Category Archives: Compliance

MetLife

“Suit Against MetLife Spotlights Problems From Old Business,” The Wall Street Journal, February 22, 2018 B12.  MetLife sued over its failure to pay proceeds of an annuity to the right person.

MetLife has a business that takes over the pension payment obligations owed by private plans.   “MetLife has said it failed to aggressively search for people as they neared pension-eligibility age.”  As a result, about 13,500 retirees weren’t getting their benefits, after MetLife had released some reserves (and thereby increased profits) related to the payment obligations.  That reserve release has now been reversed, hitting fourth quarter results.

How does your company keep from losing contact with people to whom it owes money?  Are they swept under the rug, and ignored unless they complain?

Is this information governance or ethics or something else?

See also Snoopy cried.

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Filed under Governance, Protect assets, Duty of Care, Controls, Third parties, Internal controls, Compliance, Board, Oversight, Oversight, Duty, Directors, Accuracy, Corporation

Two to tango

Two interesting stories on page B1 relating to governance:

“Ford Official Fired for Misconduct,” The Wall Street Journal, February 22, 2018 B1. Top executive fired for unspecified bad conduct.

“Disney Producer’s Behavior Criticized,” The Wall Street Journal, February 22, 2018 B1. Successful producer may act and speak inappropriately, but is still running the high-profile “Frozen” production.

How important is context?  One would think that the entertainment industry would be more sensitive than other industries in avoiding any hint of inappropriate (the PC term) behavior, and Disney in particular.

How does your company manage its culture?  Does it enforce the rules against top managers, or big money producers?  What does the Board say, both now and when something goes wrong (or is discovered) later?  Are violations and punishments publicized internally?

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Filed under Board, Communications, Compliance, Compliance, Controls, Corporation, Culture, Culture, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Inform shareholders, Internal controls, Oversight, Oversight, To report

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

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

Snoopy cried

“Shares of MetLife Plunge on Big Charge,” The Wall Street Journal, January 31, 2018 B16. MetLife needed to increase its reserves after “losing track of possibly tens of thousands of retirees owned monthly pension payments.”  Loses 9% of share value (and this was before the big drop this week!).  This was after they reduced their reserves earlier, resulting in increased revenues.  The day earlier, “Pension Snafu Hits MetLife Results,” The Wall Street Journal, January 30, 2018 B1. A “records mistake.”  Huh?

People have been and will be fired.  Will any senior executives take the hit?  What exactly is the company’s business?  Where was the Board on this?  Do they refund any of their fees?  At least the company admitted a material weakness in its financial systems.  Is the CFO nervous about what he/she signed?  Did the boost affect anyone’s bonus?  Did this affect the market?

This was not a records mistake.  It was a conscious decision.  Who decided to reduce the reserves and just forget about the pensioners who weren’t easy to find?

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Filed under Accuracy, Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Data quality, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Investor relations, Oversight, Oversight

Stealing

Stealing an asset from someone else is a crime.  Information is an asset.

“Firm Found Guilty of Tech Theft,” The Wall Street Journal, January 25, 2018 B2.  Chinese company bribes a vendor’s European employee to get software code.  The employee was convicted of the theft in Austria in 2011.  Only now is the company itself convicted in the US.

The cost of the theft was alleged to be $800 million.  The convicted company (which used to be the vendor’s major customer) faces fines of nearly $5 billion.

Is this just part of a trade war with China?

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Filed under Compliance, Controls, Corporation, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Value