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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – The Board Compliance Committee

Under the U.S. Sentencing Guidelines, the Board must exercise reasonable oversight on the effectiveness of a company’s compliance program. The DOJ Prosecution Standards posed the following queries: 1) Do the directors exercise independent review of a company’s compliance program? and 2) Are directors provided information sufficient to enable the exercise of independent judgment? Moreover, the  FCPA Resource Guide, 2nd edition required a CCO to have direct access to the Board or an appropriate sub-committee and requires a tangible commitment from the top levels of an organization, starting with the Board of Directors, that the company creates an ethical culture.

This requirement was brought forward in 2017 in the FCPA Corporate Enforcement Policy. Finally, nn the 2020 Update to the Evaluation of Corporate Compliance Programs, under the section entitled Oversight, it posed the following questions What compliance expertise has been available on the board of directors? Have the board of directors and/or external auditors held executive or private sessions with the compliance and control functions?
Today’s regulatory climate and hyper-transparency in social media make a Board Compliance Committee’s task seem Herculean. But more than simply the regulatory climate, shareholders are taking a much more active role in asserting their rights against Boards of Directors. It is incumbent that Boards seek out and obtain sufficient information to fulfill their legal obligations and keep their company off the front page of the New York Times, Wall Street Journal or Financial Times, just to name a few, to prevent serious reputational damage. A Board Compliance Committee is a good place to start.
Three key takeaways:

  1. The Board Compliance Committee exists to provide oversight and assist the CCO, not to substitute its judgment for that of the CCO.
  2. The Board Compliance Committee should work to hold the CCO accountable to hit appropriate metrics.
  3. The Board Compliance Committee is ideal for leading the efforts around strategic planning.

For more information check out The Compliance Handbook, 3rd edition, available from LexisNexis here.

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Daily Compliance News

Daily Compliance News: June 7, 2023 – The Built on Non-Compliance Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

  • SEC brings an action against Coinbase for allowing trading of unregistered securities. (NYT)
  • SEC brings an action against Binance for commingling of funds. (NPR)
  • Argentina corruption case against Cristina Fernandez is dismissed. (AP)
  • Gensler says crypto built on ‘non-compliance’. (FT)
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Compliance Into the Weeds

Compliance into the Weeds: Compliance and Middle Managers

The award-winning, Compliance into the Weeds is the only weekly podcast that takes a deep dive into a compliance-related topic, going into the weeds to explore a subject more fully and looking for some hard-hitting insights on sanctions compliance. Look no further than Compliance into the Weeds!

Join Tom and Matt as they delve into middle managers’ crucial role in fostering a culture of ethics and compliance within organizations. In this episode, the hosts discuss compliance officers’ challenges in working with middle managers and share some practical tips on building alliances, teaching soft skills, and developing personal relationships. They also examine the use of incentives and consequence management in promoting compliance and highlight the need for positive incentives for middle managers. Take advantage of this insightful and thought-provoking discussion on enforcing internal controls in a compliance program and learn more about the different ways to ensure compliance in gift travel and entertainment expenses. Tune in now to stay ahead in the world of compliance!

Key Highlights:

  • The Role of Middle Managers in Compliance
  • Training Middle Managers on Ethical Leadership
  • Investing in middle managers for ethical conduct
  • Compliance: Incentives and Consequence Management

 Notable Quotes:

“Compliance officers need to think about because you live and die in the success of your corporate culture, and the middle managers are the custodians of that culture.”

“Compliance officers should think about how do I help middle managers. How do I coach them on how to be good leaders?”

“Nothing is as significant as that personal touch point.”

“If the middle manager either turned a blind eye to the unethical practice or should have known about it but was just so aimless about it and didn’t care, should that middle manager suffer consequences along with the frontline employees who committed the offense? And the answer was generally yes.”

 Resources

Matt 

LinkedIn

Blog Post in Radical Compliance

Tom 

Instagram

Facebook

YouTube

Twitter

LinkedIn

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – Prudent Discharge of Board Obligations

What are the obligations of a Board member regarding the FCPA? Are the obligations of the Compliance Committee under the FCPA at odds with a director’s “prudent discharge of duties to shareholders”? Do the words prudent discharge even appear anywhere in the FCPA? In the case of Stone v. Ritter, the proposition is found that “a duty to attempt in good faith to assure that a corporate information and reporting system, which the board concludes is adequate, exists.” From the case of In re Walt Disney Company Derivative Litigation, she drew the principle that directors should follow the best practices in ethics and compliance. The Board has the role of monitoring the performance of the compliance function, including monitoring the performance of it using customary economic metrics and overseeing compliance with applicable laws and regulations.

