New DOJ Guidance – Evaluation of Corporate Compliance Programs

Released earlier this month with little fanfare, the Department of Justice Criminal Division Fraud Section released guidance on how to evaluate the effectiveness of a corporate compliance program.  The document has Compliance Counsel Hui Chen’s fingerprints all over it, as the DOJ has again expressly endorsed the key attributes of the modern Compliance 2.0 model: empowerment, independence, a seat at the table, line-of-sight, resources, and, of course, true Compliance SME — the important foundational element of a successful compliance function.

Download the guidance document here.

Read Donna Boehme’s insight on the guidance here.

J.P. Morgan Shuffles Top Compliance Posts

Emily Glazer – The Wall Street Journal – February 2, 2017

The Wall Street Journal discusses the shuffling at the chief compliance officer position within J.P. Morgan.  Of note, the “Journal reported last year that regulators are focusing more on who compliance executives report to give them more independence from executives who set policies and manage people in the field.”

My comments on this are:

  1. Simply focusing on reporting lines is not enough. That’s why we added seat at the table, empowerment, line of sight, and resources to the analysis.
  2. It’s nice to see this becoming part of the lexicon.
  3. Four CCOs in four years is the Compliance 1.0 red flag I have written about-> A CCO  “revolving door” should show regulators and gatekeepers that something is very wrong in a company’s compliance approach or culture.

Read this article on The Wall Street Journal.

Compliance Expertise Needed on the Board

Thomas Fox – JD Supra – December 22, 2016

This week I have been exploring the different types compliance committee’s which an organization can utilize to help effect a best practices compliance program. I have written about compliance committee’s at the Board of Director’s level; at the junction between the Chief Compliance Officer (CCO) and Board, the Oversight Committee; and at the business unit level and the Baker Hughes Inc. (BHI) GeoMarket Compliance Committee. Today I want to change this focus from the committee concept and structure to a role on the Compliance Committee at the Board of Directors level.

Every Board of Directors need a true compliance expert sitting on their Board. Almost every Board has a former Chief Financial Officer (CFO), former head of Internal Audit or persons with a similar background and often times these are also the Audit Committee members of the Board. Such a background brings a level of sophistication, training and subject matter expertise that can help all companies with their financial reporting and other finance based issues. So why is there not such subject matter expertise at the Board level from the compliance profession?

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Read this article on JD Supra.

American Subsidiary Reflects Japan Parent’s Sense of Ethics

Ben DiPietro – WSJ Risk & Compliance Journal – August 31, 2016

Kasey Ingram, general counsel and chief compliance officer for biosciences and chemicals company ISK Americas, a subsidiary of Japan-based Ishihara Sangyo Kaisha Ltd., discusses how Japanese culture helps drive compliance at the company and why the company maintains its compliance function within its legal department. The U.S. part of the company has 75 employees and three main businesses: agricultural chemicals, wood preservatives and titanium dioxide, a white pigment used in toothpaste, sunscreen and other products.

Why does ISK combine the general counsel and compliance officer roles?

Mr. Ingram: I am a big believer in “Compliance 2.0”–the separation of compliance and legal–but sometimes it’s just not practical. We are not big enough to support two separate functions within the company. I have a group of consultants that I have developed relationships with, so when an issue comes up with legal and compliance I pick the side I am going to do and outsource the other side.

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Read this article on The Wall Street Journal.

Are compliance officers at financial institutions now in the hot seat for fines?

Stanley Foodman – The Yucatan Times – August 16, 2016

Otherwise reputable financial institutions continue being sanctioned for regulatory non-compliance.  Well known “household” names continue receiving fines for failing to establish and implement adequate Anti-Money Laundering (AML) procedures.  The Financial Industry Regulatory Authority (FINRA) recently fined Raymond James & Associates and Raymond James Financial Services $17MM.  According to FINRA, the two firms failed to prevent, detect, investigate, and report suspicious activity for several years. Apparently, compliance officers and other individuals (partners, directors, officers or employees) can bear personal responsibility for failures to enforce Bank Secrecy Act/Anti Money Laundering standards; the AML Compliance Officer was also personally fined $25 thousand, and suspended for three years. Brad Bennett, FINRAs chief of enforcement, said: “This case demonstrates that when there are broad-based failures within specific areas of responsibility, we will seek individual liability where appropriate.”

