UK’s Office of Financial Sanctions Implementation published counter-terrorism legislation guidance to NGOs and those in the financial sector. Tune in as the Kitchen highlights the main ingredients.
Day: October 19, 2021
The Compliance Life details the journey to and in the role of a Chief Compliance Officer. How does one come to sit in the CCO chair? What are some of the skills a CCO needs to success navigate the compliance waters in any company? What are some of the top challenges CCOs have faced and how did they meet them? These questions and many others will be explored in this new podcast series. Over four episodes each month on The Compliance Life, I visit with one current or former CCO to explore their journey to the CCO chair. This month, my guest is John Melican, former CCO at AMEX Travel and now Managing Director at Exiger.
Melican moved into the CCO chairs at AMEX travel. He said a key lesson was that being a CCO was leading through orchestration not simply execution. A key was working with others in the business unit to educate them on how compliance changes were made but why they benefited AMEX Travel. He discussed some of his top challenges that he faced and how he and his compliance team overcame them through collaboration.
Resources
John Melican LinkedIn Profile
Exiger
Categories
What is BFJ?
Humor writer Gregg Greenberg has such distaste or disdain for Billy Joel’s music that he can remember the lyrics to. “When I was growing up in Hicksville, they kept making us sing his songs in the chorus in elementary school and junior high school. They would play it at the mall. You just could not escape Billy Joel.”
In his book F*cking Argentina and 10 More Tales of Exasperation, Greenberg writes his sentiments in an autobiographical fashion.
The short story tells of a guy who’s in love with this girl, but she has this one terrible character trait — she loves Billy Joel’s music! She sings it in the shower, watches his videos, and even wants her boyfriend to a BJ concert. And such is the deal-breaker for the guy who hates Billy Joel that much! What happens next for them? #It’sNotYouIt’sBFJ
ABOUT THE BOOK
F*cking Argentina and 10 More Tales of Exasperation by Gregg Greenberg is a compilation of short stories that dive into the American phenomenon of being in a near-perpetual state of aggravation. Greenberg’s anthology brings together eleven original pieces of work, each with their own slice of independent and distinct plot lines but all converging on the universal theme of exasperation. They run the whole gamut of scenarios, from the titular story “F*cking Argentina” wherein the country is once again in bankruptcy and a polite game of tug o’ war plays out on a porch, to “A Journeyman Tennis Player’s Prayer” with a low ranking U.S. Open contender begging God for a comparable opponent. Both stories end with the superlative f-word, which showcases at some point in other stories, and a guaranteed chuckle from their readers. Buy the book here: http://fckingargentina.com/.
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Do you have a podcast (or do you want to)? Join the only network dedicated to compliance, risk management, and business ethics, the Compliance Podcast Network. For more information, contact Tom Fox at tfox@tfoxlaw.com.
This week’s guest is Lindsay Sweeney, Senior Manager of Communications at K2 Integrity, a risk, compliance, investigations, and monitoring firm. She graduated with degrees in journalism and history and was convinced that her career would be in either of those industries. However, she started working in a small shop whose clients were mostly associated with fintech; she would eventually join K2 Integrity. She joins Tom Fox to discuss how you can use social media and communications to drive home internal messages and get your message and brand out to your clients, customers, and the compliance community.
At K2
Within her first six months at K2 Integrity, the company expanded their presence in the media with a major financial crimes practice and merged with a financial integrity network in DC. From there, they kicked off a rebrand, which was both challenging and easier to do remotely due to the pandemic. She tells Tom, “It wasn’t just a matter of changing our name in certain places,” she shares. “It was a matter of resetting how we think about ourselves and how we talk about ourselves, not just to clients, but also how we position ourselves internally.”
Surprise!
Tom asks Lindsay what the biggest surprises she’s had were like. “I don’t know if [it was] a big surprise or more like little surprises along the way, but I’ve come to realize one as a communicator there is no such thing as overcommunication,” she responds. “Keeping people in the loop is not just beneficial for making sure that everyone knows where the steps are along the way, but you’re going to get a different perspective from someone… that’s going to change the way you do things… maybe you’ll find a new way to do something that you wouldn’t have previously thought of.”
The Evolution of Content Marketing
Lindsay believes that personalization and targeted information in content marketing is going to become bigger; it was already in the works, but the pandemic has accelerated the process. Additionally, there will be increased focus on bite-sized content to accommodate the attention span of people at home.
Resources
Lindsay Sweeney on LinkedIn
When the Delaware Supreme Court says of a Board of Directors collectively signed a company’s Annual Statement “with hands on their ears to muffle the alarms” you can rest assured the Board was seriously negligent in fulfilling its Caremark obligations. The Court’s decision in Clovis Oncology (Clovis or ‘the company’) laid out what a plaintiff must prove to create liability for a Board under the Caremark Doctrine. Not only must a Board have oversight of a corporate compliance function it must also provide oversight of that function.