While the Board is not responsible for auditing or ferreting out compliance problems, it is responsible for determining that the company has an appropriate system of internal controls. The Board should also monitor company policies and practices that address compliance and matters affecting the public perception and reputation of the company. Every company should ensure that it conducts appropriate compliance training for employees and conducts regular compliance assessments. Finally, the Board must take appropriate action if and when it becomes aware of a material problem it believes management is not properly handling.
There is no reference to prudent discharge in the FCPA itself. However, a Board member might think more than twice about the prudent discharge of duties to the shareholders as both the DOJ and SEC now might wish to look into a Board’s prudent discharge of duties under the FCPA.

Three key takeaways:

  1. What is prudent discharge?
  2. What is your process for doing compliance at the Board level?
  3. A Board must have active rather than passive engagement around compliance.

For more information, check out The Compliance Handbook, 3rd edition, available from LexisNexis here.

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Innovation in Compliance

Passion, Podcasting and Perspective with Eli Marcus

Exploring the most intriguing minds and their stories can motivate us. In this episode of Innovation In Compliance, host Tom Fox talks with Eli Marcus, a fellow member of the C-Suite Network and a prominent figure in the self-help sector. They delve into Marcus’s career, his transition from the world’s largest seminar company owner to a celebrated podcaster, and his unending quest for knowledge and personal development. They also dissect the intimate power of podcasting and the significance of asking the right questions.

Eli Marcus has a passion for self-help and motivation. Growing up as a “non-fiction self-help geek,” Eli found solace and guidance in books, which later fueled his entrepreneurial spirit. He went on to establish the Seminar Center in New York City, which quickly became the world’s largest seminar company, hosting iconic figures ranging from Michael Jackson to motivational speakers like Les Brown. Marcus has embraced the transformative power of podcasting and is the host of The Motivation Show, a popular podcast within the C-Suite Network.

 

You’ll hear Tom and Eli discuss:

  • Podcasting offers a unique intimacy, fostering a one-on-one bonding experience that often reveals insights about a person’s journey, interests, and perspectives that might not emerge in other formats.
  • “The quality of your life is determined by the quality of the questions you ask,” Eli says. He encourages listeners to probe deeper and not shy away from asking challenging questions.
  • Success doesn’t come from a one-off motivational boost. Instead, it’s about constant learning, repetitive practice, and reaching a tipping point that significantly alters your perspective.
  • Eli’s approach to his podcast involves asking the questions that pique his curiosity most; he believes his audience will share this curiosity.
  • Passion is integral to making engaging podcasts, as it resonates with listeners even on an audio level.
  • Eli’s favored guests are individuals who are well-known or have a large audience. However, he also looks for fascinating individuals, regardless of their following.
  • Learning deep things and understanding the perspectives of others can help you complain less and appreciate more.
  • The perspective of “Don’t sweat the small stuff” is valuable, and most things, in reality, are small stuff, excluding significant life events like the death of a loved one.
  • Celebration and positivity even in times of grief can be a powerful coping mechanism.

 

KEY QUOTES:

“The quality of your life is determined by the quality of the questions you ask.” – Eli Marcus

 

“I always wanted to stay in the self help game, right? How can I do this in the easiest way and just get started? And that’s the beauty of being able to do the podcast.” – Eli Marcus

 

“It’s not like you drink water once and you’re good for the rest of the year. The same thing with motivation or learning. You just got to keep learning over and over again. And sometimes what Malcolm Gladwell calls the tipping point, you need maybe 1000th time or repetition finally before it sinks in and it tips things over your way. ” – Eli Marcus

 

Resources:

Eli Marcus on LinkedIn | Instagram | Twitter | Email

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SBR - Authors' Podcast

SBR Authors Podcast – Hal Hershfield, Your Future Self – Part 1

Welcome to the Sunday Book Review, the Authors Podcast! In this episode, Tom is joined by colleague Earnie Broughton. Join Tom and Earnie as they interview Hal Hershfield, author of Your Future Self, on Sunday Book Review-Author’s Edition. Delve into the psychology of decision-making and the importance of understanding present and future selves. Listen in as they discuss how organizational identity influences risk and ethical decisions and how the concept of multiple selves relates to integrity and making ethical decisions. Discover the neuroscience behind thoughts about one’s future self and how forgiveness and self-forgiveness can overcome procrastination. Learn how a connection to one’s future self can affect ethical behavior in an organizational context and find practical ways to bring ethics and compliance into workplace programs. Make sure to catch the release date of Hershfield’s upcoming book and where to find his research. Tune in now for an engaging and thought-provoking conversation!

Key Highlights Include:

·      Inaccurate Self-Prediction in Organizations

·      Collective Identity and Ethical Decision Making

·      Challenges of Future Self Concept

·      Importance of Future Self in Decision Making

·      Visualization, Procrastination, and Forgiveness

·      Connection to Future Self and Ethical Behavior

·      Ethical Behavior and Personal Values

 Notable Quotes:

“People who have a stronger sense of connection to their future selves end up doing more of the stuff that they say they want to do, saving more, for instance, reporting higher levels of subjective health.”