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Read this article on the Yucatan Times.

A Trip to the Dentist for Some Compliance Insight

Thomas Fox – JD Supra – August 10, 2016

I had to go to the dentist yesterday. I went for what I thought was filling repair but I had somehow forgotten that it was a wisdom tooth removal and a filling repair. I know you are thinking either (1) why does someone his age still have wisdom teeth and (2) how could he ‘forget’ he was having said wisdom tooth removed? All I can do is channel my inner-Laura Petrolino and say as improbable as it sounds, both can and do occur, at least with me.

While I was letting the anesthesia kick in for the wisdom tooth removal, my dentist, Dr. Shan Batiste, was talking non-stop to the newly hired dental tech. Since I was both under anesthesia or had dental tools in my mouth, I could not stop to ask any follow up questions and simply listened to their dialogue. I am not sure if it was his first day or just the first time that he had worked with my dentist but she was imparting to him what it was in his interview that led her to offer the position to him. Rather amazingly, I found my dentist had some very interesting insights about the compliance function.

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Read this article on JD Supra.

Compliance front and center

Thomas Fox – Compliance Week – June 21, 2016

The past couple of months has confirmed a trend we have seen for some time in the world of Foreign Corrupt Practices Act and greater anti-corruption compliance. It is the continued growth in the importance of doing compliance in the eyes of the Justice Department and Securities and Exchange Commission. They have clearly moved beyond simply having a compliance program in place. It must be operationalized, and you must demonstrate its effectiveness if you want to receive credit for it in any FCPA enforcement action.

In April with the release of the written document, entitled “The Fraud Section’s Foreign Corrupt Practices Act Enforcement Plan and Guidance” and detailing the Pilot Program for FCPA enforcement credit, the Justice Department made clear that it is the doing of compliance that can bring a company “reducing credit.” It also made clear that the role of the chief compliance officer needs not only to be central to your compliance efforts but also central to your overall business operations.

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Read this article on Compliance Week.

Richard Bistrong: At Compliance Week 2016, Compliance 2.0 takes center stage

Richard Bistrong – The FCPA Blog – May 31, 2016

When prosecutors, regulators, and compliance practitioners agree on anything, I pay special attention.

Last week,  Compliance Week 2016 opened with a panel of Stephen Cohen, Associate Director of the SEC Division of Enforcement and Andrew Weissmann, Chief of Fraud Section of the DOJ Criminal Division. Their topic: “Are We Defining Effectiveness Correctly?”

Cohen and Weissmann were clear about the importance of the independence of the compliance function. The issue of reporting relationships, from their perspective, wasn’t as significant as the weight of compliance being able to voice disagreement, deal with conflict, and integrating into the business.

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Read this article on The FCPA Blog.

Hui Chen, Walmart and the Radical Transformation of Compliance?

Mike Scher – The FCPA Blog – May 27, 2016

In my last post I discovered the power of images to make a point, like the ribbons of marble floating on air. The Blue Marble, NASA”s image of earth from space, changed how we see the planet, our home.

The radical transformation of compliance in the last four years is hard to grasp. There is astonishing momentum since the Walmart story broke in 2012. However, the upcoming DOJ settlement with Walmart (if there is one) will test that momentum. With a dubious DOJ leak and successful delays in the courts, is this the end of the transformation?

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Read this article at The FCPA Blog.

The Evolution of Compliance: Structural Changes Which Led to Compliance 2.0

Thomas Fox – FCPA Compliance Report – May 26, 2016

If there was one theme from Compliance Week 2016 it was the continued evolution of the Chief Compliance Officer (CCO) role and the compliance profession. Long gone are the days when someone is sent over from a legal department into the compliance department or worse, some lawyer who is just given the title of CCO and this is considered to be a best practice or even sufficient. In the opening keynote presentation, representatives from the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) made clear they expect a CCO to know more than simply the laws of anti-corruption, they must actually work to do compliance in an organization. A key metric of doing compliance is the independence of the CCO and compliance function.

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Read this article on the FCPA Compliance Report.