Defamation as a compliance risk area

Dominion Voting Systems recently sued Fox News and two of President Trump’s former lawyers – Sydney Powell and Rudolph Giuliani – for their statements that Dominion had engaged in election fraud in connection with the 2020 presidential election. This could have profound adverse affects on the defendants. (Among other things, Dominion is suing Fox for $1.6 billion in damages and Powell for $1.3 billion.)

While of special relevance to the defendants, C&E professionals from all companies should use the occasion to consider if they have defamation risks of their own.

Defamation is generally not in the first tier of compliance risks for corporations, the way that corruption, antitrust and fraud tend to be. But second-tier risks can still be significant, as discussed in this recent post in the FCPA Blog.

Here are some brief thoughts and questions on defamation and compliance:

– Risk assessment. What kind of communications do your salespeople have about competitors? What about their salespeople communicating about your company?  Given the nature of the products and services you sell does defamation seem reasonably likely?

– Policies. Defamation should be mentioned in the code but generally need not be a standalone section. (It can often be part of a general sales compliance discussion.)

– Procedures. For high-risk areas, companies should consider preapprovals by the legal department or other control functions.

– Auditing or monitoring. Internal auditors should, for high-risk areas, be trained on defamation risks. And, for such areas, consider requiring monitoring.

– Training. For his risk companies consider including defamation in the code course. And for higher risk individuals consider targeted in-person training.

– Third parties. As with  other  risk areas third-parties can pose special C&E challenges and so should be focused on in the risk assessment.

There’s much more to be said about this topic but hopefully this post will help some companies get started.

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