With Opening Day and the Astros raising the WS banner only a couple of days away, Jay and Tom take a look at some of the top compliance stories over the past week.
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.
In this episode, we take up a key element in the upcoming General Data Protection Regulation (GDPR), which comes into effect on May 25, 2018, that being the issue of the Data Protection Impact Assessment (DPIA). As always, I am joined in this exploration by Jonathan Armstrong, partner at the Cordery firm London. The UK Data Protection Regulator, the Information Commissioner’s Office (ICO), recently published new draft guidance on conducting DPIAs, entitled “Consultation: GDPR DPIA guidance”(Consultative Guidance).
A DPIA is mandatory in some cases under GDPR. At its simplest, it is a way of assessing data protection risk in any process that involves personal data. A good DPIA process will enable you to identify exactly what you are planning to do with personal data, what the risks are and how you are going to address them. The Consultative Guidance, notes your DPIA “should describe the nature, scope, context and purposes of the processing; assess necessity, proportionality and compliance measures; identify and assess risks to individuals; and identify any additional measures to mitigate those risks.” There are consultation obligations as part of the DPIA process including, in some cases, the obligation to show your DPIA to a Data Protection Authority (DPA) and seek prior approval.
For more information, check out Cordery’s great GDPR resource, GDPR Navigator.
Finally, if you are in Houston on April 10, the Greater Houston Business and Ethics Roundtable is hosting Jonathan Armstrong for a ½ half day GDPR workshop, entitled “Are You Ready for GDPR?”. For information and registration, click here.
In this episode, Matt Kelly and I being an exploration of the Facebook/Cambridge Analytica imbroglio. Today we consider the plight of soon-to-be former Facebook Chief Information Security Officer Alex Stamos who was seemingly retaliated against for his actions to try and bring the data hacking of Facebook to the attention of senior management. Stamos, who reported to the General Counsel, wanted to have a direct reporting line to Facebook senior executives, such as chief operating officer Sheryl Sandberg or CEO Mark Zuckerberg. Not only was this request denied but Stamos has 144 of the 147 employees who work under him transferred out from under his department. Now he is leaving the company although no word on whether he is ‘resigning to pursue other opportunities’.
We consider the culture of the company, with a seeming propensity to circle the wagons and not admit there was anything untoward even through Facebook was long aware of the Russian hacking and data theft by Cambridge Analytica. We discuss the differences in the role of a corporate legal department (defend the company) and the corporate compliance department (prevent, detect and remediate). Matt floats a very unusual trial balloon, that legal should report to compliance.
In this episode, I visit with Donna Bucella, the President-Compliance at Guidepost Solutions. Guidepost Solutions is well-known in the monitorship realm, but the company has a much wider focus, which Bucella discusses in this podcast. Her background is fascinating with military, civilian and government service. We discuss the compliance aspects to Guidepost Solutions’ work in the areas of cyber-security and tech services where the company provides an integrated suite of technology design, project management, and operational consulting services that balance its clients’ business needs with cost-effective solutions.
The podcast is a fascinating discussion of many of the risk areas anti-corruption compliance professionals are becoming more enmeshed in and areas they are being asked to take on in the corporate risk management process.
For more information on Guidepost Solutions, check out the company’s website by clicking here.
In the midst of this true madness in the NCAA tournament this year, Jay Rosen and myself take a look at some of the top compliance stories over the past week.
For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit this month’s sponsor Affiliated Monitors at www.affiliatedmonitors.com.
In this episode I have back Dr. Marsha Ershaghi Hames, the Managing Director of Strategy at LRN. We discuss how leading with principles has become even more important after the current wave of corporate scandals all in the context of Board of Directors accountability. Some of the topics we discuss in this episode include:
From the Headlines, we explore some specific examples of recent cooperate scandals, including:
In this episode, Matt Kelly and I take a deep dive into the recent SEC enforcement action against Elizabeth Holmes, the disgraced founder of Theranos, for her massive fraud around the former unicorn. Holmes claimed to have developed a proprietary system of blood testing so that with only one pin-prick of blood over 200 diagnostic tests could be performed. It turned out to be completely smoke and mirrors as the company never came close to developing the technology. In fact, the company and Holmes specifically hid the true nature of the company’s technology from investors using an elaborate deceit.
Holmes was one of the most famous women to come out of Silicon Valley. She founded Theranos, hyped the fraudulent blood testing scam and became for a short time a billionaire. Now all of that is gone, gone, gone. According the SEC Compliant, Holmes agreed to a civil penalty of $500,000, returned some 18.9 million shares that she obtained during the fraud and relinquished her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares and she is banded for 10 years from holding office in a publicly traded company.
We explore the questions surrounding this massive fraud and the penalty assessed by the SEC. Was the fine and penalty enough or should Holmes have been criminally prosecuted? Is there enough money left in Theranos to pay off all those the company defrauded? Where was the Board of Directors in all of this miasma? At what point does a start up with a revolutionary or innovative idea actually have to prove the idea works? Should the SEC regulate private companies which go into the market for capital? Matt and I take a deep dive into these and other questions in this fascinating look at one of the former highest-flying unicorns who fell to other with a resounding thud.
