Random Thoughts on Compliance… 

Radical Compliance is in London this week, tending to a few speaking events and some much-needed pub visits. That means fewer timely posts than usual, so here are some random thoughts to keep you entertained while we wait in the immigration arrivals line at Heathrow Airport. 

Washington should hurry up and pass legislation to extend whistleblower protections under the Dodd-Frank Act to employees who only report misconduct concerns to their corporate compliance officers. The House has passed its version, the Senate has another pending. Let’s get this over the finish line. 

I see a lot of sense conceptually in changing corporate accounting for goodwill from an annual impairment test to an amortization model — but a reasonable period for amortization that all companies could use would be so hard to set, I’m not sure FASB can make this idea work.

Who’s going to tell Boeing that consumers are never going to fly the 737 MAX again? 

Several years ago I canceled my cable TV subscription, and last year I deleted my Facebook account. My mental health is much better since then, and I recommend both moves to everyone. 

I’d especially recommend canceling cable TV to attorney general Bill Barr, who spends way too much time and taxpayer money chasing conspiracy theories he sees on Fox News

The idea of an integrated risk management function overseen by a chief risk officer has a lot of appeal, except many corporate risks are legal in nature — and there ain’t no way a general counsel is ever going to report into a CRO. 

My sympathies to all the compliance professionals in Houston who are Astros fans. Tough way to end the season.

So the Supreme Court has agreed to hear a lawsuit arguing that the Securities and Exchange Commission can’t force companies to disgorge profits from improper conduct. The idea that our primary securities regulator cannot impose remedies for corporate misconduct is so nuts, you’d like to assume it will be laughed out of court — but with some of the right-wing justices on the bench, you can’t be sure. 

I recently read Means of Ascent, the second volume of Robert Caro’s biography of Lyndon Johnson. It covers Johnson’s life in the 1940s, including when he stole the Texas Senate seat in 1948. Lots of parallels between Johnson’s amorality and narcissism and those of a certain someone in the White House today. 

Of course the Fed and other banking regulators should examine Amazon Web Services and any other cloud provider to the financial sector. Is this even a question? 

The way Republicans have handled the Ukraine whistleblower — congressmen demanding the person testify; President Trump trying to identify him publicly — is a disgrace. Every word out of their mouths is an example of how corporate executives and audit committees should not conduct themselves when investigating a whistleblower’s allegations of misconduct.

We will not see a federal data protection law in the United States until 2021 at the earliest. 3021 is more likely.

I am still cynical about the motives of the Business Roundtable’s revised statement of purpose for a corporation. It’s one part power grab from institutional investors, one part make-nice gesture to Elizabeth Warren before she becomes a real threat to Corporate America.

I’ll miss The Good Place when it finishes its final season in a few more weeks. Great show, astounding humor — and when was the last time any program on television gave a substantive treatment of ethics? 

An academic recently asked me if I knew of any data about how many corporate compliance officers have prior experience working as regulators. I don’t. If anyone else knows the answer, please email me and let me know!

Corporations need to pull it together and wean their internal audit functions off of SOX compliance. That’s not what should occupy an audit function’s time any more. Emerging risks and stronger data analytics are. 

You know the corporate governance and internal control issues around Saudi Aramco and its supposed upcoming IPO are legion. The NYSE and London Stock Exchange were right not to lower their standards to win the listing, although I’m surprised they didn’t. 

The NBA’s problems with China are about how a global brand (the NBA) handles one stakeholder group (fans) split into warring camps (Chinese values versus American values). Corporations should watch this one carefully, because it’s a predicament any large business could face. 

SOX Compliance


SEC chairman Jay Clayton is clearly scrambling these days to advance his agenda before the timer expires on the first (and possibly only) term of the Trump Administration. Watch for more outside groups to threaten lawsuits against the agency for sloppy rulemaking, or even to follow through with litigation like Institutional Shareholder Services did last week

That said, I’m pleasantly surprised at the continued civil enforcement of FCPA issues from the SEC this year. Provides a steady stream of material to study for how to improve internal control over financial reporting. 

Just when I started to think the Patriots might go undefeated this year, they went and lost to the Ravens. Now all of New England is second-guessing the first half of the season, that maybe we played eight bad teams and we’re not as good as we thought. Dammit.

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