Categories
FCPA Compliance Report

FCPA Compliance Report – Albemarle FCPA Enforcement Action – Overview

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. Today, we begin a short podcast series on the Albemarle FCPA enforcement action. Today, we open with Matt Kelly, providing an overview.

The intriguing case of Albemarle, a chemicals company embroiled in a bribery scheme, is a stark reminder of the importance of compliance and timely remediation measures. Albemarle faced hefty fines and penalties, totaling over $218 million, for using intermediaries to sell chemicals to state-owned oil companies and funnel bribes to government officials. However, the company’s swift action in withholding bonuses during their internal investigation and implementing remedial measures, such as eliminating sales agents and adopting a direct sales approach, was recognized and credited.

We underscore the significance of Albemarle’s transformation of its business model as a positive remediation measure that effectively reduces corruption risk. We also emphasize the importance of timely self-disclosure and the benefits of initiating remediation measures before an investigation is complete. The fines and penalties imposed on Albemarle are among the largest FCPA settlements in 2023. Join us in this FCPA Compliance Report podcast episode as we dive deeply into the regulatory outcome, remediation efforts, and compliance lessons from Albemarle’s case.

Key Highlights:

  • Bribery Scheme with “Friend” Emails
  • Identifying and Addressing Control Gaps for Ethical Business Practices
  • FCPA Settlement and Corruption Risk Reduction

Resources:

Tom Fox blog post series on the Albemarle FCPA Enforcement Action.

Tom Fox

Threads

Instagram

Facebook

YouTube

Twitter

LinkedIn

Categories
All Things Investigations

All Things Investigations: Episode 38 – CCO Certification – A Better Approach with Kevin Abikoff

In this episode of All Things Investigation, Tom Fox and guest Kevin Abikoff discuss the Department of Justice’s introduction of a CCO certification in the wake of FCPA violations. Kevin offers his unique perspective on this issue; their conversation also explores broader issues of corporate governance and the role of the Board of Directors.

Kevin Abikoff is a Partner and Deputy Chair at Hughes Hubbard & Reed. He is a recognized authority in corporate governance and compliance. 

You’ll hear Tom and Kevin discuss:

  • Kevin questions the necessity of the CCO certification, suggesting it addresses a problem that doesn’t exist, given the absence of complaints from the Department of Justice about dishonesty during monitorships.
  • A more practical approach, Kevin posits, is a certification 12 to 24 months after a monitorship ends to empower CCOs during periods of vulnerability truly.
  • Measuring compliance effectiveness is subjective and may be void of vagueness in a legal context.
  • In the broader realm of corporate governance, the board has a pivotal role in overseeing compliance. Parallels to the Caremark duty and Delaware law are drawn.
  • Kevin raises concerns about the burden on CCOs to assess program effectiveness retrospectively, especially considering the dynamic nature of compliance programs over time.
  • Boards should take responsibility for compliance certifications and should sign off on these certifications, mirroring similar practices in financial reporting.
  • Innovation within compliance may be stymied if CCOs fear that enhancing a program might be used against them in the future, Kevin points out.

KEY QUOTES:

“I’ve just never heard, especially from the context of Chief Compliance Officer, that the DOJ feels like they’re being lied to. If that’s not the problem they’re trying to solve, I think the solution they have paved is, again, a solution in search of a problem that doesn’t exist…” – Kevin Abikoff

“If you’re going to have a certification and you want to empower the chief compliance officer, have the certification twelve months, 24 months after the conclusion of the monitorship and have the CCO certify that they continue to believe that the policies, procedures, things that have been put in place, continue to be in place.” – Kevin Abikoff

“Now what you fail to investigate can kill you.” – Kevin Abikoff

Resources:

Hughes Hubbard & Reed website 

Kevin Abikoff on LinkedIn

Categories
31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program Through Innovation: Day 11 – Compliance Innovation Through KPIs

Measuring your compliance program’s effectiveness will be a critical criterion going forward. One of the mechanisms to do so is through Key Performance Indicators (KPIs). If you have been working towards your stated goals and reporting success, KPIs are critical in showing compliance program success or failure. And while specific requirements for this kind of reporting have been hotly debated in the industry for some time, KPIs are a regulatory requirement. Your KPIs will be specific and unique to your company and its business. Couple this with what goals you are trying to achieve as a whole as a compliance program, and you will see there is no set list of these metrics.

