Category Archives: Duty of Care

Kobe (3)

The adventure continues, after Kobe Steel announced earlier this month that workers at several different facilities had fudged paperwork on product quality, dating back to at least 2007.  Apparently, getting that type of paperwork accurate is important.  To someone.

“U.S. Looking Into Kobe Steel Scandal,” The Wall Street Journal, October 18, 2017 B3.  Department of Justice kicks off a request for information after company disclosures about practices in Japan. Affects product sold into manufacturers of train, planes, and cars.

More to follow.  Expect Congress to weigh in shortly.  Again, the problem occurred in more than one facility, over a period of years.  Is that a failure of compliance, or culture, or both?

An example of the intersection of governance, compliance, and information.

Advertisements

Leave a comment

Filed under Accuracy, Compliance, Controls, Corporation, Culture, Data quality, Definition, Duty, Duty of Care, Employees, Governance, Information, Internal controls, Oversight, Reliance, Use, Value

Mulligan

This is a straight compliance piece, where a corporation is held liable for the misdeeds of its employees (agents).

“Wells Fargo to Pay $3.4 Million Over Advisers’ Flub,” The Wall Street Journal, October 17, 2017 B10.  Apparently, some of the bank’s financial advisers recommended volatility ETFs when they shouldn’t have.  The advisers also didn’t have adequate training.

This is straightforward.  Should some manager be fired or disciplined?  Maybe.  This would not seem the type of event that calls into question the Board’s duty to supervise, unless this is the third time this same compliance issue has arisen.  This is only the second time.  The bank paid nearly $3 million in fines and restitution in 2012 for a similar violation.

Leave a comment

Filed under Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Oversight, Oversight, Requirements

Kobe (2)

“Kobe Steel Discloses More Reporting,” The Wall Street Journal, October 14, 2017 B3. Falsification of quality documents is much more prevalent than first reported at Kobe Steel.  Twice the number of customers now involved.  500.

Once you find a rotten apple, one can make certain assumptions about the rest of that barrel.  It’s a culture issue, at its core.

Leave a comment

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

Equifax and SEC Hacks

A lot in the news of late about the hacks at Equifax and the SEC.

“SEC Discloses Edgar Corporate Filing System Was Hacked in 2016,” The Wall Street Journal, September 21, 2017 A1.

“Equifax Hackers Spied for Months,” The Wall Street Journal, September 21, 2017 A1.

“Equifax Board Weighs Clawbacks,” The Wall Street Journal, September 30, 2017 B3.  How many years’ compensation will be affected?

“Equifax Lawyer in Hot Seat,” The Wall Street Journal, October 2, 2017 A1.  Chief legal officer probed for clearing stock sales after executives knew, but no one else did, about the hack.

“Equifax Ex-CEO Lays Out Lapses,” The Wall Street Journal, October 3, 2017 B1.  Staffers blamed for not reacting to public warning.

“Lawmakers Slam the Ex-CEO Of Equifax,” The Wall Street Journal, October 4, 2017 B1.  He and others “weren’t aware of the significance of the company’s data breach ….” “[A]n employee failed to notify other staff to patch the software ….”  For want of a nail ….

“Senators Rap Credit-Reporting Model,” The Wall Street Journal, October 5, 2017 B1.  “[W]hy consumers shouldn’t have power over the data [credit companies] collect on them”?

“Lawmaker Asks SEC To Delay Trade Log,” The Wall Street Journal, October 5, 2017 B12.  Head of House Financial Services Committee pressures SEC to delay release of trading database following hack of SEC systems. Can you have too much information?

“Equifax Timeline Criticized,” The Wall Street Journal, October 6, 2017 B10.  How long did Equifax sit on news of the hack before alerting the Board, the market and the Feds?  Is five weeks too long?  Executives selling stock in that window will be investigated.  Three weeks before he informed the Board.

“After Breach, SSN Reliance Is Criticized,” The Wall Street Journal, October 7, 2017 A4.  One reaction to the Equifax hack is a move to find a replacement for Social Security Numbers.

“Index Firm Flagged Equifax for Security,” The Wall Street Journal, October 7, 2017 B9.  Company warned about Equifax data security flaws in August 2016.

“Equifax Probes Possible New Breach,” The Wall Street Journal, October 13, 2017 B1.  A code installed on Equifax’s website by a vendor “serve[s] ‘malicious content’ to consumers.”  Just when you thought ti was safe to go back in the water again.

“GOP Bill Would Boost Checks on Credit Firms,” The Wall Street Journal, October 13, 2017 B10.  The horse having left the barn, the government wants to exercise more oversight.

Leave a comment

Filed under Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Directors, Duty, Duty of Care, Governance, Inform market, Inform shareholders, Information, Internal controls, Investor relations, IT, Oversight, Oversight, Protect assets, Protect information assets, Security, Value, Vendors

Another hack

“New York Investigates Deloitte Cyberbreach,” The Wall Street Journal, October 13, 2017 B10.  New York AG investigates breach, which “compromised information on a small number of clients.”  The breach started a year ago and wasn’t detected until April 2017.  The information compromised may have been limited to access credentials and the like, rather than account information.  Sort of like Equifax.

Who else has been attacked and (a) knows about it but is still keeping it quiet, or (b) doesn’t know about it yet?

Leave a comment

Filed under Access, Board, Compliance, Compliance, Controls, Corporation, Duty, Duty of Care, Governance, Information, Internal controls, IT, Oversight, Oversight, Ownership, Protect assets, Protect information assets, Security, Value

A top goal?

“CEOs Make Protecting Data a Top Goal,” The Wall Street Journal, October 13, 2017 B4.  Unfortunately, the focus is on cyber-security rather than the broader information risk profile.  While this affect CEOs’ email habits, as they are phishing targets?

While this is a start, do CEOs really understand how much their company’s proprietary information is worth?  Or their duty to protect the company’s assets (people, physical equipment, cash, and information)?  Why not?

And where are the boards?  Don’t they have an overarching duty to oversee the major risks the company is facing and to make sure there’s an effective program in place to address?

I hear the violin.  Is Rome burning?

Leave a comment

Filed under Access, Board, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Directors, Duty, Duty of Care, Employees, Governance, Information, Internal controls, IT, Managers, Oversight, Oversight, Ownership, Policy, Protect assets, Protect information assets, Security, Value

Disclosure

“A Hot Startup Misled Advertisers,” The Wall Street Journal, October 13, 2017 A1.  Outcome Health apparently misled advertisers as to how many units their ads were appearing on.  The investigation continues.

How would your employees react if ask to provide inflated numbers to potential customers?  How would your investors react after a story appears on page one, above the fold?  Probably reflects in the valuation of the company.  And what about your company’s extensive political contacts?

Leave a comment

Filed under Accuracy, Board, Communicate, Compliance, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Culture, Data quality, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Inform shareholders, Information, Internal controls, Investor relations, Managers, Oversight, Oversight, Policy, Protect assets, Protect information assets, Use, Value