“If an organization has a strong collective identity and sees itself almost as a person would over time, then you might imagine if the employee is there and the decision makers there, I buy into that identity, and they feel strongly about where the organization will go in the future, then I could imagine that level of connection will be an important input into these risk decisions, ethical decisions.”

“The essential self. The one that is continuous over time that others see as these moral traits that you’re talking about…I think that relates to the ethics topic of integrity integration and bringing those disparate parts in the resonance.”

“Our future selves evoke similar activity patterns as thoughts about others. In the brain, our future selves look like other people.

Resources

Hal Hershfield

Hal Hershfield at UCLA

Your Future Self

Tom Fox

Instagram

Facebook

YouTube

Twitter

LinkedIn

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Daily Compliance News

Daily Compliance News: June 6, 2023 – The Filthy Ritual Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

  • How to prepare for increased ESG reporting requirements. (WSJ)
  • New great podcast on fraudsters. (Filthy Ritual Podcast)
  • Circuits split on Forum Selection clauses for shareholder actions. (Reuters)
  • The Pope warns of corruption risk in missionary fundraising. (AP)
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Data Driven Compliance

Data Driven Compliance: Mollie Nichols on Law and Data

Are you struggling to keep up with the ever-changing compliance programs in your business? Look no further than the award-winning Data Driven Compliance podcast, hosted by Tom Fox, featuring an in-depth conversation around the uses of data and data analytics in compliance programs.

In this episode, Tom welcomes the Co-Founder, CEO of Redgrave Data, Mollie Nichols, for an insightful discussion on the importance of data in legal matters and the use of AI in legal representation. Mollie shares her extensive experience in digital evidence, e-discovery, privacy, and client data and her time as an assistant US attorney in Texas. Redgrave Data’s clients are mainly tech companies facing complex big data legal issues and specialize in providing high-quality services. Mollie discusses how Redgrave Data automates data processes for clients, saving them thousands of dollars a day. They also examine the importance of data governance in corporate governance and analytics tools’ critical role, particularly in the legal industry. To learn more about Redgrave Data’s services, head to their website. Don’t miss this engaging and informative episode of Data Driven Compliance.

Key Highlights

· Preserving Data Compliance

· The Power of Technology in Law

· Data visualizations for legal strategy development

· Redgrave’s Data Governance Services and ESG

· The Importance of Data and Corporate Governance

· Data Governance and Analytics in the Cloud

 KEY QUOTES

“It’s really important to understand what data is in play, what data is relevant to a particular matter so that you can take reasonable steps to preserve it.”

“Most of our clients at this point are tech companies that expect from their legal representation that their lawyers will be dealing with their issues using the same type of technology that they would expect to use in their business.”

“I had a team of developers that would quickly put together some sort of utility… And we had tools that we built that we saved clients millions of dollars in a very short fashion.”

“It’s taking that type of information and being able to present it meaningfully. But we do that through using these tools.”

Resources:

Mollie Nichols on LinkedIn 

Redgrave Data

 Tom Fox 

Connect with me on the following sites:

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – Legal Requirements of the Board Regarding Compliance

As to the specific role of best practices in general compliance and ethics, one can look to Delaware corporate law for guidance. The case of In Re Caremark International Inc., 698 A.2d 959 (Del. S. Ct. 1996) was the first case to hold that a Board’s obligation “includes a duty to attempt in good faith to assure that a corporate information and reporting system, which the board concludes is adequate, exists, and that failure to do so under some circumstances may, in theory at least, render a director liable for losses caused by non-compliance with applicable legal standards.”

In the case of Stone v. Ritter, the Supreme Court of Delaware expanded on the Caremark decision by establishing two important principles. First, the Court held that the Caremark standard is the appropriate standard for director duties concerning corporate compliance issues. Second, the Court found that no duty of good faith forms a basis for director liability, independent of the duties of care and loyalty. Rather, Stone v. Ritter 911 A.2d 362 (‎Del. S. Ct. 2006) holds that the question of director liability turns on whether there is a “sustained or systematic failure of the board to exercise oversight—such as an utter failure to attempt to assure a reasonable information and reporting system exists.”

The Board has the role of monitoring the performance of the compliance function, including monitoring the performance of it using standard economic metrics and overseeing compliance with applicable laws and regulations. While the Board is not responsible for auditing or ferreting out compliance problems, it is responsible for determining that the company has an appropriate system of internal controls. The Board should also monitor company policies and practices that address compliance and matters affecting the public perception and reputation of the company. Every company should ensure that it conducts appropriate compliance training for employees and conducts regular compliance assessments. Finally, the Board must take appropriate action if and when it becomes aware of a material problem it believes management is not properly handling. The Delaware Supreme Court has expanded this obligation in the cases of Marchand v. Barnhill (the “Blue Bell” case),  Clovis Oncology, Hughes, and Boeing.

