSJ Risk and Compliance Journal.
  2. Are fraudsters like the rich (as in different than the rest of us)? Jonathan Marks explores the mind of the fraudster in his Board and Fraud blog.
  3. What can you do to manage your third parties more effectively? Rick Chapman provides his experiences in the SCCE Blog.
  4. Is there a unified theory of corruption? Professor Joseph Pazsgai explores the question in a guest post on the FCPA Blog.
  5. Mike Volkov gives his five top compliance predictions for 2018 in the Crime, Corruption and Compliance Blog.
  6. Oh thank Heaven? Feds raid 7-11 looking for criminals (IE undocumented workers). See story by Alicia Caldwell in the WSJ.
  7. Is there a real (or perceived) bias in the monitorship process? Several experts are cited in GIR piece sub. req’d
  8. Shearman & Sterling releases its annual report, the Recent Trends and Patterns in the Enforcement of the FCPA.
  9. Join Tom’s monthly podcast series on One Month to a More Effective Compliance Program. In January, I bring together the entire year of compliance program best practices with 31 days to a more effective compliance program. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  10. Tom announces his next Compliance Master Class, sponsored by Marcum LLP. It will be held on February 11 & 12 at Marcum’s offices in Miami, FL. More information or a copy of the agenda, or to register, will be available on my website, FCPA Compliance Report or at Marcum LLP.
  11. Jay Rosen previews the Jay Rosen weekend report.
  12. We preview this week’s NFL playoffs.

 

Jan 9, 2018

A 360-degree view of compliance is an effort to incorporate your compliance identity into a holistic approach so that compliance is in touch with and visible to your employees at all times. It is about creating a distinctive brand philosophy of compliance which is centered on your consumers. In other words, it helps a compliance practitioner to anticipate all the aspects of your employees needs around compliance your employees, who are the customers of your compliance program. This is especially true when compliance is either perceived as something that comes out of the home office or is perceived as the Land of No, largely inhabited by Dr. No. A 360-degree view of compliance gives you the opportunity to build a new brand image for your compliance program.

Previously, I had thought of communications really as a two-way street upward and downward, inbound and outbound, and side to side communications. However, you might choose to phrase it, a 360-degree approach to compliance communications is something different. You simply can no longer as effectively communicate in just two ways. You now communicate in a more holistic manner, and in multiple ways. If you are just thinking about communications in the classic form you are missing something that is happening around you.

360-degrees of compliance communication is not just a classic form of communication but rather it is a communication in the concept of every interaction, whether they be planned interactions or whether they be into or accidental interactions. It is all a form of communication. This is particularly true if you are a compliance professional, a chief compliance officer or a compliant practitioner. The things you do, the way you act, and the way people see you are always communicating. It is not simply communicating to one another as often you may well be communicating to a group across siloed boundaries, to the constituencies with whom you had not even planned to initially communicate.

There are several concepts which should be included in your 360-degree view of compliance communications. Begin with an objective so you identify the purpose of your communication and the target of whom you are going to communicate to. Identify as clearly as you can the purpose and reason to ensure your message is aligned with your objectives. For instance, are you implementing a 360-degree view of communication to educate, inform, change perceptions or build trust and commitment?

Next, who is your audience? To communicate effectively you need to understand your audience. In any corporation, there are multiple audiences who are the key stakeholders in the 360-degree process. How much do they know? Some of the stakeholders include the Board of Directors, senior management, middle management, employee teams, committees, coaches, facilitators, customers, business partners, vendors, sales agents and representative, strategic alliances and business ventures. What are your distribution channels and how do you track your messaging? You should create a comprehensive spreadsheet to track the messages the intended audience and the delivery mechanism. Another key ingredient of the 360-degree approach is feedback. This is a key component of the 360-degree experience and educate each stakeholder on the benefits of feedback from the 360-degree approach.

