In today’s edition of Daily Compliance News:
· Airbnb settles Cuba trade sanction case. (WSJ)
· Danske Bank builds out its compliance function. (WSJ)
· How much does outdated data protection cost a business? (Reuters)
· Why perform DD pre-acquisition. (Reuters)
Author: admin
Dan Zitting, CEO of Galvanize (now Diligent), is back on this week’s episode of the ESG Report. He and Tom Fox check in about the progress of his company’s M&A with Diligent, reporting on ESG to the board, and ESG trends for 2022.
Becoming Diligent
Dan tells Tom how Galvanize’s M&A with Diligent is progressing. “We’ve had a big year,” he says. Galvanize being part of Diligent means that they can now bring a truly integrated GRC solution from the board to the front line. “We are working really hard on technology capability that brings what GRC professionals do directly into the boardroom,” Dan remarks. “…We’re creating the ability to say, ‘Hey, alongside that board book sits information dashboards and information and analytics about how other areas of governance and risk and compliance in the front line are working’.” Real-time reporting on ESG will help the board engage in governance more proactively, he comments.
Tom asks how the acquisition strengthens Galvanize. We have the opportunity to elevate our work all the way to the boardroom, Dan responds. Also, Diligent’s global scale means that Galvanize now has access to more resources and a bigger client market.
The Proactive Approach
What are some of the key changes you’ve seen in the GRC space, Tom asks Dan. 2021 has accelerated progress toward an integrated risk management approach, he replies. Global pressure to take ESG seriously has also spurred this on. Both Tom and Dan agree that companies need to be nimble enough to pivot in anticipation of rapid change. “Traditional approaches just don’t work,” Dan points out. “If the way we’re going to evaluate these events is by auditing past history or looking at how we complied with controls in the past, it’s just not good enough anymore.” The better, more proactive approach to risk management involves using leading indicators rather than historical auditing activity. He describes how an automated GRC platform can help companies achieve this goal. We encourage our clients to think about creating structures and systems rather than just focusing on the software as the solution, he tells Tom.
Reporting to the Board and ESG Trends
“Particularly on ESG topics, the board is looking for the answers to simple questions,” Dan advises. Keep your report to just 5 points and their relevant benchmarks. Currently, two hot topics boards want to know about are carbon emissions and gender diversity. Dan believes the conversation will expand to other issues in the coming years, and that we’ll see ESG becoming more important throughout the organization. “I think a lot of organizations are going to be setting up a sustainability function that will ultimately have responsibility for doing that kind of accounting. We should be concentrating on that and then in turn connecting it to standards and compliance programs which is exactly what we know how to do as GRC professionals,” he remarks.
Dan shares his view on ESG trends for 2022 and beyond. The rapidly increasing pay rate for GRC professionals is a sign of how important and necessary this role has become. Boards and audit committees are also asking more questions and looking for guidance on ESG. That’s a good indication of what’s to come, Dan says.
Resources
Dan Zitting on LinkedIn | Twitter
Diligent Institute
In this episode of the FCPA Compliance Report, I am joined by Professor Karen Woody. We discuss the recent SEC enforcement actions involving JPMorgan and Nikola which were announced in December 2021. Highlights of this podcast include:
- Background on both cases.
- Why was the SEC so excised with JPMorgan?
- What are the broader lessons for the Compliance Professional?
- Compliance Consultant or Monitor or both?
- Nikola and the trouble with SPACs?
- What is the intersection of puffing, faking it til you make it and illegal conduct?
- SPACs and Due Diligence.
- Could Nikola change the SEC approach to SPACs?
- From visionary to founder to CEO of a public company?
- The shadow of Elizabeth Holmes?
Resources-Tom on the FCPA Compliance and Ethics Blog
JPMorgan
Nikola
Welcome to a special podcast series on the Compliance Podcast Network, 31 Days to a More Effective Compliance Program. Over these 31 days series in January 2021, I will post a key part a best practices compliance program each day. By the end of January, you will have enough information to create, design or enhancement a compliance program. Each podcast will be short, at 6-8 minutes with three key takeaways that you can implement at little or no cost to help update your compliance program. I hope you will plan to join each day in January for this exploration of best practices in compliance.
