Category Archives: Communicate

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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Filed under Business Continuity, Communicate, Compliance, Compliance, Controls, Duty, Duty of Care, Governance, Government, Internal controls, IT, Management, Operations, Oversight, Protect assets, Risk assessment, Security, Third parties

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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Filed under Accuracy, Communicate, Communications, Controls, Corporation, Data quality, Duty, Governance, Internal controls, Management

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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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?

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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

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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Altered metrics

If someone asks you to “alter” or “fudge” a financial metric reported to the market, take pause.  Or hit the big red button.

“Witness: Magnate Knew of Altered Metric,” The Wall Street Journal, June 28, 2017 B9. The chairman of a large company allegedly knew that one of the financial metrics the company reported to the market for the previous quarter was improperly inflated.  Or fudged, as they say in the trade.  By $12 million.

The former chief accounting officer took a plea to fraud (and admitted to lying on other matters) and is cooperating with the government; the former CFO is charged with criminal fraud and is at trial.  The company is “cooperating.”  The chairman hasn’t been charged.  Yet.

Why isn’t the company charged?  At least one of its agents appears to have committed a fraud.  Why isn’t the chairman charged, if he knew?  Is this consistent with the Yates memo?  Is there a civil (derivative) suit against the chairman?

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Texas Administrators

Soon to be signed into law is a bill holding school administrators, superintendents, and principals criminally liable for failing to report teachers who commit “inappropriate acts” with students.  The offending teachers are already potentially liable.

“Texas Measure Targets Improper Teachers, The Wall Street Journal, May 22, 2017 A3.

Surprising it wasn’t the law already.  Mr. Bumble was right:  the law is a ass.

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