In this episode, I welcome back Steve Durham, a partner with Labaton and Sucharow to discuss the continued reverberations from the recent Supreme Court decision narrow the definition of whistleblowers in Digital Realty Trust v. Somers. Durham discussed the impact the decision may portend for the SEC Office of the Whistleblower and both the quality and quantum of tips and information brought forward to the SEC after the decision.
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.
Henry Worsley and Ernest Shackleton are related by more than blood. They are related by their souls. A distant relative, Frank Worsley had accompanied Shackleton on his Antarctic expeditions, including the abortive Nimrod expedition where Shackleton had tried and failed to reach the South Pole coming with 90 miles of reaching his goal until he and his two-man team turned back. Inspired by this event, Henry Worsley and two other men successfully walked unaided to the South Pole and back in 2008-2009.
Shackleton is of course much more famous for his Endurance expedition, which one of the legendary 3-year (1914-1917) trip to the Antarctic where his crew was stranded on the ice; Shackleton and a few companions traveled some 800 miles in an open boat to the South Georgia Island whaling station to obtain a rescue craft. He then returned to the Antarctic and rescued all the men who have been stranded.
Both men provided some interesting leadership lessons from their experiences. Henry Worsley’s journey to the South Pole was recently chronicled in the New Yorker in a piece by David Grann entitled, “THE WHITE DARKNESS-A solitary journey across Antarctica”. Henry Worsley became interested in Shackleton as a child, marveled by his stories of exploring and adventure. For most of his life he was in the British Army, becoming a member of the elite Special Action Services (SAS). After his retirement, he met Shackleton’s grand-daughter who introduced him to Will Gow, the great-nephew of Shackleton who wanted to recreate the trek to the South Pole. They were joined by another relative of the Nimrod expedition Henry Adams who was the great-grandson of the Nimrod expedition’s second in command, Jameson Boyd Adams.
Together the three men trained in Artic treks and cold weather situations for several years, while fund raising for their own expedition. This training regimen was couple with meticulous planning for their trek. Each man was required to haul a sled weighing some 300 pounds across the ice. Henry Worsley’s pack was emblazoned with two phrases, “Always a little further” and “By Endurance we Conquer”. Henry Worsley drew the following leadership lessons from Shackleton, "His optimism and patience. That the welfare of his men governed all his decision making. His courage. The hope he instilled in others. His romanticism. His ability to hold a team together in adversity. His recognition of the qualities of Frank Wild and his choice to make him his second in command. The depth of affection and respect that his crew members (from all expeditions) had for him. That he never gave up on fulfilling dreams. But above all I believe that in times of deep trouble, when lives were at risk, he was able to instill in his men the confidence that he would get them out of the desperate situation they were in, because nothing was more important to him than their welfare." The three were able to accomplish their goal by safely trekking across the ice to the South Pole and back.
Shackleton is best known for his Antarctic expeditions failures. In addition to the Nimrod and Endurance expeditions, he was also the failed first South Pole trek by Robert Falcon Scott on 1901. According to Cathy Graham, writing in Workplace Navigator in an article entitled, “7 Characters of Leadership I Learned From Sir Ernest Shackleton” the tale of “how 28 men survived for 21 months after the ship was beset in the ice floes of Antarctica”, in sub-freezing temperatures, no digital equipment, not even a radio, numerous physical obstacles, including climbing for 36 hours over uncharted mountains without climbing gear, in one chock full of leadership lessons for today’s business leader. She noted seven lessons.
In this episode, Matt Kelly and I continue our exploration of the fallout from the recent Supreme Court decision in Digital Realty Trust v. Somers in light of the filing by BioRad in its appeal of the whistleblower award to its former General Counsel, Sanford Wadler. Wadler had internally reported allegation of FCPA violations by the company in China to its Board of Directors. Wadler was later terminated and filed suit claiming his termination had been in retaliation for his whistleblowing efforts. The jury agreed with him and he was awarded approximately $11MM in damages, including damages under Dodd-Frank.
Last week, BioRad filed notice in its appeal of the Digital Realty Trust v. Somers decision and asked for approximately $3MM in damages awarded to Wadler be thrown out as they were based on Dodd-Frank. There was no evidence that Wadler has whistleblown to the SEC, although there was evidence he reported as required under SOX. We explore three issues which the case raises:
For more information on these issues see Matt Kelly’s blog post Supreme Court Whistleblower Ruling, Already in Play
See Tom Fox’s blog post Whistleblowers at the Supreme Court-Part II: Impact of the Somers Decision
In this episode, I visit with Miller & Chevalier Member John Davis on the firm’s FCPA Winter Review 2017. We discuss the key FCPA enforcement actions from 2017 and developments in compliance. Davis identifies four theme’s from Miller’s report including: (1) What if any change did the new administration bring in FCPA enforcement; (2) the uptick in individual enforcement actions under the FCPA; (3) the new FCPA Corporate Enforcement Policy which incorporated elements from the 2016 FCPA Pilot Program and 2017 Evaluation of Corporate Compliance Programs and (4) the large, multi-national anti-corruption enforcement actions which are becoming more normalized.
