Random Thoughts on Ethics & Compliance

Radical Compliance is taking a few days of personal leave. We’ll still have the Jobs Report and the newsletter on Friday as usual, and will be back next week. To keep you occupied until our return, we have another round of random thoughts on ethics, compliance, audit, and whatever else comes to mind. Read on…

This business with Gamestop shares, inane as it may be, really does deserve regulators’ attention. We have day traders and hedge fund managers borrowing money to fight with each other. That’s how financial crises start: with leverage and stupidity. Order must be brought to this nonsense before the next incarnation has consequences we didn’t anticipate.

Prediction: Michael Barr will be confirmed as head of the Office of the Comptroller of the Currency. Yes, progressive Democrats say he’s too close to the banking industry, but let’s say they torpedo his candidacy. Then what — they force an even more liberal nominee whom Republicans will torpedo, and Biden nominates an even more centrist replacement? That makes no sense. I think Barr runs OCC.

I’d long thought the Patriots’ success was a preternatural alignment of Tom Brady talent and Bill Belichick coaching. Now that Brady is taking the Bucs into the Super Bowl and the Patriots are back to their natural habitat in the lower realms of the AFC East, I’m re-evaluating my world view.

About that Association of Corporate Counsel survey earlier this week found that only 42.5 percent of chief legal officers oversee corporate ethics. My question is this: who oversees corporate ethics in the other 57.5 percent? Ethics and culture very much tie into anti-corruption, whistleblower complaints, and enforcement actions — which all ranked as relatively low concerns among CLOs. Clearly, these CLOs who oversee compliance see all those issues as somebody else’s concern. Whose, exactly, if not legal and compliance? 

The Queen’s Gambit is a fantastic show, but did the world really need a Queen’s Gambit SPAC, too? 

Cobra Kai, meanwhile — that’s clearly the tale of two super-powers struggling to coexist while smaller, less stable states provoke global crises, egged on by a relic power from the 1980s. A PhD student in international relations could have a field day with this show.

Back to Gamestop. If the questions here are about fintech’s power to introduce market instability, then Gary Gensler would be an excellent person to chair the Securities and Exchange Commission while regulators try to answer them. 

We still don’t have a nominee to lead the Federal Trade Commission, and I want one. That Democratic dissent against the FTC’s enforcement action against Zoom Technologies last fall read like a blueprint of how Democrats would enforce data collection practices if they were in charge. I want to know if those priorities will still hold now that they are.

Businesses need to play a much stronger role in telling employees, and the public, to get over themselves and get vaccinated. 

I’ll be very curious to see whether, and how, the Defense Department revisits its Cybersecurity Maturity Model Certification in the wake of the SolarWinds cyber attack last year. Ideally the Pentagon will ramp up attention to CMMC substantially, and deliver a much needed kick in the rear to businesses about the importance of security in the software supply chain. 

The SEC really does need to update its guidance for companies on internal control over financial reporting. Whoever ends up running the Division of Corporation Finance or the Office of the Chief Accountant, let’s hope they give us some fresh meat here. 

In contrast, the Justice Department does not need to update its guidance on effective compliance programs for quite some time; that material is fine, and so is the FCPA Corporate Enforcement Policy. Although I wouldn’t be surprised if we see the Biden Administration be more forceful in its use of compliance monitors. 

Sens. Josh Hawley and Ted Cruz are collaborators with extremists who sought to cast aside American values with dictatorship. They should be expelled from the Senate. 

The job market for compliance professionals continues to be robust. Sure, some people are losing their jobs due to the pandemic or the economy — but many firms are hiring compliance professionals at the same time. Call the market frothy, or volatile, or brisk, or whatever; but one word you can’t ascribe to the state of affairs right now is “bad.”

An item many of us overlooked: a Senate investigative report published in December about dysfunction at the Federal Aviation Administration. One major theme was that FAA managers retaliated against employees trying to raise concerns about safety. The major lesson there: effective internal reporting systems are crucial to help the organization stay true to its mission and values. Remember that, the next time operations folks ask why all this attention to speak-up culture is necessary.

Hey son, I said, why don’t we go to the park? “Dad, I have an even better idea! I’ll just play Nintendo so you have more time to work.” Clearly my son has a bright future in private equity.