KPIs provide yet another mechanism for you to monitor and update your compliance program almost continuously. KPIs can be extremely low in cost and, therefore, something you can put in place without much approval from higher-ups in your organization that you might have to go to for budget approval. Finally, innovation can come in many ways. ComTech can be a huge jump forward. But sometimes innovation can occur at much less cost and a much more granular level. KPIs can be such a mechanism for you.

Three key takeaways:

  1. KPIs will be critical to assess a compliance program going forward.
  2. Set your KPIs.
  3. Decide on how to use KPIs and the blueprint for going forward.

For more information, check out The Compliance Handbook, 4th edition, here.

Categories
Blog

Messaging App Compliance in Regulated Industries: Lessons from Recent Enforcement Actions

In recent years, regulated industries, particularly broker-dealer firms like Wells Fargo and Morgan Stanley, have faced increased scrutiny from regulatory bodies due to their lack of compliance in policing messaging apps. The Securities and Exchange Commission (SEC) recently announced charges against 10 firms in their capacity as broker-dealers and one dually registered broker-dealer and investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications. The firms admitted the facts outlined in their respective SEC orders. These firms collectively “agreed to pay combined penalties of $289 million and have begun implementing improvements to their compliance policies and procedures to address these violations.” Additionally, the Commodity Futures Trading Commission (CFTC) ordered four financial institutions to pay $260 million for recordkeeping and supervision failures due to the widespread use of unapproved communication methods.

Even more troubling is the involvement of senior managers in these misconducts, leading the SEC to require an independent compliance consultant in multiple settlements. This highlights the significance of overall corporate culture and the need for stricter compliance measures. Matt Kelly and I recently explored these enforcement actions, the reforms that companies must implement, the role of consultants in reviewing these reforms, and the potential risks and consequences of using messaging apps for business purposes in a Compliance into the Weeds podcast.

Reforms in regulated industries focus on policies and procedures, messaging policies, and employee training. Companies must establish clear messaging policies that outline the acceptable use of communication channels and the importance of recordkeeping obligations. Training employees on these policies and ensuring their understanding is equally vital. Additionally, companies must track training records and allegations of policy violations, making them readily available for review. Next, both ongoing monitoring and continuous improvement must be utilized. Finally, do not forget the need for disciplinary frameworks, with repeat offenders and senior employees potentially facing more severe discipline.

The enforcement crackdown by the SEC and CFTC has already resulted in significant penalties, with fines totaling a staggering $550 million. J.P. Morgan was the first bank to face such a settlement decree, setting a precedent for other banks. This raises speculation about whether the misconduct will continue and if there will be additional enforcement actions. While some large securities firms have yet to be targeted, all regulated industries must take note and proactively address compliance issues.

As noted above, using improper messaging apps for business communication is a significant concern for regulators. Moreover, these violations of securities laws occurred due to employees using ephemeral messaging apps like WhatsApp and Snapchat, which turn off record preservation. Once again, the involvement of supervisory employees and managers in using these apps is even more alarming, further angering the regulators. The SEC’s requirement for an independent compliance consultant in multiple settlements indicates a focus on corporate culture and the need to address senior managers’ involvement.

While these enforcement actions focused on regulated industries, it raises an important question about whether non-regulated industries could also face similar exposure to the SEC. The Justice Department has emphasized taking messaging and communication app risks seriously for all companies. Therefore, even if a company operates outside the purview of specific regulations, it is crucial to consider the potential risks and consequences of using improper messaging apps for business purposes. In a Radical Compliance blog post, Kelly noted, “That is a terrible look for a company. It paints the picture of a management team not interested in good ethical conduct, and we all know how that goes over with the Justice Department when evaluating the state of your compliance program.”

