Tag: compliance

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Daily Compliance News

Daily Compliance News: August 1, 2023 – The Accident Waiting to Happen Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance brings to you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen in 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.

  • Binance founder draws scrutiny from German regulator. (WSJ)
  • Lead FBI agent talks about Householder case. (Columbus Dispatch)
  • US asks SCt to delay Purdue Pharma settlement. (Reuters)
  • eBike for adult or motorcycle for kids: disaster in the offing. (NYT)
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FCPA Compliance Report

FCPA Compliance Report – Peter Grossman and Duane Stumpf on Crafting Impactful Compliance Campaigns

Welcome to the award-winning FCPA Compliance Report, the longest-running podcast in compliance. In this episode, Tom welcomes Peter Grossman, Co-Founder, Chief Strategist at Labyrinth Training, and Duane Stumpf, Global Head of Integrity and Compliance at Alcon.

Starting with a 70s-style rock and roll music number, Alcon Vision’s interactive, animated compliance training program, developed in conjunction with Labyrinth Training, has been recognized with high praise, receiving an Anthem Award and two Telly Awards. This program was created to make the company’s Lens Policy more memorable and engaging.

This podcast episode focuses on creating impactful campaigns and stresses the need for creativity, mission, and quality work. This episode features Tom Fox, Peter Grossman, and Duane Stumpf discussing how the program’s success effectively delivers important lessons in ways people will remember and enjoy. Through this episode, the trio offers great insight into developing meaningful campaigns that will have a lasting impact.

Key Highlights:

  • The Lens Policy
  • Creating Compliance Storytelling
  • Compliance Training Musical
  • Dr. Louis’ Musical Number
  • Award-Winning Compliance Training
  • Creating Impactful Campaigns

Resources:

Peter Grossman on LinkedIn

Labyrinth Training

Duane Stumpf on LinkedIn

THE LENS

CALL DR LOUIS

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Adventures in Compliance

Adventures in Compliance – Leadership Lessons from the Five Orange Pips

Welcome to a review of all the Sherlock Holmes stories which are collected in the work, “The Adventures of Sherlock Holmes.” The appeared in the Strand Magazine from July 1891 to June 1892. Over 12 episodes, I will be reviewing each story and mine them for leadership, compliance and ethical lessons. In this episode, I consider “The Five Orange Pips” which was originally published on the Strand Magazine in November 1891 and is included in the collection of stories found in the book ‘The Adventures of Sherlock Holmes’.

Summary

The story begins when a young man named John Openshaw seeks Holmes’ help. John has received a mysterious letter from abroad containing five dried orange pips and the initials “K.K.K.”, along with a demand to “put the papers on the sundial”. Both his uncle, Elias, who lived in America for several years, and his father had previously received similar letters and subsequently died under suspicious circumstances.

Sherlock deduces that K.K.K. represents the Ku Klux Klan, a racist group from the United States, and the five orange pips are a death threat, previously sent to John’s relatives who had disobeyed the order to surrender certain papers. Elias Openshaw, John’s uncle, had made enemies during his time in the US due to his involvement with the group, and the papers likely hold some dangerous information about them.

Holmes advises John to return home, find the papers, and turn them over. Unfortunately, before this could happen, John is found dead, apparently drowned after falling into a small river.

Holmes sends a reply to the Klan’s address in America, mimicking their style by including five orange pips in the envelope. He suspects that the people responsible for John’s death were on a sailing ship called the Lone Star. While Holmes is unable to bring the criminals to justice directly, the Lone Star is reported to have been lost at sea in a storm, implying a form of poetic justice.

This story ends on a somber note, as it is one of the few cases that Holmes is unable to solve in time to prevent a tragic death. 

Leadership Lessons 

1.         Be proactive: Holmes was proactive in investigating the case of the five orange pips, even when there was limited information available. Leaders should also be proactive and take the initiative to solve problems and achieve their goals.

2.         Persevere: Holmes persevered in his investigation of the case, even when the trail seemed to have gone cold. Leaders should also persevere and not give up in the face of challenges or obstacles.

3.         Stay focused: Holmes stayed focused on his investigation and did not let distractions or other cases interfere with his work. Leaders should also stay focused on their goals and avoid being sidetracked by distractions.

4.         Use creative thinking: Holmes used his creative thinking and innovative approaches to solve the case of the five orange pips. Leaders should also encourage and embrace creative thinking, as it can lead to new solutions and breakthroughs.

5.         Be vigilant: Holmes was vigilant and kept a watchful eye for any clues or developments in the case of the five orange pips. Leaders should also be vigilant and keep a watchful eye for any opportunities or threats that may impact their organization.

