Category Archives: Supervision

Sniff test

What happens to compliance when the CEO and her boyfriend collaborate to create a culture of secrecy and fear?

“Partners in Blood,” The Wall Street Journal, May 19, 2018 C1.  Reports from the trenches at Theranos, which said it was able to run a range of tests from a few drops of blood; it couldn’t.  SEC charges company with fraud, and investors lose millions.

While the implications of a relationship of the CEO goes to Governance, are there also links to Compliance and Information?  What impact did the culture have on the company’s compliance?  How do investors know about the nature of a CEO’s personal relationships leaking into the corporate environment?

Who should have seen this and reported it to someone?  Why didn’t the directors smell a rat?


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Filed under Board, Compliance, Culture, Culture, Directors, Duty, Employees, Governance, Oversight, Oversight, Risk, Supervision, To report

Shoes of the centipede

“Wells Fargo Faces More Woe Over Client Data,” The Wall Street Journal, May 18, 2018 B1.  Another shoe drops at Wells Fargo (when will it ever end?) after disclosure that employees in the wholesale business (non-consumer) banking side changed and added customer information without approval.  Reason: to meet a compliance deadline.

Is there another organization with so many compliance failures?  It started with consumer banking and credit cards and now seems to have permeated the entire enterprise.  Is it risky to call this an enterprise?  What influenced their behavior?  Why are the directors not in the dock?  Weren’t they in charge of establishing and ensuring the culture of compliance?  This is a bank, for God’s sake.

Is it easier to find someone who was or wasn’t involved in some type of bad behavior at Wells Fargo?

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Filed under Accuracy, Board, Compliance (General), Controls, Corporation, Culture, Culture, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Managers, Oversight, Oversight, Supervision

What does a lawyer do if the client ignores his advice?

The CEO arranged to hire one of his buddies for a senior job with the company.  Someone ( employees? a shareholder?) sent a letter to a member of the Board complaining about the hiring.  The CEO asked Security to find out who wrote the letter, despite being told by Compliance and the General Counsel not to.  He persisted.

“Barclays CEO Hit With Penalties of $1.5 Million,” The Wall Street Journal, May 12, 2018 B1.  UK regulators fined him nearly $870,000 for a ”serious error of judgment.'”

What does it say about a company when the CEO doesn’t listen to the company’s General Counsel or Compliance department?  Is this a governance problem, a compliance problem, or an HR problem?  Costs the shareholders about the same.  And did either the General Counsel or Compliance advise the Board that the C?  What happened to them?

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Filed under Communications, Compliance, Compliance (General), Controls, Corporation, Culture, Duty, Employees, Governance, Internal controls, Lawyers, Oversight, Supervision, To report

To the surprise of no one

“Wells Kept Client’s Fund Fee Rebates,” The Wall Street Journal, May 10, 2018 B1.  Wells Fargo apparently failed to pass on fee rebates that Wells Fargo had received for a pension fund for which Wells Fargo acted as a trustee.

Whether it’s a process issue or a culture issue, lack of supervision, general incompetence, or a way of doing business, is anyone surprised?  Is it only at one pension fund?  Who knows?

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Filed under Accuracy, Compliance, Compliance (General), Controls, Corporation, Culture, Duty, Governance, Internal controls, Oversight, Supervision, Third parties, To report, Vendors

It is indeed a world-wide web

“Tech Firms Update Privacy Protections,” The Wall Street Journal, May 8, 2018 B4.  Firms adjust their privacy policies to comply with European restrictions, even where the European restrictions don’t apply.

The US tried, with some success, to export the joys of ediscovery in litigation; Europe has successfully imposed/influenced privacy restrictions beyond their borders.

Is this just standardization for the convenience of the firms, or for the protection of their customers?  Does it matter?

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Filed under Access, Compliance, Compliance (General), Controls, Corporation, Duty, Duty of Care, Governance, Interconnections, IT, Oversight, Policy, Privacy, Protect assets, Supervision, Third parties

Cheaters never prosper

What does it say about the workplace culture if hundreds of employees try to cheat on a special employee benefit?

“Fidelity Ousts 200 for Benefit Misuse,” The Wall Street Journal, May 7, 2018 B1.  Employees allegedly tried to cheat Fidelity by claiming reimbursement for computer or health care expenses to which they were not entitled.

What does it say about whether they will also cheat Fidelity’s customers?  At least Fidelity found it (in an audit) and took action.  Ethics do matter, as there now-former employees learned.  What does it say that Fidelity took action and flagged the files of employees who were covered by Finra? I guess those employees will look for employment outside the industry.

Primarily Governance and Compliance. But the employees did submit false information.

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Filed under Compliance, Compliance (General), Controls, Corporation, Culture, Duty, Employees, Governance, Internal controls, Oversight, Protect assets, Supervision

Another ½ billion

This may appear to be more a straight compliance piece than an information governance piece, but consider that the officers and directors didn’t know or didn’t report things that they should have known about.  Truth or consequences?

“Wells Fargo Reaches Settlement In Lawsuit,” The Wall Street Journal, May 5, 2018 B10. Tentative settlement in suit alleging certain “current and former officers and directors of the bank had made false statements” affecting the stock price between 2014 and 2016.

The final paragraph of the article says,

The bank said Friday that it “denies the claims and allegations in the action and entered into the agreement in principle to avoid the cost and disruption of further litigation.”

One pauses to wonder if the current shareholders agree, it being their $480 million being spent to resolve the lawsuit, not the $480 million of said certain current and former officers and directors.  This is on top of the $1 billion fine paid last month.  Hopefully, the current and former shareholders will get some of the $480 million, less legal fees.

Telling fibs in connection with a company’s stock price can be real expensive for some one.  Not knowing about abusive sales practices is about the same as lying.  And how can you deny something yet still pay $480 million?  Who are they trying to fool this time?  At least now they can post nice ads on TV, claiming a re-invention.  Has the culture problem been fixed?

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Filed under Board, Compliance, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Inform shareholders, Information, Internal controls, Investor relations, Oversight, Oversight, Protect, Supervision, To report, Value