We desired to shed some light on the recent enforcement actions against regulated industries for their lack of compliance in policing messaging apps. The fines and penalties imposed by the SEC and CFTC highlight the seriousness of these violations. Companies must implement reforms, establish robust policies and procedures, and prioritize employee training to ensure compliance. The conversation also underscores the potential risks and consequences of using improper messaging apps for business communication. All companies must prioritize compliance and take proactive measures to address these concerns regardless of industry. By doing so, companies can foster a culture of integrity and avoid the hefty fines and reputational damage associated with non-compliance.

Categories
Sunday Book Review

Sunday Book Review: October 15, 2023 – The Fall of SBF and Crypto Edition

In the Sunday Book Review, Tom Fox considers books that would interest the compliance professional, the business executive, or anyone who might be curious. It could be books about business, compliance, history, leadership, current events, or anything else that might interest Tom. In today’s edition of the Sunday Book Review, Tom considers four books reviewed by Brooke Masters in the FT on the fall of SBF, FTX, and crypto.

  1. Going Infinite: The Rise and Fall of a New Tycoon by Michael Lewis
  2. Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall by Zeke Faux
  3. Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud By Ben McKenzie and Jacob Silverman
  4. Tokens: The Future of Money in the Age of the Platform by Rachel O’Dwyer

 

Resource:

Michael Lewis on how Sam Bankman-Fried and FTX fell by Brooke Masters in the FT.

Categories
10 For 10

10 For 10: Top Compliance Stories For the Week Ending October 14, 2023

Welcome to 10 For 10, the podcast that brings you the week’s Top 10 compliance stories in one podcast each week. Tom Fox, the Voice of Compliance brings to you, the compliance professional, the compliance stories you need to be aware of to end your busy week. Sit back, and in 10 minutes hear about the stories every compliance professional should be aware of from the prior week. Every Saturday, 10 For 10 highlights the most important news, insights, and analysis for the compliance professional, all curated by the Voice of Compliance, Tom Fox. Get your weekly filling of compliance stories with 10 for 10, a podcast produced by the Compliance Podcast Network.

  • Staley was banned from the financial services arena.   (FT)
  • More 1MDB trouble for Goldman.  (Reuters)
  • When your ex testifies in your fraud case. (WaPo)
  • CA law requires companies to report carbon emissions.  (BBC)
  • Belgium to unfreeze frozen Russian assets. (WSJ)
  • SFO brings corruption charges.  (FT)
  • Elon Musk’s legal woes. (Reuters)
  • Crypto is having trouble getting CCOs. (WSJ)
  • Roger Ng heads to Malaysia.   (AP)

You can check out the Daily Compliance News for four curated compliance and ethics-related stories each day, here.

Connect with Tom 

Threads

Instagram

Facebook

YouTube

Twitter

LinkedIn

Categories
Kerrville Weekly News Roundup

Kerrville Weekly News Roundup: October 14, 2023

Welcome to the Kerrville Weekly News Roundup. Each week, veteran podcaster Tom Fox and his colleagues Andrew Gay and Gilbert Paiz get together to go over a couple of their favorite stories from the past week from Kerrville and the greater Hill Country. Sit back, enjoy a cup of morning coffee and listen in to get a wrap up of the Kerrville Weekly News. We each consider two of our favorite stories and talk about the upcoming weekend’s events which will enjoy or participate in this weekend.

In this episode, Tom and Andrew discuss the following stories which caught their attention over the past week.

·      Tom discusses the Lennar Housing project and the removal of Harvey Belew from the Commissioners Court website. He shouts out to the ALCS featuring the Houston Astros and Texas Rangers starting Sunday night in Houston.

·      Andrew discusses the eclipse coming to Kerrville. Andrew shouts out to our visitors and reminds people to be safe and wear the glasses.