Resources

The New Annotated Sherlock Holmes

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31 Days to More Effective Compliance Programs

One Month to More Effective Reporting and Investigations – The Parameters of Privileges

The concept of privilege in an internal investigation is critical. Two important privileges are the attorney-client privilege and the work product privilege. Unfortunately, both are often misunderstood, miss-applied and consequently lost. To determine whether you have a valid privilege claim, it is incumbent to understand the parameters of the attorney-client privilege. In presentation, entitled “Attorney-Client Privilege ”, David E. Keltner, Kelly Hart & Hallman LLP, Elizabeth Brummett and Adrienne Parham, both from University of Texas Law School, wrote that under U.S. federal law, the attorney-client privilege applies when the following are present:

  1.  A client is seeking legal advice or a lawyer’s services;
  2. The person to whom the communication is made is a lawyer or his or her representative;
  3. The communication relates to a fact disclosed from a client (a representative) to a lawyer (a representative);
  4. Strangers are not present;
  5. A client requires confidentiality.

In addition to the attorney-client privilege there is another privilege which can come into play around internal investigations. It is the attorney work-product doctrine. Keltner noted, “The attorney-client privilege and the attorney work-product doctrine are often asserted interchangeably. While there is some overlap between the two, the attorney-client privilege is significantly different than the attorney work-product doctrine.” Moreover as “codified in Fed R.Civ. P. 26(b)(3), [the attorney/work product] provides a qualified protection to materials prepared by party’s counsel or other representative in the anticipation of litigation.” The doctrine exists “because it permits lawyers to “work with a certain degree of privacy, free from unnecessary intrusion by opposing parties . . .””

Three key takeaways:

  1. Note the differences in the attorney-client privilege and attorney work-product doctrine.
  2. Both can be waived intentionally or through inadvertent conduct.
  3. Take care on attorney work-product outside the U.S., where there may be no privilege at all.
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10 For 10

10 For 10: Top Compliance Stories For the Week Ending July 29, 2023

Welcome to 10 For 10, the podcast which 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.

  • Zelensky warns about corruption. (FT)
  • Ukraine tackles corruption. (EuroNews)
  • New cyber disclosure rules go into effect. (AP)
  • Najib deposed in 1MDB case. (Bloomberg)
  • Cognizant investigation not outsourced. (WSJ)
  • DWS closes in on settling greenwashing charges. (FT)
  • Prosecutors want SBF jailed pre-trial. (WSJ)
  • DOJ revamps Crypto enforcement team. (WSJ)
  • Altice co-founder denies corruption. (Reuters)
  • US consultancies struggle in China after raids. (FT)

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

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31 Days to More Effective Compliance Programs

One Month to More Effective Reporting and Investigations – Miranda Warnings for Employees?

Must an investigator warn an employee that concealing information from company lawyers conducting an internal FCPA investigation could be a federal crime? Even if the company attorneys provided the now standard corporate attorney Upjohn warning? Does a company attorney asking questions morph into a de facto federal agent during an internal company investigation regarding alleged FCPA violations and is the attorney thereby required to provide a Miranda warning to employees during said investigation?

Employees who are subject to being interviewed or otherwise required to cooperate in an internal investigation may find themselves on the sharp horns of a dilemma requiring either (1) cooperating with the internal investigation or (2) losing their jobs for failure to cooperate by providing documents, testimony or other evidence. Many U.S. businesses mandate full employee cooperation with internal investigations or those handled by outside counsel on behalf of a corporation. These requirements can exert a coercive force, “often inducing employees to act contrary to their personal legal interests in favor of candidly disclosing wrongdoing to corporate counsel.” Moreover, such a corporate policy may permit a company to claim to the government a spirit of cooperation in the hopes of avoiding prosecution in addition to increasing the chances of earning meaningful credit under the U.S. Sentencing Guidelines or the FCPA Corporate Enforcement Policy.

Three key takeaways:

  1. Make sure you provide an Upjohn warning.
  2. If an employee demands counsel to represent them during an internal investigation, who bears the cost?
  3. Always check state law requirements around internal investigations.
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31 Days to More Effective Compliance Programs Uncategorized

One Month to More Effective Reporting and Investigations – Board Investigations

In their article, “Successful Board Investigations”, David Bayless and Tammy Albarrán, offered seven considerations to facilitate a successful Board investigation.

  • Consider whether you need independent outside counsel.
  • Consider hiring an experienced investigator to lead the internal investigation.
  • Consider the need to retain outside experts.
  • Analyze potential conflicts of interest at the outset and during the investigation.
  • Carefully evaluate whistleblower allegations.
  • Request regular updates from outside counsel, without limiting the investigation.
  • Consider whether an oral report at the conclusion of the investigation is sufficient.

