A webcast on effective COI compliance programs


Rebecca Walker and I hope you can attend.

Designing compliance incentives

A new article from SCCE’s  Compliance & Ethics Professional on an always challenging area.

I hope you find it interesting.

Shifting Perspectives on COI in the Modern Workforce

An article by Rebecca Walker and me on the Navex Global website.

We hope you find it interesting.

“Just-in-time” risk assessment

In 1994 I spoke at a meeting of a company’s executives that took place shortly before the end of the company’s financial quarter, and in the same session the CEO made the point that the executives needed to be vigilant against any mischief designed to dress up the quarter. This was my first exposure to “just-in-time” training/communication. And although more companies time their compliance measures in this sort of way now than did then (mostly because there are more measures to time), it is an area where many organizations can and should up their respective games.

The basic idea of just-in-time communications (also sometimes called “point of risk” communications) – as described in this post – is that compliance communications are most likely to have the desired impact if delivered shortly before exposure to the risk in question. As noted in that post, this mechanism could be used to address a wide range of risks: “anti-corruption – before interactions with government officials and third-party intermediaries; competition law – before meetings with competitors (e.g., at trade association events); insider trading/Reg FD – during key transactions, before preparing earnings reports; protection of confidential information – when receiving such information from third parties pursuant to an NDA; … accuracy of sales/marketing – in connection with developing advertising, making pitches; and employment law – while conducting performance reviews…”

To his discussion I would like to add the notion of a just-in-time risk assessment.  Specifically, when conducting risk (or program) assessment interviews or surveys, compliance personnel should inquire a) for any given area or risk, whether there is a need for just-in-time training/communications; and b) if so, what the specifics of such training/communications should be.

Finally, the need to look for opportunities of this sort can be added to lists of managers’ C&E duties (e.g., those set forth in the code of conduct, training for new managers, and perhaps personnel evaluations). This will not only help companies develop more “just-in-time” communications but will raise the level of managers’ C&E knowledge and commitment generally.

Socialism and conflicts of interest

There was a time in my life when I might have embraced the cause of socialism, but that was many years ago and today I proudly march under the banner of centrism. And the current  flirtation with socialism in the US has me worried – at least a little bit.

My concern is not that the US will become a fully socialist country (already having been a partly socialist one for many years, mostly in a benign way). If that didn’t happen in the 1890’s and 1930’s it seems unlikely to happen now.

Rather, my worry is that the prospect of socialism could lead to a powerful counter push to the right.

What – if any – is the relevance of COIs to this prospect?

As I have argued in this blog on occasion, a strong and healthy approach to COIs can be immensely beneficial to many aspects of our society. Conversely, a world without such an approach could be one of “needlessly diminished lives, resources and opportunities.”   In such a society, the case for socialism can indeed be seen as compelling. If private parties don’t live up to their ethical duties then government will fill the vacuum.

A strong and healthy approach to COIs means, of course, enforcement of COI-related laws, rules and norms.  See, e.g., this recent piece  on underenforcement of the fiduciary duty of loyalty.

But more important than enforcement is having a broad view of COIs – one that takes into account the phenomenon of “moral hazard.” As noted in an earlier post, both in the areas of climate change and public debt the wellbeing of the young is being sacrificed to conflicting interests of others – with likely calamitous effects. And of course there are many other areas where intergenerational COIs pose grave  threats to our society.

Addressing this sort of COI will be a considerable task. But the alternative may be a political, economic and social order based on an extremist ideology.

Compliance culture assessments – the why and the how

The latest post on the Compliance Program Assessment Blog.

Rebecca Walker and I hope you find it useful.

A short post on directors’ compliance duties

From the most recent issue of Compliance & Ethics Professional (p 3 of PDF).

I hope you find it interesting.

Compliance officers as entrepreneurs?

In a paper recently published by Boston University School of Law – The Law Office (LO) and Compliance Officer (CO): Status, Function, Liabilities, and Relationship  – Emerita Professor Tamar Frankel of that school quotes a former SEC official (John Walsh, then Chief Counsel, Office of Compliance Inspections and Examinations) as noting the following:

[C]ompliance officers have the characteristics of entrepreneurs. They have the “what next” mentality. They are excited about change and interested in the unknown; perhaps because the unknown is where their opportunities lie. They are not afraid of what they do not know and are eager to learn. With continuous learning come recognizing problems and ideas for solutions. They focus on creating and implementing new ways of doing things. Often, they are more interested in the future than in the present or the past, particularly if the future promises better methods and results. This process and the ideas it brings, are the exciting for entrepreneurs. In this respect COs are similar to entrepreneurs.

Note that these remarks are from a speech given in 2002, and compliance is not quite as new a profession now as it was then. On the other hand, the expectations of COs are now escalating steadily and the need for COs to have an entrepreneurial mindset – and entrepreneurial reputation within their respective companies – is as great as ever.

But COs are not the only members of the compliance universe who need be entrepreneurial in how they approach their work. Prosecutors should do so too, as the Department of Justice seemed to recognize in 2015 by creating the position of Compliance Counsel for the Fraud Section. The lawyer appointed to that post – Hui Chen – noted in an interview with Ethical Systems:

By creating the Compliance Counsel role, the Fraud Section in the Criminal Division sought to bring in-house expertise to that evaluation [of target companies’ compliance programs]. In doing so, the Fraud Section both recognizes compliance as an area of professional expertise, and heightens the significance of that expertise as something that is critical to companies.

Chen was (and is) clearly a compliance expert. And she seemed to bring an energy and engagement to her work that could fairly be called entrepreneurial.

However, she resigned in 2017, and last month the head of the Criminal Division announced that the position would not be filled. He noted:  “Our expectation is that the [Criminal] Division will develop a training program [for prosecutors] that addresses compliance programs generally, as well as issues specific to each section and unit.’”

Perhaps this new approach will work out okay. But without a true expert accountable for achieving compliance success at Justice I am doubtful that it will happen, as accountability is also part of what makes an entrepreneur.

I’ll be speaking on behavioral ethics with

Azish Filabi of  Ethical Systems at Navex’s Ethics & Compliance Virtual Conference on November 8.

We hope you can join us.

New on the Compliance Program Assessment Blog

A post on confidentiality and C&E assessments.

Rebecca Walker and I hope you find it useful.