The facts are so egregious on the monitoring requirement, the entire opinion could have been the basis for the original Caremark Doctrine. As the opinion stated the Board “breached their fiduciary duties by failing to oversee the Roci clinical trial and then allowing the Company to mislead the market regarding the drug’s efficacy. These breaches, it is alleged, caused Roci to sustain corporate trauma in the form of a sudden and significant depression in market capitalization.”
Clovis had no products and no sales but only the hope of the creation, marketing and sale of a new cancer drug, Roci. Clovis “relied solely on investor capital for all operations.” The potential success for Clovis “rested largely on one of its three developmental drugs, Roci, a cancer drug designed to treat a previously- untreatable type of lung cancer. Because of the estimated $3 billion annual market for drugs of its type, Clovis expected Roci to generate large profits if Clovis could secure FDA approval for the drug and shepherd it to market.” To get Roci to market, the company had to first perform clinical trials and then submit those findings to the Food and Drug Administration (FDA).
To perform the clinical trials, Clovis used a standard, well-known drug testing protocol called RECIST. A key component of the RECIST protocol was differentiating on the reporting on confirmed results v. non-confirmed results. During the trial, Clovis deviated from the RECIST protocol by improperly calculating the efficacy measurement based on both confirmed and unconfirmed results without differentiating between the two. As a result, Clovis published inflated performance results, and included this information in raising capital in the private and public securities markets of over $500 million. Clovis also failed to properly disclose the drug’s side effects. Worse yet, Clovis made these same misrepresentations in its initial presentations to the FDA.
After its initial presentation to the FDA, the FDA requested additional information on the test results. It appears at that point the Board was made aware of significantly different results from the confirmed v. the non-confirmed categories. The stock dropped some 80% in a few days, wiping out over $1 billion in capitalization. The fallout of Clovis actions led the FDA to suspend its review of Rico, effectively ending the company’s efforts.
As noted, the Court found that the Board had made certain there was an overall compliance program. However, Caremark has a second prong which requires a Board to “monitor” its compliance program. The Court stated, “To state a claim under this prong, Plaintiffs must well-plead that a “red flag” of non- compliance waived before the Board Defendants but they chose to ignore it. In this regard, the court must remain mindful that “red flags are only useful when they are either waived in one’s face or displayed so that they are visible to the careful observer. But, as Marchand makes clear, the careful observer is one whose gaze is fixed on the company’s mission critical regulatory issues.” For the Clovis Board, the compliance oversight should have been over Roci’s trials, clinical trial protocols and related FDA regulations governing that study.
The RECIST clinical trials protocol was “the crucible in which Roci’s safety and efficacy were to be tested. Roci was Clovis’ mission critical product. And the Board knew, upon completion of the TIGER-X trial, the FDA would consider only confirmed responses when determining whether to approve Roci’s NDA per the agency’s own regulations.” Moreover, the Clovis “Board was comprised of experts and the RECIST criteria are well-known in the pharmaceutical industry. Moreover, given the degree to which Clovis relied upon it when raising capital, it is reasonable to infer the Board would have understood the concept and would have appreciated the distinction between confirmed and unconfirmed responses. The inference of Board knowledge is further enhanced by the fact the Board knew that even after FDA approval, physicians (i.e., future prescribers) would evaluate Roci based on its” clinical trials.
Mike Volkov has stated of the Clovis decision, “The Clovis Court explained that “‘Delaware Courts are more inclined to find Caremark oversight liability at the board level when the company operates in the midst of obligations imposed upon it by positive law yet fails to monitor existing compliance systems, such that a violation of law, and resulting liability, occurs.’” The Clovis Court noted that when externally imposed regulations govern a company’s mission critical operations, the board must exercise a good faith effort to implement an oversight system, which “entails a sensitivity to ‘compliance issues[s] intrinsically critical’ to the company.”
The Clovis decision is another steppingstone in the creation of duties for a Board regarding compliance. Like the Board at Blue Bell Ice Cream, the Clovis Oncology Board had but one compliance obligation. At Blue Bell Ice Cream, it was food Safety. At Clovis Oncology it was compliance around the clinical trials and reporting results of its signature product, the drug Roci. While Blue Bell Ice Cream management did not even report its food safety results to the Board, senior management at Clovis made material misrepresentations to the Board about the results of the clinal trial based upon the melding of unconfirmed results with confirmed results. This case then stands for the proposition that a Board must do more than simply accept what management says about compliance, it must monitor compliance. Here the Clovis management made material misrepresentations to the Board about the results of the clinal trial based upon the melding of unconfirmed results with confirmed results.
