In today’s edition of Daily Compliance News:
Tag: compliance
Jay and Tom are back to unpack some of the stories that caught their collective eye on the Monsterfest Month Returns edition.
Stories
1. WPP FCPA enforcement action. Tom with 5-part series on the FCPA Compliance and Ethics Blog. Matt Kelly in Radical Compliance. Tom and Matt on Compliance into the Weeds. Mike Volkov has a 3-part series in Corruption Crime and Compliance.
2. Human rights litigation on the EU. Salomé Lemasson in the FCPA Blog.
3. BOD structure as key to compliance oversight. David Katz and Laura McIntosh in Harvard Law School Forum on Corporate Governance.
4. Bringing clarity to the chaotic world of the CCO. Chris Audet in CCI.
5. Another week, another Wells Fargo fraud related penalty. Jaclyn Jaeger in Compliance Week (sub req’d)
6. Dan Kahn returns to private practice. Dylan Tokar in the WSJ Risk and Compliance Journal.
7. Do ABC academics fail? Matthew Stephenson in GAB.
8. Conquering the last mile of delivery of your Code of Conduct. Harper Wells in CCI.
9. What is Ozy and what does it mean for compliance. Ben Smith in the NYT.
10. Who owns ESG? Matt Kelly explores on Radical Compliance.
Podcasts and Events
11. CCI surveying stress in compliance. Henry Kronk in CCI. Take the survey here.
12. Compliance Week is going ‘Inside the Mind of the CCO’. Participate in the survey here.
13. Ethisphere’s World Most Ethical Company awards for 2022 are open for submission. For more information on the Application Process, click here.
14. Check out the latest addition to the Compliance Podcast Network, A Yank at Oxford. It details the journey of Foley & Lardner partner David Simon as he heads back to university to matriculate for a MBA at Oxford. Episode 1.
15. Are you exasperated? Then check, F*ing Argentina. In this podcast series co-hosts Tom Fox and Gregg Greenberg, author of F* Argentina explore the current American psyche of being overworked, over leveraged, overtired and overwhelmed. Find out about modern America’s exasperation with well…exasperation. In Episode 1, the dreaded Parent Meeting night at your child’s elementary school. In Episode 2, why F*ing Argentina? In Episode 3, one of the most beloved characters in musical theater, Officer Krupke is exasperated.
16. Tom and Compliance Week EIC Dave Lefort look back at September in CW and forward to October (and talk some sports) in this month’s edition of From the Editor’s Desk.
17. K2 Integrity’s Edoardo Fiora will present at, “ESG Getting Hitched to Business (and IP) Strategy—From Resilience Framework to Recovery Path,” on October 14th. Registration and Information here.
18. Join Jay, Tom and the top E&C professionals at Converge21, a virtual conference on October 12 & 13. Registration and information here. Why should you attend? Check out some of the panelists discuss their presentation on the Converge21 podcasts. Michael Randrup Wendy Badger, Lloydette Bai-Marrow, Tom and Philip Winterburn.
19. How does a Compliance Bible become a best-seller. Check out Tom’s appearance on the C-Suite Network’s Best Seller TV to find out. Purchase The Compliance Handbook, 2nd edition here.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
This week we have been exploring the recent Securities and Exchange Commission (SEC) Cease and Desist Order (Order) entered into last week with WPP plc, the world’s largest advertising group, for paying bribes to Indian government officials and participating in other “illicit schemes” in China, Brazil and Peru. WPP agreed to pay $11 million+ in disgorgement and interest and penalty of $8 million for a total amount of just over $19 million. Today we conclude with some lessons learned for the compliance professional.
Culture Matters
It seems about the most basic thing to say in the compliance realm, but the most important thing is your corporate culture. If your culture puts no value on doing business ethically and in compliance, your organization will surely have problems. As I have cited to multiple times in this exploration of WPP, the Order stated, “WPP had no compliance department during the relevant period”. If your company will not have a compliance function, it speaks about as highly as one can about the values and culture of your organization. It could not be put more simply, with no compliance program, your organization does not value having a culture of compliance. Throughout the Order are examples of this lack of value. From the perfunctory first investigation into allegations in India, to the paper compliance program in place, to the lack of preacquisition due diligence from the compliance perspective; it is clear WPP put no value into having a culture of compliance.