The authors conclude their piece by stating, “By keeping in mind the issues addressed above, the Board will be better prepared for the investigation and readily able to exercise good judgment throughout the review. A well-conducted investigation by the Board may spare the company further disruption and costs associated with follow-on investigations by the regulators, or at the very least minimize the company’s exposure.”

Three key takeaways:

  1. Retain the right counsel. Consider conflicts and appearance.
  2. Carefully evaluate all whistleblower allegations and reject retaliation.
  3. Consider receiving oral reports on an ongoing basis and one lengthy oral report at the end of the investigation.
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31 Days to More Effective Compliance Programs

One Month to More Effective Reporting and Investigations – Board Investigation Protocols

Many companies have an investigation protocol in place when a potential compliance violation or other legal issue arises. However, many Boards of Directors do not have the same rigor when it comes to an investigation, which should be conducted or led by the Board itself. The consequences of this lack of foresight can be problematic, because if a Board does handle an investigation right, the consequences to the company, its reputation and value can be quite severe. The SEC considers a variety of factors around corporate investigations including: Did management, the board or committees consisting solely of outside directors oversee the review? Did company employees or outside persons perform the review? If outside persons, have they done other work for the company?

Dan Chapman has said this is the time for a very frank conversation with your Board about what such an investigation will entail. Costs must be adequately discussed to set proper expectations. These include both direct costs and, what Chapman believes may be even more important, a discussion of indirect costs to the company. He noted, “the biggest cost to a company during an investigation is the diversion of management resources” and, as he further explained, “everything stops to focus on the investigation.” This indirect cost comes through largely the time commitment of senior management. He further explained, “if senior management has to commit 20% of their time to the investigation, that’s 20% that’s not going towards revenue generating, shareholder value protecting activities.”

Finally, Jonathan Marks has noted after notification of serious allegations, Boards should take the following steps:

• Consider creating a Special Committee to conduct the investigation;

• Establish a committee charter;

• Preserve the electronic and hardcopy documentation environment;

• Communicate with external auditors; and

• Plan potential communication with the SEC, DOJ, and the relevant stock exchange.

Marks also notes that while a special committee might be necessary in certain rare circumstances, the Board should try to avoid forming a special investigative committee to oversee the investigation if the Audit Committee is composed of independent and disinterested directors that are suited for the task. A special committee must be disbanded at some point (usually once the investigation is completed and before the restatement process begins), and the disbanding could become a complicated news item. Conversely, if the Audit Committee oversees the investigation, then, once the investigation is complete, they can pivot back to their normal role, which would include overseeing the actual restatement process. Investigations overseen by the Audit Committee also benefit from the positive relationship that the committee chair usually has with the audit partner of the company’s external auditor.

 Three key takeaways:

1. The Board should have a written protocol for investigations prepared in advance.

2. Any Board led investigation must be both credible and objective.

3. The investigation must be thorough but the Board can be cost effective.

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Daily Compliance News

Daily Compliance News: July 25, 2023 – The Ted Cruz Be Damned Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance brings to you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen in 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.

  • Chinese fight seed corruption. (WSJ)
  • UM Law bans using ChatGPT in applications. (Reuters)
  • Another ex-con embraces compliance. (WSJ)
  • Barbie No. 1 movie for the weekend. (NYT)
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31 Days to More Effective Compliance Programs

One Month to Better Reporting and Investigations – How an Investigation Informs Remediation

There is nothing like an internal whistleblower report about a FCPA violation, the finding of such an issue or (even worse) a subpoena from the DOJ to trigger the Board of Directors and senior management attention to the compliance function and the company’s compliance program. Such an event can trigger much gnashing of teeth and expressions of outrage followed immediately by proclamations “We are an ethical company.” However, it may well be the time for a very serious reality check.
In addition to robust investigation, a company must engage in remediation of the offending conduct. The 2020 Update to the Evaluation of Corporate Compliance Programs mandated the additional significance of this by providing that this process must be considered “both at the time of the offense and at the time of the charging decision and resolution”. When you consider the strictures around continuous monitoring and continuous improvement in compliance programs it is clear why this analysis is so important. Obviously, a key test of any compliance program is when a deficiency is found and a violation occurs. The question then becomes, what did you do about it.
But from the DOJ (and Securities and Exchange Commission) perspective, the key is to use the information to both fix the problem so that it does not occur again but also improve your compliance regime.

Three key takeaways:

  1. How does your investigation inform your remediation plan?
  2. A compliance program failure offers a way to upgrade your regime.
  3. Your investigative team must inform your remediation team.