Preventing investigative failures

It is too soon to know how history will judge the efficacy of the Mueller special counsel investigation. But there is no shortage of clear investigative failures in the private sector, such as in the Wells Fargo debacle.

In Complex Compliance Investigations – a soon-to-be-published article in the Columbia Law Review – Professor Veronica Root Martinez of Notre Dame Law School argues that many recent compliance failures “within organizations might have been avoided if more robust processes –  meaning the actions, practices, and routines that firms can employ to communicate and analyze information  – had been in place to ensure investigations were conducted in a manner that allowed the firm to analyze information from diverse areas within the firm.” She further notes: “The task of creating effective compliance programs has been made more challenging, however, by the shift from small, discrete organizations to complex ones. The challenge for complex organizations is, quite simply, more complicated than what’s faced by those with a smaller footprint and reach.”

She makes the following recommendations for addressing these challenges:

Track Similar Unlawful Behavior within the Firm. She suggests this because “[w]hen firms focus on policing and structural components of a compliance program, they sometimes focus too heavily on particular compliance areas, when they might otherwise benefit from assessing certain types of behavior.”

Engage in Consistent Compliance Assessments. Specifically, “Complex organizations could choose to develop formal, prospective processes in an effort to ensure that members throughout their organizations engage in similar investigative methods when misconduct is detected.”

Aggregate Potential Compliance Concerns. As she notes: “sometimes a seemingly innocuous or isolated event is actually an indication of a larger problem within the firm,…”

However, she also notes that: “ The promise of process is, however, limited in that for it to be effective it requires a firm to have (i) a strong organizational structure (ii) free from a corrupt culture.”

There is far more to Professor Martinez’s very fine article than I have space to address here. I encourage you to read all of it.

Additionally, for more information about making investigations effective please see this post in the Compliance Program Assessment Blog.

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