Resources

Tom Fox on LinkedIn

Gilbert Paiz on LinkedIn

Andrew Gay on LinkedIn

Texas Hill Country Podcast Network

The Lead

Texas Tribune

Categories
Popcorn and Compliance

Popcorn and Compliance: Monster Movie Month – The Black Cat

Tom Fox is back with his Classic Monster Movie Month, where he reviews a Classic Monster Movie from Universal Pictures from its Classic Monster Movie era of 1931 to 1947. This year, he wants to take a look at some of the lesser-known movies and mine them for both leadership and ethical lessons. He continued his journey of Edgar Allen Poe-themed movies with the 1934 Bela Lugosi and Boris Karloff class The Black Cat.

Classic monster movies have long captivated audiences with their thrilling plots, iconic characters, and spine-chilling moments. However, beyond the scares and special effects, these films often contain deeper themes that explore ethical implications and leadership. In this episode of “Popcorn and Compliance,” Tom Fox focuses on the Universal Pictures classic monster movie “The Black Cat” and the valuable insights it provides into ethical decision-making.

“The Black Cat,” delves into a variety of ethical dilemmas and explores themes such as revenge, respect for others’ beliefs, avoiding harm, empathy, accountability, and the danger of blind obedience. While the film is known for its eerie and gruesome content, it offers a unique perspective on the complexities of ethical decision-making and the consequences of our actions.

One of the key takeaways from “The Black Cat” is the reminder that ethical dilemmas can arise even in the most extreme circumstances. The characters in the film find themselves in horrifying and morally ambiguous situations, highlighting the difficult decisions that leaders may face in real life. Leaders must carefully consider moral principles and navigate complex situations with integrity.

The film also serves as a cautionary tale about the destructive consequences of revenge. The pursuit of revenge by the characters in “The Black Cat” leads to a series of tragic events, emphasizing the importance of letting go of vengeful feelings and seeking peaceful resolutions. This theme reminds us of the potential harm that can come from harboring negative emotions and the need to consider the long-term consequences of our actions.

Respecting the beliefs and cultures of others is another ethical lesson that can be drawn from “The Black Cat.” The film features elements of superstition and the occult, highlighting the importance of open-mindedness and sensitivity to diverse backgrounds and perspectives. This lesson is particularly relevant in today’s globalized world, where leaders must navigate multinational companies and work with teams from different cultures.

Avoiding harm to others is a fundamental ethical principle that is depicted in the film. “The Black Cat” showcases actions that cause harm to innocent people, reminding us of the importance of considering the potential consequences of our actions on individuals and society as a whole. Leaders must prioritize the well-being of others and make decisions that minimize harm.

While empathy may not be a central theme in “The Black Cat,” it is an ethical quality that can be emphasized. Leaders should cultivate empathy for their team members, understanding their needs, concerns, and emotions. This can lead to a more compassionate and ethical leadership approach, fostering a positive work environment and promoting the well-being of employees.

Accountability for one’s actions is another key lesson that can be derived from the film. In “The Black Cat,” the characters face the consequences of their actions, highlighting the importance of taking responsibility for one’s actions and being accountable for the outcomes, even if they are unintended or unfavorable. Ethical behavior requires individuals to own up to their mistakes and learn from them.

Finally, “The Black Cat” warns against the danger of blind obedience to authority figures. The film portrays instances of blind obedience, emphasizing the need for critical thinking and the courage to question authority when necessary, especially when it involves unethical or harmful actions. Ethical decision-making requires individuals to think independently and consider the broader implications of their actions.

While “The Black Cat” may not have been primarily intended to convey ethical lessons, it offers valuable insights into ethical decision-making and leadership. Tom Fox, the host of “Popcorn and Compliance,” encourages viewers to watch the movie and draw their lessons from this classic Universal monster movie.

In conclusion, classic monster movies like “The Black Cat” provide a unique lens through which to explore ethical implications and leadership. By examining the ethical dilemmas, consequences of revenge, respect for others’ beliefs, avoiding harm, empathy, accountability, and the danger of blind obedience depicted in these films, viewers can gain valuable insights into ethical decision-making and leadership. As compliance professionals, it is essential to consider the impact of our actions and make ethical choices that prioritize the well-being of others. So, grab some popcorn, watch “The Black Cat,” and discover the ethical lessons hidden within this classic monster movie.