Investigations
The Order made clear that after the initial whistleblower report, “which identified CEO A by name as the architect of the scheme”; WPP then tasked part of the group involved in the actions to investigate the allegations. That group then hired “an Indian partner firm of an international accounting firm ostensibly to investigate the allegations and review India Subsidiary’s processes regarding government contracts and transactions involving government clients.” [emphasis supplied] Who did this investigator rely on for information? The very leaders of the corruption scheme, the WPP-India Chief Executive Officer (CEO) and Chief Financial Officer (CFO).
What were other key deficiencies in the investigation?
- There was no contact with the identified recalcitrant 3rd
- The investigative firm relied on information from the parties identified in the whistleblower report.
- There was no independent verification.
- There were no conclusions related to the bribery allegations brought forward by the whistleblower.
The WPP matter is an excellent teaching tool for how NOT to perform an investigation.
Mergers and Acquisitions (M&A)
Here WPP apparently engage in none of the M&A components of even a minimum standard for compliance. There was no preacquisition due diligence into any of the entities acquired. Simply doing acquisitions in a high-risk environment is not verboten. But doing so with no compliance is. Moreover, there was apparently no integration of the acquired entities into the WPP compliance program, such as it was. Once again without a compliance function to drive this to the finish, there was no corporate group tasked to finish it out. Obviously, there was no forensic compliance audit of the acquired entities after acquisition as well. I cannot point to a shortcoming of WPP as there were no shortcomings in execution, as there was no effort.
Incentives
When do sales or remuneration incentives become perverse incentives? For Wells Fargo, it came when the corporate hierarchy determined that the proper number of Wells Fargo products was eight per customer and employees continued employment and compensation would depend on hitting that inane number. (Remember the CEO, John Stumpf, said “8 is great!”) WPP crossed that threshold when they made the earnouts for the founders of the organizations they acquired, who were kept on to run subsidiaries such as WPP-India, contingent on hitting sales numbers they could not reach without engaging in bribery and corruption. When you couple that with no effective controls, no culture of compliance and outright fraud, you see how WPP came to Foreign Corrupt Practices Act (FCPA) grief.
Whistleblower Reports
The bribery schemes were so blatant that in India there were seven internal whistleblower reports. As stated in the Order, “From July 7, 2015 through September 2, 2017, WPP received seven anonymous complaints alleging – with increasing specificity – two bribery schemes related to India Subsidiary’s work for DIPR.” That is seven, count them seven documented whistleblower reports which had details including names of the participants and the bribery schemes. This failure simply boggles the mind, yet is axiomatic of the culture of WPP.
It is still not clear how WPP came to the attention of the SEC. We do know if it was not through self-disclosure. It may well have been an internal whistleblower. For companies who decry whistleblowers who go public, WPP is Prime Example 1 of why. Moreover, how many whistleblowers would have the continued drive to continue to report illegal conduct after the first report which was dismissed through a sham investigation?
We are now at the end of the WPP sage from the perspective of the SEC enforcement action. I began this series with several questions which still remain open. They include:
- How was the SEC made aware of WPP’s bribery and corruption?
- Is there a parallel Department of Justice (DOJ) enforcement action?
- Where is the Serious Fraud Office (SFO)?
- How did WPP avoid a monitor?
As these questions remain open, we may well be revisiting WPP again.
Regulator Insights & SEC Exam Priorities
In this episode, CSS’s team of CCO experts Korrine Kohm and Dan Haynes discuss regulatory examinations, SEC priorities and trends and insights into how compliance teams can be more proactive before the regulators come knocking.
About Our Guest Speakers:
Korrine Kohm is CSS’s Director of Retail Wealth Manager Services. Prior to CSS, Korrine was the Chief Compliance Officer and Head of Operations at Estabrook Capital Management where she was responsible for all compliance functions of this SEC-registered, $2.1B investment advisory firm. Korrine began her regulatory career while working at Allied Irish Bank (NY) in the Operations Department where she was a key member of AIB’s Compliance Committee, responsible for ensuring compliance with Federal and State regulations. An active member of the National Society of Compliance Professionals for over 10 years, Korrine earned her Investment Adviser Certified Compliance Professional (IACCPTM ) designation in 2006, is a member of the Association of Certified Fraud Examiners, and obtained her Certified Fraud Examiner designation. In addition to her experience in compliance and banking, Korrine began the 16-week intensive training course in Quantico, Virginia, to become a Special Agent with the Federal Bureau of Investigation. She has particular experience in crafting customized policies and procedures, developing and implementing compliance programs, conducting on-site compliance reviews, acquisition due diligence reviews, risk assessments and mock SEC examinations. She routinely councils clients on various regulatory matters, including SEC registration issues, social media and advertising, policies related to diminished financial capacity, disclosures and the annual review process.
