Tag: compliance

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Daily Compliance News

Daily Compliance News: June 10, 2023 – The Don’t Want No Stinking 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.

Stories we are following in today’s edition:

  • The corruption in belts and suspenders. (WSJ)
  • Alleged Texas AG bribe payor arrested. (Bloomberg)
  • Short seller as due diligence guru. (FCPA Blog)
  • You don’t need any stinking compliance. (FT)
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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – OIG Guidance for Boards Regarding Compliance

The OIG white paper “Practical Guidance for Health Care Governing Boards on Compliance Oversight” (OIG Guidance), provides an excellent road map for thinking about how to structure a Compliance Committee for your Board and a Board’s obligations. As an introduction, the OIG Guidance states that a Board must act in good faith around its obligations regarding compliance. This means that there must be both a corporation information and reporting system and that such reporting mechanisms provide appropriate information to a Board. It states: The existence of a corporate reporting system is a key compliance program element, which not only keeps the Board informed of the activities of the organization but also enables an organization to evaluate and respond to issues of potentially illegal or otherwise inappropriate activity.

The OIG Guidance sets out four areas of Board oversight and review of a compliance function:

  1. Roles of, and relationships between, the organization’s audit, compliance, and legal departments;
  2. Mechanism and process for issue-reporting within an organization;
  3. Approach to identifying regulatory risk; and
  4. Methods of encouraging enterprise-wide accountability for the achievement of compliance goals and objectives.

The OIG Guidance is an excellent review for not only compliance professionals and others in the healthcare industry but a good primer for Boards around their duties under a best practices compliance program. The U.S. Sentencing Guidelines, the Hallmarks of an Effective Compliance Program, the OIG Guidance, and OIG Corporate Integrity Agreements can be used as baseline assessment tools for Boards and management in determining what specific functions may be necessary to meet the requirements of an effective compliance program.

Three key takeaways:

  1. Information flow up to the Board is critical.
  2. Compliance should be institutionalized in your company as a way of life.
  3. A Board needs to consider all risks.

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

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31 Days to More Effective Compliance Programs

One Month to a More Effective Compliance Program with Boards – Compliance Expertise on the Board

Every Board of Directors needs a true compliance expert sitting at the table. Almost every Board has a former CFO, former head of Internal Audit, or persons with a similar background, and often these are also the Audit Committee members of the Board. Such a background brings a level of sophistication, training, and SME that can help all companies with their financial reporting and other finance-based issues. So why is there, not such compliance SME at the Board level?

This requirement was set out in 2017 in the FCPA Corporate Enforcement Policy, where one of the criteria to be evaluated in a compliance program is “the availability of compliance expertise to the board.” Finally, the 2020 Update to the Evaluation of Corporate Compliance Programs, under the section entitled Oversight, posed the following questions What compliance expertise has been available on the Board of Directors?

The DOJ and Securities and Exchange Commission introduced this concept to the FCPA Resource Guide, 2nd edition. It means that when your company is evaluated by the DOJ, under the factors set out in the 2020 Update and the FCPA Corporate Enforcement Policy, to retrospectively determine if your company had a best practices compliance program in place at the time of any violation, you need to have not only the structure of the Board-level Compliance Committee but also the specific SME on the Board and on that committee.

Three key takeaways:

  1. Boards must have compliance expertise.
  2. Government regulators and shareholder groups have both called for greater compliance expertise on the Board.
  3. Compliance expertise at the Board works up and down as such expertise can be a resource to both the CCO and Compliance Department.

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

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Trekking Through Compliance

Trekking Through Compliance-Episode 6-Mudd’s Women

In this episode of Trekking Through Compliance, we consider the episode Mudd’s Women, which aired on October 13, 1966, Star Date 1329.1.

Harry Mudd attempts to evade the Enterprise with his small class J cargo ship and leads it into an asteroid field. The Enterprise extends its shields over Harvey’s ship, burning out three of its four lithium crystals. The crew of the Enterprise becomes fascinated with the three beautiful women Mudd has been transporting.
As a result of the destruction of three of its lithium crystals, the Enterprise is forced to divert to Rigel 12 to obtain new crystals. Mudd makes his bargain with the lithium miners on the planet. At Mudd’s prompting, the miners offer to provide Kirk with lithium only in exchange for Mudd’s freedom and the three women. Kirk learns the women’s beauty secret: Mudd has been providing them with the Venus drug. Kirk beams down to collect the lithium from Childress while providing Evie with red gelatin she believes to be the Venus drug. Evie believes herself again to be beautiful and unintentionally reveals her natural inner beauty. In the end, Kirk gets his lithium, Evie remains with Childress, and Mudd is taken into custody.
Compliance Takeaways:
  1. How can your risks change, and are you prepared?
  2. A CCO needs to understand you may not be telling the truth to them.
  3. Have you added the Modern Slavery requirements to your compliance regime?
Resources
The story synopsis comes from the Excruciatingly Detailed Plot Summary by Eric W. Weisstein for Mudd’s Women.
Additional insights from the MissionLogPodcast.com episode Mudd’s Women
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Great Women in Compliance

Great Women in Compliance – Carolyn Renzin on Compliance at FanDuel

Welcome to the Great Women in Compliance Podcast, hosted by Mary Shirley and Lisa Fine.

