Why does it seem that when a certain type of crisis happens in one industry leader, similar crises pop up in other members of the same industry? Does “culture” affect an entire industry? What about a culture of “not reporting”?
“Amazon Executive Quits Amid Sex Claim,” The Wall Street Journal, October 18, 2017 A10. The head of Amazon Studios (who had close business relationships with Harvey Weinstein) “resigns” after a producer claimed he had sexually harassed her two years ago.
What does it say that there were so many unreported instances of sexual harassment in this industry (many coming out in recent weeks in various media outlets)? Did people not complain or did people not respond? Or was the press/media not interested, for any one of a whole host of reasons?
What does it say about a company’s culture that allows a sexual predator to continue to run the company for years? What other non-compliance with ethics and law will we find? Not only there, but at every other company in the industry? Nobody reported this? Where were the policies and the audits? Where were the lawyers? Where was the press?
“Weinstein Co. Board Fires Harvey Weinstein, Citing Sexual Misconduct Allegations.” The Wall Street Journal on-line, October 8, 2017.
Filed under Board, Compliance, Controls, Corporation, Culture, Culture, Directors, Duty, Employees, Governance, Internal controls, Managers, Oversight, To report
I normally cite to The Wall Street Journal. But occasionally I come across something elsewhere worthy of note. One of my sources is the Business Law Prof Blog. There was a post there today titled “Omissions Liability: Tempest in a Teapot or Gathering Storm?”
At issue, can there be Rule 10b-5 liability (dealing with securities fraud) for not saying something, when you had knowledge and something akin to a duty to disclose. There’s a Supreme Court case (Leidos, Inc. v. Indiana Public Retirement System) pending that may resolve the issue.
Is a corporation’s failure to say something in itself information, and if so, is that silence itself information that must be governed in order to be compliant? How do you manage/govern silence?
Filed under Board, Business Case, Collect, Communicate, Communications, Compliance, Compliance, Compliance, Controls, Corporation, Directors, Duty, Governance, Inform market, Inform shareholders, Investor relations, Management, Third parties, To report
“Insider Charge for Ex-BofA Staffer,” The Wall Street Journal, August 17, 2017 B1. The staffer was a former IT consultant accused of getting tips from a confidential deals database and passing them on to his girlfriend’s father.
The former consultant pleaded guilty to criminal insider trading charges. The company fully cooperated in the government investigation, it says.
A bad weak for IT consultants.
Filed under Access, Controls, Corporation, Directors, Duty, Internal controls, IT, Security, Third parties, To report, Vendors
VW is being investigated by the EU’s antifraud office since November 2015, in connection with loans based, in part, on VW’s green environmental reputation. The emissions cheating scandal has cost $25 billion. And counting. May recommend that Germany charges two employees with fraud. German authorities are in on the hunt, too.
“Volkswagen Faced With New Legal Woes,” The Wall Street Journal, August 1, 2017 B3.
Who knew what when, and who failed to disclose what they knew? When it rains, it pours.
Filed under Board, Compliance, Compliance, Corporation, Duty, Employees, Governance, Inform market, Inform shareholders, Managers, To report
One unique aspect of information is that it can be stolen, yet remain in the owner’s possession. Apparently, medical facilities are required to report if your medical information is stolen, but not if it is merely kidnapped and held for ransom.
“Some Cyberattacks Go Unreported,” The Wall Street Journal, June 19, 20127 B3. Whether hospitals need to report a ransomware attack of their files as a data breach is a “gray area,” and the federal government doesn’t require such reports, even if the government knows about them. Some hospitals don’t report ransomware attacks, so these attacks are not in the HHS statistics.
So, patients don’t know when hospitals have weak security protection. What value, then, are the government statistics? Do they need a big asterisk?
Filed under Controls, Corporation, Data quality, Duty, Government, Information, Internal controls, IT, Legal, Requirements, Security, Third parties, To report, Value
One might suppose accountability and responsibility apply to CEOs. Then, again ….
“Gymnastics Boss Paid Severance,” The Wall Street Journal, June 3, 2017 A9. The CEO, who was nominally in charge when the team doctor for the women’s gymnastics team allegedly abused female gymnasts, gets a $1 million severance package.
One wonders what the Board would have paid him if they fired him for cause. The gymnastics federation reportedly sat on the results of an internal investigation of the sexual abuse allegations for five weeks. The CEO said the federation didn’t have an obligation to report sexual abuse by its coaches to law enforcement. Didn’t the ex-president of Penn State just get sentenced to jail for similar acts or omissions?
One of the Board’s fundamental jobs is to hire the CEO; another is oversight. Everyone has a duty to report violations of law. It would appear either the Board or the CEO or the Federation wasn’t doing its or his job. Maybe the Board gets severance, too. What do the shareholders get?
Filed under Board, Compliance, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Oversight, Oversight, To report