Dan Haynes joined CSS in 2017 providing consulting services to investment advisers, registered investment companies and private investment funds. Prior to joining CSS, Dan was the Chief Compliance Officer for Summit Strategies Group. Summit is a large institutional pension consultant in the Midwest with multiple private funds – ultimately around $180 billion in assets under administration. Dan implemented several aspects of, and oversaw the entire compliance program. His time there resulted in experience in NFA/CFTC registration and regulation, Private Fund oversight, and the pension consulting world overall. Prior to Summit, Dan was the Chief Compliance Officer for Buckingham Asset Management and BAM Advisor Services. Dan is also a member of the Charles Schwab Compliance Advisory Board.
Jay returns from his travels to report on the 1st compliance conference since 2019. He and Tom unpack some of the stories that caught their collective eye on the Heading to October edition.
Stories
1. ESG and Compliance. Mike Volkov on the ‘G’ in ESG. Tom has a 5-part series on why compliance should lead the ESG effort in the FCPA Compliance and Ethics Blog.
2. Asking more of your auditors. Neil Hodge in Compliance Week (sub req’d)
3. ISO weighs in on good governance standards. Dylan Tokar in the WSJ Risk and Compliance Journal.
4. Regulating the wild west of crypto. Henry Kronk in CCI.
5. Which Mozambique countenance or prosecute its President’s corruption? Rick Messick in GAB.
6. Making the most from your risk assessment? Jeff Kaplan in the FCPA Blog.
7. What is a criminal COI? Sara Kropf in Grand Jury Target.
8. Revisiting whistleblower procedures. Wachtel Lipton lawyers in Harvard Law School Forum on Corporate Governance.
9. The SEC investigation into Activision. Professor Stephen Bainbridge in his blog.
10. Jay’s reflections on the first compliance conference since 2019.
Podcasts and Events
11. CCI surveying stress in compliance. Henry Kronk in CCI. Take the survey here
12. Check out the latest addition to the Compliance Podcast Network, A Yank at Oxford. It details the journey of Foley & Lardner partner David Simon as he heads back to university to matriculate for a MBA at Oxford.
13. Are you exasperated? Then check out the latest offering from the Compliance Podcast Network, F*ing Argentina. In this podcast series co-hosts Tom Fox and Gregg Greenberg, author of F* Argentina explore the current American psyche of being overworked, over leveraged, overtired and overwhelmed. Find out about modern America’s exasperation with well…exasperation. In Episode 1, the dreaded Parent Meeting night at your child’s elementary school. In Episode 2, why F*ing Argentina?
14. Jay spreads his wings by hosting his first podcast. He interviews Lisa Beth Lentini Walker and Stef Tschida about their new book, Raise Your Game, Not Your Voice, on this episode of Integrity Through Compliance.
15. K2 Integrity is partnering with the DIFC Academy for a webinar, “Virtual Assets and FATF Guidelines—A Risk-Based Approach for Financial Institutions,” on September 28, 2021. Registration and Information here.
16. Join Jay, Tom and the top E&C professionals at Converge21, a virtual conference on October 12 & 13. Registration and information here. Here some of the panelists discuss their presentation on the Converge21 podcasts. Wendy Badger and Philip Winterburn.
17. Ethisphere’s World Most Ethical Company awards for 2022 are open for submission. For more information on the Application Process, click here.
18. Breaking News features The Compliance Handbook, 2nd edition. Check out the Breaking News feature here. Purchase The Compliance Handbook, 2nd edition here.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
The Latest News & Analysis on the PRIIPs RTS
In this episode, CSS’s Chief Product Officer Ronan Brennan does a technical deeper dive into the latest news on the PRIIPs RTS, regulatory timelines and the challenges stemming from divergence between the EU and UK.
