Category Archives: Theme One: Information

“Ford Discloses Justice Department Probe Into Vehicle Emission Certifications,” The Wall Street Journal, April 27, 2019.  Criminal investigation.

The government relies on industry to provide accurate (and truthful) information about their products’ performance in certain tests.  One or more members of the industry fakes information.  The government finds out.  Fines and criminal charges follow.  Rinse and repeat.

Information (test results); Compliance (cheating on tests); Governance (fines and other enforcement, investigations).

“Facebook Probe Found Major Shortcomings in Privacy Protection, Canada Privacy Watchdog Says,” The Wall Street Journal, April 26, 2019.  Facebook defends against efforts to force it to comply with Canadian law.

Information (user data); Governance (Canadian privacy law); Compliance (suit to force compliance).

“A Small Town Takes a Stand: It Banned Gossip,” The Wall Street Journal, April 26, 2019. Philippine town sets a $10 fine for first offense.

Sounds like Information, Governance, and Compliance, all in one.  Balancing freedom of speech v. slander?

“Facebook Sets Aside $3 Billion to Cover Expected FTC Fine,” The Wall Street Journal, April 25, 2019. Reserve to cover potential fine from privacy violations.

You tell the FTC that you won’t share user data without consent.  And then you share it anyway.  Oopsie.

So, Information (user data) shared without consent (Compliance) in violation of agreement with the FTC (Governance/Compliance). One question: is this fine (one quarter’s profit) sufficient to penalize this behavior by Facebook and deter similar violations by others?

“Brothers Involved in Smollett Case Sue His Attorneys for Defamation,” The Wall Street Journal, April 24, 2019.  Smollett’s lawyers accused of defaming the two Nigerian brothers in news interviews.

Generally, you can’t sue a lawyer for an accusation he or she makes in court.  But what he or she says to the news cameras is fair game.  And the lawyer is probably acting as the client’s agent in making those statements, so the client has exposure for the attorney’s acts.  But, for a change, the lawyers are the deep pockets.

So, clearly information.  And Compliance (with libel/slander laws).  And Governance, through the legal process.

“Online Lender Prosper Settles Probe Over Misleading Investors,” The Wall Street Journal, April 20, 2019.  Company provided the wrong data to is investors.  For two years.

The error resulted in the company overstating its earnings.  Why do these errors never go the other way?

You invest in something, and rely on the company providing accurate information to measure your investment.  They overstate their results by not including certain deductions.  Then the suit for fraud.

Where is the failure in governance?  The company?  You?