Category Archives: Compliance

What’s worse than a tweet?

“FBI Probes Tesla Over Production Figures,” The Wall Street Journal, October 27, 2018 A1.  FBI conducts a criminal investigation into whether Tesla knowingly overstated anticipated production figures and thereby misled investors.

What if Tesla knew at the time that it couldn’t and wouldn’t meet the production targets it was then continuously providing the market?  When does mere puffery become criminal?  What controls would you need to have to prevent this at your company?

Do you have them?  Are they enforced?

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Filed under Accuracy, Collect, Communicate, Communications, Compliance, Compliance, Compliance (General), Controls, Corporation, Culture, Data quality, Duty, Duty of Care, Governance, Internal controls, Investor relations, Management, Oversight, To report

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 https://infogovnuggets.com/2018/08/11/loose-lips-revisited/.

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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CEO Charged

“SEC Charges Ex-CEO With Insider Trading,’ The Wall Street Journal, July 11, 2018 B12.  Ex-CEO charged with giving his paramour inside information (and money) to buy stocks.

From a compliance perspective, it is good to see that the people at the top of the shop get charged, too.  Helpful training reminder.  If the CEO doesn’t obey the law, what can you expect of the other employees?

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Contracts matter, too

This blog often deals with Compliance, both compliance with law and compliance with company policy.  But another aspect of Compliance is the corporation’s compliance with its own contracts.

“Professor Wins College-Freedom Case in Wisconsin,” The Wall Street Journal, July 7, 2018 A3.  Private university penalizes professor for posting a factual post online, despite  academic freedom protections he had in his contract; professor wins back pay and reinstatement.

So, does your compliance program cover your organization’s compliance with its own contracts?  Does your compliance training mention that point?  Is contract compliance more or less important than ethics?  Or is it part of ethics?  How strong are your processes around contract compliance?

I just ask the questions.

 

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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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Three returning contestants

And all on the same page.

  1. “U.S. Indicts VW’s Former CEO,” The Wall Street Journal, May 4, 2018 B1. Former CEO indicted in March for conspiracy and wire fraud following the emissions cheating scandal.  Do CEOs go to jail?
  2. “Facebook Has Dual Standard On Privacy,” The Wall Street Journal, May 4, 2018 B1. If you’re in a special group in Facebook, you get an alert if someone accesses your profile; if you’re a muggle, or don’t work at Facebook, you don’t.  Maybe this will change?
  3. “Theranos Hurt Big-Name Investors,” The Wall Street Journal, May 4, 2018 B1.  Company said it had the technology to do a wide range of blood tests based on a few drops of blood.  It didn’t, and a host of big-name investors lost a bundle. Is this a governance issue, an information issue, or a compliance issue?  Don’t believe everything you hear; it’s costly.  And don’t serve as a director without doing your own due diligence.

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Filed under Access, Accuracy, Board, Compliance, Compliance, Compliance, Controls, Corporation, Culture, Data quality, Duty, Duty of Care, Employees, Governance, Internal controls, Oversight, Oversight, Policy, Protect information assets, Supervision

Ethics

When you need to hide relevant information from your clients, you are often doing something that’s not ethical.

“BofA to Pay Fine Over ‘Marking’ of Trades,” The Wall Street Journal, March 24, 2018 B10.  Bank hid the fact that it was routing its clients’ trades through high-speed trading firms.  Millions of times.  Apparently, the scheme was well known by bank employees, and was to hide the bank’s practices from major clients who would have objected.  And they did it anyway.  Cost: $42 million fine, and a loss of a lot of face.

You’d think a bank would have a policy or maybe even a culture against lying, cheating, or stealing.  Who’s getting fired?

 

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