About Our Guest Speakers:
Ronan Brennan is the Chief Product Officer at Compliance Solutions Strategies (CSS). In his role, he has direct responsibility for the strategic evolution of the global suite of CSS products and regulatory content. Managing product in CSS involves ensuring the product suite is ready to support both the current and future compliance management and regulatory reporting needs of investment management and advisory firms globally. Ronan participates as a speaker in many industry events each year, in addition to publishing a company blog and development of thought leadership materials. Ronan has 26 years of experience in the technology sector, 21 of which have been spent in the investment data management and regulatory reporting space.
Natalie Silverman serves as CSS’s Chief Marketing Officer. A leading FinTech specialist, Natalie has over 18 years of go-to-market and strategic expertise in financial services, SaaS, media and news. Most recently she has helped to build innovation labs across startups and enterprises.
Jay is once again traveling this week so we are joined by Professor Karen Woody as special guest co-host. I know you will enjoy her comments on this special Focus on the SEC edition.
Stories
1. Coinbase v. the SEC. Andrew Ross Sorkin previews in NYT Dealbook. Francine McKenna takes a deep dive in The Dig (sub req’d) Gary Gensler testifies before Congress, Paul Keiran in the WSJ.
2. Why compliance should lead ESG. Kyle Brasseur in Compliance Week (sub req’d)
3. Another cheating scandal at KPMG. Matt Kelly on Radical Compliance. Leadership
4. Leadership lessons from the fall of Kabul. Sandra Erez in CCI.
5. What are the Big 3 issues from this year’s proxy season? Eric Knox, Sehrish Siddiqui and David Venturella in CCI.
6. How large a problem is corporate recidivism? Dick Cassin in the FCPA Blog.
7. The Great Resignation and meaningful work. Brett Beasley in Notre Dame’s Deloitte Center for Ethical Leadership.
8. Boeing safety woes hit the Boardroom. Wachtel Lipton lawyers in Harvard Law School Forum on Corporate Governance.
9. On the intersection of culture and corporation reputation. Mike Volkov in Corruption Crime and Compliance.
10. Learned Hand on leadership and humility. Jeff Kaplan in the Conflict of Interests blog.
Podcasts and Events
11. CCI surveying stress in compliance. Henry Kronk in CCI. Take the survey here
12. On Innovation in Compliance, Tom has run a 6-part special podcast series on Looking Back on 9/11, sponsored by Affiliated Monitors. In this series he will visit with professionals from a variety of compliance perspectives who will discuss how 9/11 changed our profession, including three who were in NYC during the attacks. Hear thoughts and reflections from Gabe Hidalgo, Juan Zarate, Alex Dill, Eric Feldman, Scott Moritz and John Lee Dumas.
13. Are you exasperated? Then check out the latest offering from the Compliance Podcast Network, F*ing Argentina. In this podcast series co-hosts Tom Fox and Gregg Greenberg, author of F* Argentina explore the current American psyche of being overworked, over leveraged, overtired and overwhelmed. Find out about modern America’s exasperation with well…exasperation. In Episode 1, the dreaded Parent Meeting night at your child’s elementary school.
14. Ethisphere’s World Most Ethical Company awards for 2022 are open for submission. For more information on the Application Process, click here.
15. Breaking News features The Compliance Handbook, 2nd edition. Check out the Breaking News feature here. Purchase The Compliance Handbook, 2nd edition here.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com.
This week is the 20th anniversary of 9/11. On Saturday Tom and Jay ask that you take a moment of silence to remember all those who lost their lives on that day, their loved ones and those who were impacted by those events over the past 20 years.
Stories
1. Elizabeth Holmes finally goes to trial. Aly McDevitt in Compliance Week (sub req’d) Opening statements review in the WSJ.
2. The role of compliance in an ESG effort. David Povey in Compliance Week. (sub req’d) Matt Kelly weighs in on diversity as well in Navex Global’s Risk and Compliance Matters.
3. Raytheon under FCPA scrutiny. Dylan Tokar in WSJ Risk and Compliance Journal.
4. CCI surveying stress in compliance. Henry Kronk in CCI. Take the survey here.
5. From Wells Fargo to Kraft Foods. Matt Kelly in Radical Compliance. Tom and Matt in Compliance into the Weeds.
6. Has the SFO turned the corner? Martin Kenney in the FCPA Blog.
7. Measuring compliance measurement. Jeff Kaplan in COI Blog.
8. From firm specific risk to systemic risk. John Coffee in Harvard Law School Forum on Corporate Governance
9. Do you need a BOD Code of Conduct? Kristy Grant-Hart in Compliance Kristy.
10. Joe Biden-the anti-corruption President? Joe Acotoia in Corruption Crime and Compliance.
Podcasts and Events
11. On Everything Compliance, the full gang discuss where they were on 9/11 and its impact on their profession. Lisa Fine looks back on 9/11 in Great Women in Compliance.