Over the past few years, it seems like fantasy sports and online gaming have a higher profile than ever, and they are part of a rapidly growing industry. Today’s guest, Carolyn Renzin, is the Chief Legal and Compliance Officer at FanDuel, which is one of the leaders in that space. In a wide-ranging discussion, Carolyn and Lisa discuss building a compliance function at the same time an industry framework is being built, and how she has grown her team. She also talks about FanDuel’s commitment to integrity – both as an organization and for professional sports in general.

Her analogy between sports and her role is one we can all keep in mind – “you play offense, we play defense, and we need each other.”

You can find the Great Women in Compliance Podcast on the Compliance Podcast Network where you can find several other resources and podcasts to keep you up to date in the Ethics and Compliance world. You can also find the GWIC podcast on Corporate Compliance Insights where you can learn more about the podcast, stream prior episodes and catch up on Mary’s monthly column “Living Your Best Compliance Life.”

Corporate Compliance Insights is a much-appreciated sponsor and supporter of GWIC, including affiliate organization CCI Press publishing the related book; “Sending the Elevator Back Down, What We’ve Learned from Great Women in Compliance” (CCI Press, 2020). If you enjoyed the book, the GWIC team would be very grateful if you would consider rating it on Goodreads and Amazon and leaving a short review.  Don’t forget to send the elevator back down by passing on your copy to someone who you think might enjoy reading it when you’re done, or if you can’t bear parting with your copy, consider it as a holiday or appreciation gift for someone in Compliance who deserves a treat.

If you enjoyed the book, the GWIC team would be very grateful if you would consider rating it on Goodreads and Amazon and leaving a short review.  Don’t forget to send the elevator back down by passing on your copy to someone who you think might enjoy reading it when you’re done, or if you can’t bear parting with your copy, consider it as a holiday or appreciation gift for someone in Compliance who deserves a treat.

You can subscribe to the Great Women in Compliance podcast on any podcast player by searching for it and we welcome new subscribers to our podcast.

Join the Great Women in Compliance community on LinkedIn here.

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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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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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Trekking Through Compliance

Trekking Through Compliance Episode 3 – Compliance Lessons from Where No Man Has Gone Before

In this episode of Trekking Through Compliance, we consider Where No Man Had Gone Before, which aired on September 22, 1966, Star Date 1312.4. The first Star Trek episode was made (not counting the pilot episode, The Cage), although not the first aired. It differs from subsequent episodes in that there is no “Space, the final frontier” voice-over during the theme song at the beginning.

Story

The Enterprise discovers a 200-year-old ship recorder from the SS Valiant near the galaxy’s edge. Shortly after, the Enterprise passes through an unknown phenomenon that causes major damage and knocks out navigators Gary Mitchell and Dr. Elizabeth Dehner (both of whom have high ESP ratings). When Gary recovers, he begins to acquire telepathic and telekinetic powers. Kirk alarmed at the prospect of having his ship taken over by an increasingly powerful and tyrannical Mitchell, is convinced by Spock to maroon Mitchell at the lithium cracking plant of Delta Vega. Dr. Piper has no explanation for what is happening. Gary kills Lee Kelso and escapes from his imprisonment. Kirk follows him and can destroy him with the help of Dr. Dehner, who is also beginning to acquire the power but kills herself in the process.

Commentary

We take a deep dive into into compliance lessons drawn from the episode’s plot, emphasizing the importance of root cause analysis, risk management, adaptability, ethical leadership, monitoring and controls, balancing innovation with safety, effective team communication, and understanding human behavior in the context of compliance. These lessons are crucial for building and maintaining effective compliance programs in any organization.

Key Highlights

·       Plot Summary of Where No Man Has Gone Before

·       Key Compliance Takeaways

Resources

Excruciatingly Detailed Plot Summary by Eric W. Weisstein

MissionLogPodcast.com

Memory Alpha

 

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Trekking Through Compliance

Trekking Through Compliance – Episode 2 – Charlie X

In this episode of Trekking Through Compliance, we consider Charlie X, which aired on September 15, 1966, Star Date 1533.6.

The USS Enterprise meets the merchant vessel Antares to take charge of Charlie Evans, the sole survivor of a transport ship that crashed on Thasus. For fourteen years, 17-year-old Charlie grew up alone, stranded in the wreckage, learning to talk from the ship’s computer systems, which remained intact.