Finally, you need to evaluate what you have done. You can monitor your communication activities by tracking attendance at the events, website statistics, open rate of emails, downloads of materials, video hits; in other words, the same techniques that your marketing folks would use to determine their messaging’s effectiveness. The objective is to build trust for the 360-degree process by determining if the goal achieved. You can utilize surveys or focus groups to assess the impact on your target audience. By focusing on your customer customers of compliance, I.E. your employees, it allows you to identify gaps and improve the communication process for your compliance program.

Using such a 360-degree approach to communication, allows a CCO to “see around corners” and can be one of the greatest strengths of a best practices compliance program. The reason is listening. Listening is a key leadership component and there are certainly many ways to listen. You can sit in your office and wait for a call or report on the hotline or you can go out into the field and find out what challenges employees are facing. From this you can work with them to craft a solution that works for the company and holds to the company’s ethical and compliance values.

Three Key Takeaways

  1. Remember the definition of 360-degrees of compliance communications. It is an effort that includes the compliance identity into a holistic approach so compliance is in touch and visible to your employees at all times.
  2. What is your objective? What are you trying to do with your 360-degrees of compliance communications and how are you using that mechanism to deliver the objectives of your compliance program.
  3. Evaluate. You need to evaluate three factors: (a) has the message been delivered; (b) has it been heard; and (c) is it being implemented.

 

This month’s podcast sponsor is Convercent. Convercent provides your teams with a centralized platform and automated processes that connect your business goals with your ethics and values. The result? A highly strategic program that drives ethics and values to the center of your business. For more information go to Convercent.com.

Dec 31, 2017

Jay and I take things in a different direction this week. We take the top five podcasts from 2017 and each of us, gives a highlight from that episode to highlight some of the key compliance issues from 2017, for our year end wrapup edition.

1. Episode 55-The Covfefe Edition, for the week ending June 2

 From Jay- Compliance is making its way into Boards of Directors. See article by Ben DiPietro in the WSJ Risk and Compliance Journal.

From Tom- Samuel Mebiame, sentenced to two years behind bars for paying bribes to help Och-Ziff with lucrative mining deals in Africa. See article by Sam Rubenfeld in WSJ Risk and Compliance Journal. Judge asks why no one else was criminally prosecuted. See article in Bloomberg.

2. Episode 53-The I Left My Heart in SF Edition, for the week ending May 19 

From Jay- Should compliance and ethics be wedded? New report by Institute of Business Ethics and the Ethics Institute considers the issues. See article in WSJ Risk and Compliance Journal.

From Tom- Astros lead the MLB with the best record in baseball. Will they regress to the mean?

3. Episode 52-The Firing the Investigators Edition, for the week ending May 12

 From Jay- ECI Report Finds Use of Corporate Monitors is on the Rise. For a copy of report, click here. For a webinar replay with Affiliated Monitors’ Eric Feldman and Nasdaq’s Michael Kallens click here.

From Tom- Why the judgment of CEOs and their actions really do matter. See James Stewart considers Barclays’ Jes Staley in his Common Sense column in the New York Times.   

4. Episode 54-The Rubber Match Edition, for the week ending May 26

From Jay-he recaps the SCCE San Francisco event he attended last week. See Jay’s recap in his article I Left My #SCCE Heart in San Francisco or I Love It When A Plan Comes Together!

From Tom-Was the individual enforcement against the MoneyGram CCO significant or much ado about nothing? See article by Dick Cassin in the FCPA Blog and by Sara Kropt in her Grand Jury Blog.

5.  Episode 77-The Home for the Holidays Edition, for the week ending November 17

 From Jay-

1a) Wal-Mart reserves $283MM to settle its outstanding FCPA matter. See article by Dick Cassin in the FCPA Blog. Henry Cutter reports in the WSJ Risk and Compliance Journal.

1b) The Everything Compliance gang put together an eBook of their reflections from the recent SCCE 2017 Compliance and Ethics Institute. It is available for download free on JDSupra. It is also available on the Affiliated Monitors site by clicking here.

From Tom- Tom visited with Marc Havener and Bryan Belknap about using movie clips to expand your compliance training classroom. See Tom’s blog post here

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