From the Delaware cases, a Board must have a corporate compliance program in place and actively oversee that function. Further, if a company’s business plan includes a high-risk proposition, additional oversight should exist. In other words, there is an affirmative duty to ask tough questions. However, there has been a significant expansion of the Board’s Caremark obligation.  Delaware courts will be much more scrutinizing of Caremark claims going forward. The evolution of decisions from Marchand to Boeing shows that a company must have robust compliance and risk management oversight but, more importantly, engage in oversight for the company’s signature risk(s). Boards must do so aggressively, not passively.

As Mike Volkov has noted, “At the bottom, the Chancery Court is raising the stakes on board member accountability.”

 Three key takeaways:

  1. The Delaware courts have led the way with the Caremark and Stone v. Ritter decisions.
  2. Boards must have compliance expertise and exercise it.
  3. In a series of recent decisions, the Delaware courts are expanding the Caremark obligations, most recently.

For more information check out The Compliance Handbook, 3rd edition, available from LexisNexis here.

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Principled Podcast

Principled Podcast – S9 E16 – What Does Responsible AI and Machine Learning Look Like for Business Leaders?

What you’ll learn on this podcast episode

Generative AI is on the agenda of almost every company right now. Business leaders are grappling with how to use it in products, services, and in workflows. Managers and their teams are wondering if artificial intelligence is coming for their jobs. Regulators are trying to wrap their arms around it as its potential for misuse is high. If you’re concerned about corporate ethics, culture, and compliance, what is your role in the responsible development and deployment of AI-oriented business initiatives? On the Principled Podcast, host Jen Üner talks about responsible AI with Dr. Seth Dobrin, Ph.D. and President of the Responsible AI Institute. Listen in as the two unpack what “responsible AI” means and how business leaders can move forward in this rapidly changing landscape that is sure as monumental a shift as the invention of the Internet. 

 Guest: Seth Dobrin, Ph.D.

Seth Dobrin – Grayscale

Dr. Seth Dobrin is a leading expert in artificial intelligence (AI) and its application to business. He is the president of the Responsible AI Institute. Previously, he was IBM’s global chief AI officer, where he led the company’s AI strategy. He has also held senior positions at other Fortune 500 companies where he used data and AI to create billions of dollars of top and bottom-line value.

Dr. Dobrin is a sought-after speaker and advisor on AI. He has been featured in major publications such as The Wall Street Journal, Forbes, The New York Times, and major broadcast networks such as the BBC, PBS, and NPR. He has also spoken at numerous conferences and events around the world head-lining top-tier events such as IAA Global 2022, AI Week Rmini, TNW Conference 2022, Reuters Momentum 2023, AIMed Global 2023, Total Retail Tech 2023, and many others.

Dr. Dobrin is a passionate advocate for the responsible use of AI. He believes that AI has the potential to solve some of the world’s most pressing problems, but that it is essential to ensure that AI is used in a way that benefits all of humanity.  Dr. Dobrin holds a Ph.D. Molecular and Statistical Genetics from Arizona State University. 

Here are some of his most notable achievements: 

  • DataIQ 100 USA 2024 
  • Corinium’s Top 100 Leaders in Data & Analytics 2022. 
  • AI Innovator of the Year by AIconics in 2021. 
  • “100 Most Influential People in AI” by Onalytica. 
  • “100 Most Influential People in Big Data” by DataQuest. 
  • “Top 50 AI Influencers” by Analytics India Magazine. 
  • “Top 100 AI Thought Leaders” by AI Business Review. 
  • “Top 100 AI Influencers in Europe” by Datanami. 

Dr. Dobrin is a visionary leader who is shaping the future of AI. He is a passionate advocate for the responsible use of AI, and he is committed to using AI to solve some of the world’s most pressing problems. Dr. Dobrin is a true pioneer in the field of AI. He is using his expertise and passion to make a positive impact on the world. 

Host: Jen Üner

Episode_Card_Jen_Uner_2

Jen Üner is the Strategic Communications Director for LRN, where she captains programs for both internal and external audiences. She has an insatiable curiosity and an overdeveloped sense of right and wrong which she challenges each day through her study of ethics, compliance, and the value of values-based behavior in corporate governance. Prior to joining LRN, Jen led marketing communications for innovative technology companies operating in Europe and the US, and for media and marketplaces in California. She has won recognition for her work in brand development and experiential design, earned placements in leading news publications, and hosted a closing bell ceremony of the NASDAQ in honor of the California fashion industry as a founder of the LA Fashion Awards. Jen holds a B.A. degree from Claremont McKenna College.