12. On Innovation in Compliance, Tom has run a 6-part special podcast series on Looking Back on 9/11, sponsored by Affiliated Monitors. In this series he will visit with professionals from a variety of compliance perspectives who will discuss how 9/11 changed our profession, including three who were in NYC during the attacks. Hear thoughts and reflections from Gabe Hidalgo, Juan Zarate, Alex Dill, Eric Feldman, Scott Moritz and John Lee Dumas.
13. Join K2 Integrity September 15 for a round-table on the 20th Anniversary of September 11 and consider its impact on countering terrorist financing and illicit financing, and the continuing risks to national security. The roundtable will include members of the team that spearheaded the post-9/11 counter illicit finance regime: Juan Zarate, Chip Poncy, Danny McGlynn, moderated by Dr. Michele L. Malvesti. Information and Registration here.
14. Ethisphere’s World Most Ethical Company awards for 2022 are open for submission. For more information on the Application Process, click here.
15. Breaking News features The Compliance Handbook, 2nd edition. Check out the Breaking News feature here. Purchase The Compliance Handbook, 2nd edition here.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Co-host Jay Rosen (AKA ‘Mr. Monitor’) can be reached at jrosen@affiliatedmonitors.com.
In today’s edition of Daily Compliance News:
- Raytheon under FCPA scrutiny. (WSJ)
- Why the Kraft Foods SEC settlement is like Wells Fargo. (Radical Compliance)
- Obstacles in anti-corruption fight in Central America. (Univision)
- Lack of diversity in PE directors. (NYT)
As Jay returns from an extended road trip, he and Tom look forward to an extended Labor Day weekend and are back to look at some of this week’s top compliance and ethics stories which caught their interest on This Week in FCPA in the Labor Day edition.
Stories
1. Is ESG on your radar? Vince Walden in Fraud Magazine.
2. The intersection of business and compliance. Mike Volkov in Corruption Crime and Compliance.
3. China to set world standard for data privacy? Aaron Nicodemus in Compliance Week (sub req’d)
4. Is Covid-19 the biggest challenge to compliance ever? Calvin Gordon in CCI.
5. UK signals different approach on data transfer from EU. Aaron Nicodemus in Compliance Week (sub req’d)
6. 3 compliance officers get SEC whistleblower award. Matt Kelly in Radical Compliance.
7. Email break-ins sanctionable. Dylan Tokar in WSJ Risk & Compliance Journal.
8. ISO 37002 and EU Whistleblower standard. Kelly Maxwell in Convercent by One Trust blog.
9. Trial of the Century in Mozambique, Part 2. Rick Messick in GAB.
10. Diversity training that fosters acceptance and collaboration. ComplianceLine blog.
Podcasts and Events
11. On Innovation in Compliance this week I interviewed Ethisphere’s Erica Salmon Byrne and Doug Allen on the opening of submissions to the World’s Most Ethical 2022 awards. You can listen to the pod here. You can find out more about the submission process here.
12. On The Compliance Life, in August I visited with Kortney Nordrum CCO at Deluxe. In Episode 1, from Red Wing to Israel. In Episode 2, From Freddie Mac to the law. In Episode 3, how Kortney found her professional passion – Compliance. In Episode 4, Kortney moves into the CCO chair.
13. Breaking News features The Compliance Handbook, 2nd edition. Check out the Breaking News feature here. Purchase The Compliance Handbook, 2nd edition here.
14. Join K2 Integrity September 15 for a round-table discussion as we reflect on the 20th Anniversary of September 11 and consider its impact on countering terrorist financing and illicit financing, and the continuing risks to national security. The roundtable will include members of the team that spearheaded the post-9/11 counter illicit finance regime: Juan Zarate, Chip Poncy, Danny McGlynn, moderated by Dr. Michele L. Malvesti. Information and Registration here.
15. The week of 9/11, Tom will run a 6-part special podcast series on Looking Back on 9/11. In this series he will visit with professionals from a variety of compliance perspectives who will discuss how 9/11 changed our profession, including three who were in NYC during the attacks. Check it out on the Compliance Podcast Network.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
