Category Archives: Communicate


“Ex-Salix Official to Pay Fine,” The Wall Street Journal, September 29, 2018 B10.  A company’s CFO understated the company’s inventories held by wholesalers; fined $1 million.

“Under-reporting,” also known in lay circles as lying, is generally not a good thing, especially for a CFO.  See also, “Lender’s Unit Resolves SEC Case,”The Wall Street Journal, September 29, 2018 B10.


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Filed under Accuracy, Communicate, Communications, Compliance, Compliance (General), Controls, Duty, Employees, Governance, Internal controls, Third parties

Sunk ship

“SEC Sues to Oust Musk From Tesla Over Tweets,” The Wall Street Journal, September 28, 2018 A1.  The SEC sued to remove Elon Musk as the CEO of Tesla, after Mr. Musk tweeted about funding for taking the company private.  See also

So, if the CEO doesn’t follow the rules, how much do the shareholders get hurt?  Ten percent (or $5 billion).  What’s Compliance worth to them?

Take that and smoke it.


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A Mayor’s challenge

“Probes, Cyberattack Distract Atlanta as It Pitches Amazon,” The Wall Street Journal, May 29, 2018 A3.  Investigations of former mayor and the aftermath of a ransomware attack hamper efforts to entice Amazon to the city.

Corporations should conduct structured risk assessments.  Do cities?

One assumes Atlanta has done a risk assessment and identified the risk of official misconduct.  Did it also capture the risk of a cyberattack?  Did the risk assessment suggest that if these risks occurred, Atlanta would lose the chance of phenomenal growth?


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What is your brand?

“Hundreds of Cryptocurrencies Show Hallmarks of Fraud,” The Wall Street Journal, May 18, 2018 A1.  Plagiarism, promises of future returns, and fake executives found in offering materials for cryptocurrency companies.

What can investors expect if they invest in these companies?

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Wells Fargo, continued

“Wells Fargo Fires A Top Official, The Wall Street Journal, November 18, 2017 B1. Head of commercial lending canned because he said bad things to a fellow employee about regulators (and how they were affecting golden parachute payments) .

Think about that.  He didn’t write it down; he just said it.  Not outside the company, even.

True, his firing may have been expedited by all the other legal issues Wells Fargo has been having.  But he may not have gotten much of a parachute.

Information controls apply to unwritten information, too.

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“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?

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Silence as information?

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?


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