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?
Filed under Board, Business Case, Collect, Communicate, Communications, Compliance, Compliance, Compliance, Controls, Corporation, Directors, Duty, Governance, Inform market, Inform shareholders, Investor relations, Management, Third parties, To report
I was working on another project, and could not do my postings as timely as I would like. But here’s a bunch of news items I wanted to write about:
- “Tesla Boss Warns on Artificial Intelligence,” The Wall Street Journal, July 17, 2017 B1. Elon Musk call for a regulatory body to “guide development of the powerful technology.” Government bodies are so well suited to such activity.
- “Disney Sued Over Films’ Visual Effects,” The Wall Street Journal, July 18, 2017 B3. Who owns the technology (that’s information) that melds real human faces with characters in films? Plaintiff wants an injunctions to prevent display and sale of several major movies.
- “States Urged to Give Voter Records to Commission,”The Wall Street Journal, July 20, 2017 A4. Who owns your voter record? You? The state in which you voted? Is it public? If so, can the Federal government request it?
- “U.S. To Drop ‘London Whale’ Charges,” The Wall Street Journal, July 22, 2017 B1. What happens when your star witness suffers a credibility problem?
- “Lax Governance Cited in Spanish Bank’s Collapse,” The Wall Street Journal, July 25, 2017 B10. Problems: lack of sufficient independence of directors from management and deals with companies that may have posed conflicts. How can you govern if you’re too friendly with management?
- “Ex-Fiat Executive Is Charged,” The Wall Street Journal, July 27, 2017 B3. Executive formerly in charge of labor relations for Fiat indicted, accused of illegal payoffs and special deals with union leaders, and skimming money from a worker training fund. Executives go to jail when they get caught.
- “Local Council Suspected in London Fire,” The Wall Street Journal, July 28, 2017 A16. Were the local councils somehow responsible for the fire that killed 80? Police think so. Decision makers are responsible for their decisions.
Filed under Compliance, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Lawyers, Oversight, Ownership, Privacy, Third parties, Uncategorized
“Two Plead Guilty in Insys Cases,” The Wall Street Journal, July 12, 2017 B3. Insys Therapeutics had an unusual fentanyl problem: bribing doctors to prescribe it. Two saleswomen took the plea.
Notable: one of the women is married to the firm’s former CEO, who was arrested on related charges in December, together with 5 other senior managers.
Does corruption normally run this deep? Where is (or was) the board?
Filed under Board, Compliance, Compliance, Compliance, Compliance Verification, Controls, Corporation, Culture, Culture, Directors, Duty, Duty of Care, Employees, Governance, Internal controls, Management, Oversight, Oversight
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?
Filed under Accuracy, Board, Collect, Communicate, Compliance, Compliance, Compliance, Controls, Corporation, Directors, Duty, Duty of Care, Employees, Governance, Inform market, Internal controls, Management, Oversight, Oversight
Where do you start if you want to pierce a corporation’s cybersecurity protections? The CEO.
“Goldman, Citi Bosses Duped by Email Prankster,” The Wall Street Journal, June 13, 2017 B11. Although nothing confidential was leaked, the CEOs bought into phishing emails.
Hard to blame the Chief Information Security Officer. One assumes there’s a policy in place, but can you write a policy to protect against this? Who else in the corporation isn’t following the existing policy? How do you fix? Two-factor authentication for every email to/from a senior exec? Encryption?
Filed under Access, Compliance, Compliance, Controls, Corporation, Duty, Duty of Care, Employees, Governance, Internal controls, IT, Management, Policy, Security
How do you deal with claims of sexual harassment? Have two law firms conduct investigations and fire 20 people. But will that be the end or the middle?
“Uber Fires Over 20 In Wake Of Probe,” The Wall Street Journal, June 7, 2017 B1. Over two hundred claims investigated and no action taken in 100 of them.
Were there supervisors who participated or condoned or who failed to notice or respond? Were there reporting practices and policies in place? If harassment was “accepted” in the Uber culture, who’s to blame? HR? The Board? Management? How long had this been going on? How much will the shareholders have to pay?
A summary of one of the law firm reports is due out soon.
Filed under Board, Compliance, Compliance, Compliance, Controls, Corporation, Culture, Culture, Duty, Employees, Governance, Internal controls, Management, Oversight, Oversight
Uber fired the executive at the heart of the dispute with Google over self-driving cars. The exec failed to meet a deadline to comply with a court order to turn over documents in a trade secret case over self-driving cars. “Uber Fires Executive At Center Of Suit,” The Wall Street Journal, May 31, 2017 A1.
Lesson? If you hire an employee from a competitor and he’s accused of stealing his former employer’s trade secrets, try your best to look good.
What’s your process for keeping new employees, especially from competitors, from damaging your business and your reputation by bringing in your competitor’s trade secrets? Did you follow it, or is it just there for show?
Filed under Communications, Compliance, Controls, Corporation, Duty, Employees, Governance, Information, Internal controls, Management, Managers, Oversight, Ownership, Policy, Protect, Third parties, Value