Despite his eagerness to please, Charlie becomes obnoxious since his lack of upbringing has left him with no knowledge of social norms or control of his emotions. He latches on to Captain Kirk as a father figure and develops an infatuation with Yeoman Janice Rand. He demonstrates extraordinary powers of telepathy and matter transmutation. When the Antares is nearly out of sensor range, it transmits a message to the Enterprise. The message is cut off before it can convey a warning. Scanners show the Antares has been reduced to debris.

Realizing Charlie’s powers are too great to be controlled, and Kirk opts to divert from Alpha V to at least keep Charlie away from a civilized world where he would wreak havoc. Charlie discovers Kirk’s plans and takes control of the Enterprise.

A Thasian ship approaches and restores the Enterprise and its crew to their proper forms. The Thasian commander says that his race gave Charlie his powers so he could survive in their world, but these powers (which they can’t remove from him) make him too dangerous to live among humans. Charlie begs Kirk not to let the aliens have him since the Thasians lack any physical form or capacity for love. However, the Thasians reject Kirk’s argument that Charlie belongs with his kind, with a final echoing wail of “I wanna stay!

Compliance Takeaways:

  1. Ask more of your front-line employee, and they will respond positively.
  2. Compliance is like a multi-dimensional chess match.
  3. As a compliance professional, who are you mentoring?

Resources:

Excruciatingly Detailed Plot Summary by Eric W. Weisstein for CharlieX
MissionLogPodcast.com-Charlie X

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Principled Podcast

Principled Podcast – S9 E14 – From Basic to Best in Class: Evolving Hexcel’s Compliance Program

What you’ll learn on this podcast episode

How do you move your ethics and compliance program along the journey from basic to best in class? How do you keep momentum amid a major business disruption and downturn? And how do you make progress on the holy grail of compliance objectives—a speak-up culture?  In this episode of LRN’s Principled Podcast, host Emily Miner is joined by Gail Lehman, the EVP, general counsel, and secretary at Hexcel Corporation. Listen in as Gail shares how this high-tech materials manufacturing company has evolved its compliance program over the past five years and what that’s meant for the company’s culture.

Guest: Gail Lehman

Gail Lehman – Grayscale

Gail Lehman is the executive vice president, general counsel, and corporate secretary at Hexcel Corporation, having joined Hexcel in January of 2017. Hexcel is headquartered in Stamford, Connecticut. Gail oversees the legal and trade compliance functions for this NYSE public company, a leading global producer of advanced composites for commercial aerospace, space and defense, and various industrial markets. She is also the leader of Hexcel’s Sustainability program at a corporate level. Gail serves as a trusted strategic advisor to the board, chief executive officer, and business teams. Upon joining the company, Gail restructured the legal and trade functions to align with Hexcel’s business teams and operational objectives. She re-engineered the Code of Business Conduct program, redrafting the code and rolling out specially tailored “speak up” ethics training and messaging across all global locations. She collaborates with other senior leaders and teams to drive Hexcel’s sustainability efforts and major growth, strategic and commercial activities, including mergers and acquisitions, cyber incident readiness, and contracting with the company’s critical customers and suppliers.  

Prior to joining Hexcel, Gail served as chief administrative officer, general counsel, and corporate secretary at Noranda Aluminum Holding Corporation. Prior to Noranda, Gail was vice president, general counsel, and corporate secretary at both Hawker Beechcraft Corporation and Covalence Specialty Materials Corporation. Earlier she rose through the ranks of the law department at Honeywell International. She began her career at the law firm of Lowenstein, Sandler in Roseland, NJ after serving a federal judicial clerkship in the District Court in New Jersey. 

Gail has a degree in psychology from Rutgers College, a graduate degree in educational psychology from Rutgers Graduate School of Education, and a law degree with high honors from Rutgers University School of Law. She has served on several non-profit boards, including currently for the Women’s Business Development Council in Stamford, Connecticut. 

Host: Emily Miner

Episode_Card_Emily_Miner

Emily Miner is a vice president in LRN’s ethics and compliance Advisory practice. She counsels executive leadership teams on how to actively shape and manage their ethical culture through deep quantitative and qualitative understanding and engagement. A skilled facilitator, Emily emphasizes co-creative, bottom-up, and data-driven approaches to foster ethical behavior and inform program strategy. Emily has led engagements with organizations in the healthcare, technology, manufacturing, energy, professional services, and education industries. Emily co-leads LRN’s ongoing flagship research on E&C program effectiveness and is a thought leader in the areas of organizational culture, leadership, and E&C program impact.

Prior to joining LRN, Emily applied her behavioral science expertise in the environmental sustainability sector, working with non-profits and several New England municipalities; facilitated earth science research in academia; and contributed to drafting and advancing international climate policy goals. Emily has a Master of Public Administration in Environmental Science and Policy from Columbia University and graduated summa cum laude from the University of Florida with a degree in Anthropology.