We they discuss how these trends may continue into 2018 and beyond. The Miller & Chevalier quarterly FCPA report is always one of the most useful review of FCPA and related laws enforcement around. It reviews all the FCPA enforcement actions in the quarter as well as the key international anti-corruption enforcement actions. Also it has some very useful charts and graphics to summarize key trends. It is an invaluable resource for the compliance practitioner. You can check out the FCPA Winter Review 2017 by clicking here.
In this episode, Jay Rosen and myself take a look at some of the top compliance stories over the past week, including some fury.
For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit this month’s sponsor Affiliated Monitors at www.affiliatedmonitors.com.
In this episode I consider the role of the Board of Directors in having a Compliance Committee and having a compliance expert on the Board itself. When you consider any of the most recent corporate scandals, from industries as wide as pharmaceutical to banking to manufacturing to transportation, one of the key themes in common was they had no compliance expertise on the Board of Directors. This lack of a key resource to the Board is something which has now drawn the attention of regulators and prosecutors.
At the Board of Directors level, a Board Compliance Committee can devote itself exclusively to non-financial compliance, such as FCPA compliance. While many companies have fulfilled these obligations through an Audit Committee, clearly the better practice is to have a separate Compliance Committee. The reason is clear, that compliance has become not only central to any well-run business but it is critical to overseeing a wider variety of risks than the typical Audit Committee has experience with, which is usually only aimed towards financial risks.
Every Board of Directors need a true compliance expert sitting on their Board. Almost every Board has a former Chief Financial Officer, former head of Internal Audit or persons with a similar background and often times these are also the Audit Committee members of the Board. Such a background brings a level of sophistication, training and subject matter expertise that can help all companies with their financial reporting and other finance-based issues. All of these considerations were incorporated into the Justice Department’s thinking when it added the requirement for compliance expertise to a Board of Directors in the 2017 FCPA Corporate Enforcement Policy.
In this episode we explore the basic policies and procedures that you need to have in place to comply with the General Data Protection Regulation (GDPR). I am joined in the exploration by Jonathan Armstrong, a partner at Cordery Compliance in London. GDPR compliance mandates some specific policies and procedures that Jonathan Armstrong and the team at Cordery Compliance in London suggest that you put in place at this time for the GDPR go-live date of May 25, 2018.
In this episode, Matt Kelly and I explore the recent revelations of systemic sexual harassment and abuse present in the front office of the Dallas Mavericks. The allegations were not lodged against owner Mark Cuban but against his former team CEO, Terdema Ussery, who was CEO of the Mavericks from 1997 to 2015. The story was broken by Sports Illustrated in a stinging expose last month. Cuban claims the first he heard about these allegations were when the SI writers, Jon Wertheim and Jessica Luther contact him for comment on their piece.
Matt writing in his blog post Dallas Mavericks Scramble on Compliance noted the story had the three hallmarks we have seen from recent #MeToo scandals involving top CEOs. First, these organizations have unchecked senior executives — charismatic, larger-than-life figures who dazzle their peers and superiors, which leaves them in excellent position to abuse subordinates. Second, the organizations have flawed reporting mechanisms that don’t send allegations of misconduct to people empowered to do something about them. Third, the organizations allow a culture of protection to fester.
All of this led to years of harassment and physical abuse by members of the Mavericks front office. Some women in the article said it was safer in the player’s locker room, where the players were gentlemen. They contrasted it with the Animal House atmosphere of the team’s front office. Owner Mark Cuban has certainly said all of the right things since the story broke. He has even posted a job opening for the team’s first Chief Compliance Officer. You can apply here.
The sordid story is yet one more in a stinging line of unethical and illegal acts that a company’s management allowed to fester for year. It also points how compliance is assuming a greater importance to help a company prevent, detect and remediate nefarious conduct.
In this podcast I welcome back John Hanson, founder and President of the International Association of Independent Compliance Monitors (IAICM) the only professional group for independent corporate monitors. The IAICM was announced one year ago in conjunction with the ABA White Collar Conference. At it's one-year anniversary, Hanson returns to the podcast to reflect on the growth the IAICM, assess the first year of IAICM, discuss of the highlights of the first year for you as President of the IAICM and then goes into some of the goals or initiatives for the IAICM in year 2.
With the announcement of the Justice Department’s Evaluation of Corporate Compliance Programs in February and new FCPA Corporate Enforcement Policy in November, the landscape for monitors will likely continue to evolve in 2018. Hanson and I consider what these and other DOJ announcements may portend, including the following questions:
As with all visits with Hanson, they are thoughtful, well-informed and very insightful. If you practice in the FCPA world or in the broader international anti-bribery/anti-corruption sphere, you will not want to miss this interview.
For more information on the IAICM, including membership, resources, its Code of Conduct and services, check out the website IAICM.org.
In this episode, Jay Rosen and myself take a look at some of the top compliance stories over the past week as we celebrate Texas Independence Day.
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.
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.