Monthly Archives: November 2016

The reason for policies

What happens when company employees don’t follow company policies?

“J.P. Morgan Settles Asia Jobs Probe,” The Wall Street Journal, November 18, 2016 B1.  The company apparently had a policy prohibiting the hiring the sons and daughters of clients and potential clients.  Then it created a program to do exactly that in Asia, resulting in a lot of red faces and $264 million in fines for FCPA violations.

Why do you have the policies you have?  Some are to assist compliance with law, while others just make good business sense.  Why, exactly, would you fast-track the hiring of  the offspring of clients and potential clients?  Because they were the best and the brightest, or because doing so “facilitated” relationships?  To obtain or retain business?

Who’s going to get fired?  Who, ultimately, is going to pay the fine?

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Filed under Board, Compliance, Compliance, Compliance, Controls, Corporation, Directors, Duty, Employees, Governance, Legal, Management, Oversight, Policy, Requirements, Risk

Termination as governance

What do you do when a lower-level employee breaks the law?  Well, you could ignore them, reprimand them, or fire them.  When it’s a higher-level executive, do the same rules apply?  What do the answers say about the company’s commitment to compliance with all applicable laws?

“Rio Tinto Fires Two Amid Payment Probe,” The Wall Street Journal, November 17, 2016 B4.  The chief executive of a large section of the company, together with the top legal officer of the company, were fired following discovery of emails tying a payment of $10.5 million to a consultant with the award of a large project.

As the Yates memo (and the Federal Sentencing Guidelines Manual) might have said, it’s a start.  Firing the General Counsel (actually, the head of the company’s legal and regulatory affairs function) is a twist.

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Filed under Board, Compliance, Compliance, Compliance, Controls, Corporation, Directors, Duty, Governance, Internal controls, Management, Oversight, Oversight, Third parties

Compliance is tricky

What happens if you fire an employee for complaining about how you do things?

“Wells Fargo Firings Get Scrutiny,” The Wall Street Journal, November 17, 2016 B1.  Employees fired for refusing to break the law in the account-cramming scandal may have a claim.  Employees have a duty of loyalty, but a “higher” duty not to break the law.

When Congress gets excited, it’s seldom good news.


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Filed under Compliance, Compliance, Controls, Corporation, Duty, Employees, Governance, Internal controls, Management, Oversight, To report, Uncategorized

Who or what?

Who or what governs what you do and don’t do?

“Legislators Barred From Taking Office,” The Wall Street Journal, November 16, 2016 A13.  Incoming legislators who decided to change the oath of office to add words of allegiance to a “Hong Kong nation” were barred from office for violating the Basic Law and for not being sincere or solemn.

Were these two legislators-to-be (or not to be) subject to the governance of the Basic Law (the constitution-like document governing Hong Kong post-1996) or the Standing Committee of China’s National People’s Congress?  Or just unclear on the duties involved in taking an oath?

And can you be punished/sanctioned for not being sufficiently sincere?  And does anyone recall an oopsie and subsequent re-do by the Chief Justice in giving President Obama his oath of office?

And, finally, did the legislators-not-to-be understand the value of the addition of those words?  Content matters.

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Filed under Compliance, Content, Controls, Governance, Information, Internal controls, Legal, Oversight, Third parties, Uncategorized, Value

A new area of ESI

ESI, or electronically stored information, is all the rage in ediscovery.  But there’s a new frontier.

“Cellphone Smudges Yield A Trove of Forensic Data,” The Wall Street Journal, November 15, 2016 A3.  It may be possible to recover enough from the smudges on your cellphone to tell a lot about you.  Not a fingerprint, yet.

Is a smudge “information”?  Skin flakes?  Sweat?

How do you govern this?  What can you use it for?  Can you store it?  Delete it?

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Filed under Accuracy, Data quality, Definition, Discovery, Information, Use

Consider the source

Facebook is a source of information, but isn’t responsible for fake “news”on the platform.

“Zuckerberg Refutes Election Criticism,” The Wall Street Journal, November 14, 2016 B4.  CEO says Facebook is not an arbiter of truth.  Says less than 1% of site’s content “would be classified as fake.”

Where do you get your information?  Do you and should you trust it?

Is Facebook a better source of news than Rolling Stone?  Are The Wall Street Journal and The New York Times arbiters of truth?

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Filed under Access, Accuracy, Controls, Data quality, Duty of Care, Governance, Internal controls, Oversight, Ownership

Due diligence in M&A

“H-P Deal Leads to Indictment,” The Wall Street Journal, November 12, 2016 B4.  Autonomy’s former CFO indicted for fraud in the sale of the company to Hewlitt-Packard.

This was fairly bog-standard alleged fraud, albeit on a much grander scale (nearly $9 billion).  Follows a $100 million payment by H-P to some of its shareholders.

Is this a value-of-information case or a value-of-compliance case (for Autonomy)?  Or just poor due diligence by H-P?  How did Autonomy’s board miss this?  How did H-P (and it’s lawyers and investment advisers) miss this, pre-acquisition?  Might this be worthy of another post- Caremark decision on negligent oversight?  If not, what will it take to hold a board liable for failing to meet its fiduciary duties?

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Filed under Accuracy, Board, Collect, Communicate, Compliance, Compliance, Compliance, Compliance Verification, Controls, Corporation, Data quality, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Inform shareholders, Information, Internal controls, Management, Oversight, Oversight, Protect, Protect assets, Protect information assets, Reliance, Third parties, Value, Vendors