2021 was a very significant year for every compliance practitioner and compliance program. While there was a paucity of corporate FCPA enforcement actions, the three enforcement actions were significant with multiple lessons for the compliance professional. In Deutsche Bank, we learned about the costs of a corrupt culture and recidivism, in Amec Foster Wheeler, we saw happens to a company which pays bribes and then tries back out; the criminals they are dealing with have them in an untenable position that they must continue to pay the bribes and how catastrophic failure in pre- and post-acquisition due diligence can lead to massive FCPA violations. Finally, in WPP, we saw how accepted business incentives can become perverse, what happens when you ignore whistleblowers. However, there were two major policy announcements from the Biden Administration which every compliance professional needs to not simply be aware of but study and implement solutions based upon these announcements.
In late October, Deputy Attorney General Lisa O. Monaco gave a Keynote Address at ABA’s 36th National Institute on White Collar Crime (Monaco Speech). The key changes announced in the Monaco Speech were as follows: (1) “today I am directing the department to restore prior guidance making clear that to be eligible for any cooperation credit, companies must provide the department with all non-privileged information about individuals involved in or responsible for the misconduct at issue. To be clear, a company must identify all individuals involved in the misconduct, regardless of their position, status or seniority.” This portends a return to the strictures of the Yates Memo. (2) “The second change I am announcing today deals with the issue of a company’s prior misconduct and how that affects our decisions about the appropriate corporate resolution. (3) The final change I am announcing today deals with the use of corporate monitors.” This final change is a rejection of the strictures laid out in the Benczkowski Memo regarding the DOJ use of corporate monitorships.
In November, the Biden Administration released the United States Strategy on Countering Corruption (the “Strategy”); subtitled “Pursuant To The National Security Study Memorandum On Establishing The Fight Against Corruption as a Core United States National Security Interest”; in response to President Biden’s prior declaration of corruption as a national security issue of the United States. While obviously focused on the US government’s role in leading the fight against corruption, the entire document portends a major sea change in the approach of fighting bribery and corruption, literally on a worldwide basis. For this reason alone, it should be studied by all compliance professionals. Obviously, this more holistic approach is most welcomed. Corruption does more than simply steal money from the world economy.
Three key takeaways:
- The Biden Administration released its Strategy on Countering Corruption.
- Deputy Attorney General Lisa Monaco gave a speech refocusing the DOJ’s efforts on FCPA and other white-collar crime.
- Even with a paucity of FCPA enforcement actions, there were multiple lessons for the compliance professional.
Staats Smith was a judicial intern with the Delaware Chancery Court this past summer, and plans to work with one of the large Delaware firms during the next. He is a 2L student at Washington and Lee. In this episode of Classroom Insiders, Staats talks about the pivotal case of Dirks v. SEC.
Chiarella was an employee for a financial printing publication, which was used by the company to disclose their material nonpublic information. To avoid premature disclosure, the company developed a code to prevent its employees from trading on the information before it went public. However, Chiarella was able to crack the code, and made hefty profits on his trades as he was always leading it before the news broke. He was convicted for violating the disclose-or-abstain rule by the District Court, which was affirmed by the Second Circuit. Justice Powell decided to reverse the conviction; it was in his view that Chiarella owed no duty to the sellers or shareholders, as he was not an insider or a fiduciary.
Any fiduciary relationship Chiarella had with his employer was not considered due to the application of a judicial waiver, Staats claims; an argument not briefed or argued is deemed waived. The theory of misappropriation was not brought up at all in the District Court, so it could not even be considered on review.
Resources
Karen Woody on LinkedIn
With Jay on a holiday assignment, Tom is joined by Mike Volkov to look at some of the week’s top compliance and ethics stories this week in the Tribute to Madden and Harry edition.
Stories
1. We lost two greats this week, one in sports and gaming and one from politics. John Madden and Harry Reid. Tom and Mike reflect.