Categories
2 Gurus Talk Compliance

2 Gurus Talk Compliance – Episode 15 – The I Don’t Like it Edition

What happens when two top compliance commentators get together? They talk compliance, of course. Join Tom Fox and Kristy Grant-Hart in 2 Gurus Talk Compliance as they discuss the latest compliance issues in this week’s episode! In this episode, Tom and Kristy take on a wide variety of topics, including a visit to Florida Women.

The landscape of corporate compliance is ever-evolving, with recent developments posing new challenges and opportunities for businesses. Compliance is a dynamic process that requires constant monitoring and retrospective reviews to identify potential risks and changes. He also emphasizes the importance of involving compliance officers early in the due diligence process of mergers and acquisitions and acknowledges the complexities of managing conflicts of interest in networking and hiring. Tom and Kristy advocate for a proactive approach to compliance, highlighting the importance of regulatory resources such as the New York State Department of Financial Services’ cybersecurity rules. She also stresses the need for clarity and certainty in compliance practices, particularly in areas like mergers and acquisitions and conflicts of interest. Join Tom Fox and Kristy Grant-Hart as they delve deeper into these issues in the latest episode of the 2 Gurus Talk Compliance podcast.

 Highlights Include:

  1. Albemarle FCPA enforcement action. (FCPA Blog)
  2. DAG Monaco on more credit for self-disclosure, this time in M&A. (Radical Compliance)
  3. NYDFS Comments on proposed cyber disclosure amendments. (Compliance and Enforcement Blog)
  4. Michael Lewis and SBF. (The Dig)
  5. Identifying compliance blind spots. (CCI)
  6. Lawmakers Press NBA, Players Union on Forced Labor (WSJ)
  7. Can you tell the difference between acceptable networking and wrongful hiring practices? (FCPA Blog)
  8. Crypto Sector Seeks Lawyers, Compliance Officers After Reputational Hits (WSJ)
  9. Stop Obsessing About Work All the Time (WSJ)
  10. Two women stole bags of food from Florida Taco Bell during armed robbery, deputies say (Fox 25 Orlando)

Resources 

Kristy Grant-Hart on LinkedIn

Spark Consulting

Tom

Threads

Instagram

Facebook

YouTube

Twitter

LinkedIn

Categories
Creativity and Compliance

Creativity and Compliance – Promoting Year-Round Compliance and Ethics Engagement

Where does creativity fit into compliance? In more places than you think. Problem-solving, accountability, communication, and connection – they all take creativity. Join Tom Fox and Ronnie Feldman on Creativity and Compliance, part of the award-winning Compliance Podcast Network.

Ronnie’s company, Learnings, and Entertainment, utilizes the entertainment devices that people use to consume information in their everyday, non-work lives and apply it to important topics around compliance and ethics. It is not only about being funny. It is about changing the tone of your compliance communications and messaging to make your compliance program, policies, and resources more accessible. Today, Ronnie and Tom discuss the philosophy behind Corporate Compliance and Ethics Week and use it as a jumping-off point to discuss compliance year-round.

Promoting corporate ethics is not a one-time event but a year-round commitment that can be made engaging and interesting through creative activities. Tom believes that while Compliance and Ethics Week is a great initiative, the philosophy behind it should be applied throughout the year. He suggests using the momentum built during this week to engage employees in ethical discussions and training through creative methods like interviews, art exhibits, and game shows. Similarly, Ronnie believes that the philosophy behind Compliance Week should be a year-round commitment. He suggests implementing creative initiatives like talk shows and workshops and repurposing fun games to address ethical subjects. Join Tom Fox and Ronnie Feldman as they delve deeper into this topic in this episode of the Creativity and Compliance podcast.

Key Highlights:

  • Promoting Year-Round Compliance and Ethics Engagement
  • Creating Engaging Compliance Apps for Millennials
  • Engaging and Memorable Compliance Activities
  • Exploring Ethics and Integrity Through Art

Resources:

Ronnie

Tom

Threads

Instagram

Facebook

YouTube

Twitter

LinkedIn