Category Archives: Board

Cost of (non-)Compliance

“U.S. Bancorp Is Charged, Fined in Laundering Case,” The Wall Street Journal, February 16, 2018 B2.  Bank fined over $600 million and criminally charged with laundering money.  And placed under a deferred prosecution agreement, which is always an adventure.

Bank allegedly constructed and operated its controls on money laundering “‘on the cheap.'”  Think of the money they saved!

Their shareholders, not so much.

How much would having adequate controls and filing required suspicious activity reports have cost?  More or less than $600 million?

A key compliance requirement for banks is to have adequate money laundering controls.  What does it say about the directors and officers that this bank didn’t have them?  Who’s responsible for this failure (i.e., who’s duty was it to prevent this?)?  Who’s getting canned?

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Filed under Board, Compliance, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Oversight, Oversight, Protect assets, Protect information assets, To report

The cobbler’s children

The cobbler’s children have no shoes.  Experts tend not to tend to things at home.

“Errant Charges at Coinbase,” The Wall Street Journal, February 17, 2018 B9.  A bitcoin firm ended up charging its customers multiple times (as many as 50!) for the same transactions. Blames its vendors.

Let me see.  You can’t work out your own electronic invoicing and you want to store our digital currency?  We should trust you why, exactly?

Wouldn’t you think you’d keep a close eye on the processes by which customers are charged and you are paid?

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Filed under Accuracy, Board, Controls, Corporation, Directors, Duty, Governance, Interconnections, Internal controls, IT, Oversight, Supervision, Third parties, Vendors

Uber settles

“Uber Settles Trade-Secrets Case,” The Wall Street Journal, February 10, 2018 B1.  Uber pays more than $240 million to settle case, and agrees not to use certain technology on self-driving cars, allegedly belonging to Waymo.  The agreement not to use was worth perhaps $250 million.

How does your company make sure it isn’t using a third party’s intellectual property without permission?  Is this an important part of your compliance program?  How does your company manage its acquisitions of new companies, some of whom (or their employees) may not have been as diligent in avoiding trade secret theft?

How can you prevent people from bringing information that you do not want into your company?  What are your processes?

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Filed under Board, Compliance, Controls, Corporation, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Oversight, Ownership, Ownership, Policy, Protect assets, Protect information assets, Supervision, Third parties, Value, Vendors

Lessons learned?

I am not sure what to say about the Nunes memo about the DOJ and the FBI and the FISA court, and classified information and governance and compliance.  Too political to be educational.

So, the right-hand news item instead.  “Fed Limits Wells Fargo Growth, Replaces Directors,” The Wall Street Journal, February 3, 2018 A1.  Following a pretty bad year or two, following the customer cramming schedule or the auto insurance.  A former CEO. Lower bonuses.  Now the government takes control of a large bank and replaces the directors.  Restricts the bank’s future growth.  A 6% stock value drop, before this week’s really bad sell-off.  Cost: $300-400 million. Government says, “We cannot tolerate pervasive and persistent misconduct at any bank ….”

What’s the value of compliance?  Is it the possible loss of your ability to control your company?  Is this a lesson for directors, in that they may lose their positions (but they don’t have to refund their fees)(yet- the derivative suits are coming soon).  They didn’t even do that to BP!  The Chief Risk Officer is also retiring later this year.

Business case for compliance or better risk management?  For knowing what’s going on in your company?  Not sure what the lesson is for the shareholders.

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Filed under Board, Business Case, Compliance, Compliance, Compliance Verification, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Inform shareholders, Internal controls, Oversight, Oversight, Protect assets, Risk, Risk Assessment, Risk assessment, Supervision, To report

Vendors

“U.S. Probes Supplier to VW,” The Wall Street Journal, February 1, 2018 B2.  Engineering firm under criminal investigation for alleging helping VW cook the emissions tests – altering the nature of the information provided to the government.  See also, “Robert Bosch Workers Face Probe,” The Wall Street Journal, February 1, 2018 B3. (Similar allegations, but involving Chrysler).

Are you concerned about your vendors?  Do you make sure they comply with law?  Do you appreciate the data that confirms your own compliance?  What’s it worth to have that data be accurate?

Were this a blog about Crisis Management and Emergency Response, there would be an entry here about what you should do when you hear that someone else in your industry has been doing something bad.

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Filed under Accuracy, Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Data quality, Definition, Directors, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Oversight, Oversight, Protect assets, Protect information assets, Third parties, Value, Vendors

What’s information worth?

“Cryptocurrency Exchange to Pay Back Customers,” The Wall Street Journal, January 29, 2018 B4.  Company to pay customers back $426 million after hack of cryptocurrency.

What is cryptocurrency except information that people agree has a certain value?  If that information is hacked, isn’t it the same as a theft of a client account?

No Christmas bonus for you, I guess.

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Filed under Board, Controls, Corporation, Definition, Duty, Governance, Information, Internal controls, Protect assets, Protect information assets, Security, Value

Early warning system

You discover a product flaw.  One of the first things on your crises management list of things to do is notify your biggest (or best) customers.

“Intel Told China of Flaw Before U.S.,” The Wall Street Journal, January 29, 2018 A1.  Intel tells its Chinese customers of a security flaw in Intel chips before telling the US government.  Flaws discovered in June 2017.  Not disclosed to the market until after a website in the UK reports on them in January 2018.

Who thought waiting to tell the US government was a good idea?  Where are they now and what are they doing (and for whom)?

Getting information early increases the value of that information to you.  Six months?  What happened in the meantime?  What did the Board know?  Did they approve the communications plan?

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Filed under Board, Communications, Corporation, Directors, Duty, Duty of Care, Governance, Inform market, Information, Oversight, Security, To report, Value