2. No poaching in the Defense Industry. Jay DeVecchio and Lisa Phelan in a MoFo Client Alert.
3. What is a ‘Bump Up’ provision in an E&O policy. Barry Buchman and Michael Scanlon in D&O Diary.
4. Reflections on 2021 in Compliance. Lisa Schor Babin in CCI.
5. Should lawyers file SARs? Jason Morris in Compliance Week (sub req’d).
6. Fraud in the taxi business? (This is my shocked face.) Matt Kelly in Radical Compliance.
7. Making ESG 2nd nature in asset allocation. Sara Rosner and Jess Gaspar in Harvard Law School Forum on Corporate Governance.
8. An app for ESG investment. Lawrence Heim in PracticalESG.
9. Thoughts for the Board from 2021. Marty Lipton in Harvard Law School Forum on Corporate Governance.
10. Tom and Mike look back at 2021 in compliance. Tom in FCPA Compliance and Ethics Blog.
Podcasts
11. Want some fun? Join Tom and One Stone Creative co-founder Megan Dougherty for an exploration of the full MCU. In their most recent posting, check out Episode 3, Iron Man.
12. In December on The Compliance Life, I visit with Matt Silverman, Director of Trade Compliance at VIAVI. Matt is the first Trade Compliance Director I have hosted on TCL. In Part 1, Matt details his academic career and early professional life. In Part 2, Matt moves into trade compliance. In Part 3, Matt moves into the Director’s chair. In Episode 4, Matt looks down the road for trade compliance.
13. The Compliance Podcast Network welcomes Professor Karen Woody and her new podcast, Classroom Insider. In this most unique pod, Karen interviews some of her student to tell the history of insider trading. Check out Episode 1 where they discuss the history of insider trading. In Episode 2, the disclosure or abstain rule. On Episode 3, they will take up narrowing the scope of the disclose or abstain rule.
14. On EMBARGOED!, Brian and Tim run through a Lightning Round-style discussion of the top economic sanctions and export controls stories of 2021.
15. Looking to enhance your compliance program? Check out 31 Days to a More Effective Compliance Program returns, which runs for the month of January, from January 1 to January 31. Available on the Compliance Podcast Network, Megaphone, iTunes, and all other top podcast platforms.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Mike Volkov is the founder of the Volkov Law Group and can be reached at mvolkov@volkovlaw.com.
I have always striven to provide my readers and listeners with the most up-to-date information on what goes into a best practices compliance program. To that end, beginning January 1, and for the next 31 days, I will be exploring the best way to more fully operationalize a compliance program using these resources. The podcast series will provide the compliance practitioner with a thorough grounding in the key aspects of a best practices compliance program based on the latest information from the regulators. Each day I will highlight a new topic based upon the information we learned on compliance programs in 2021. If you are starting out to design, create and implement a best practices compliance program, this series will give you the basics. If you are looking for the most current thinking on how to enhance your compliance program, this series will also benefit you as well.
I hope you will join me as we engage in 31 days to a more effective compliance program. It will be available on the FCPA Compliance Report, iTunes, YouTube and JDSupra.
Categories
MCU Series – Iron Man
In this podcast series, two complete MCU fans, Tom Fox, founder of the Compliance Podcast Network and Megan Dougherty, co-founder of One Stone Creative indulge in passion for all things in the Marvel Cinematic Universe by re-watching each movie and then podcasting on every movie in the MCU. If you want to indulge in your love for the MCU with two fans who are passionate about all things MCU, this is the podcast series for you. For this offering, we consider the Iron Man.
Some of the highlights include:
Ø The story synopsis.
Ø What are the key plot points?
Ø What were some of our favorite cookies?
Ø How does this movie fit into the overall MCU?
Ø How is this movie an homage to prior non-MCU movies?
Next up in our series Iron Man 2.
Categories
Year End Review, Part 2
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. On Tuesday, Matt and Tom began a special two-part year-end review of six topics which they saw as significant in 2021 and believe will be so into 2022 as well. They looked at SPACs, the Robinhood/GameStop phenomena and the new hybrid working environment and what is means for the compliance professional. Today in Part 2 we consider the Biden Administration’s Strategy on Countering Corruption, in conjunction with DAG Lisa Monaco’s speech on the refocus of the Department of Justice on FCPA enforcement and other white collar prosecutions, the continuing evolution of ransomware attacks and ESG in 2021 and beyond.
Resources
Matt in Radical Compliance
Tom in the FCPA Compliance and Ethics Blog