Random Thoughts on Compliance

Radical Compliance is taking a few days of vacation this week. So until we return, it’s time for another edition of random thoughts on all things compliance-, audit-, and risk management-related, and whatever else comes to mind. 

So, wait — the Trump Organization and CFO Allen Weisselberg actually kept a spreadsheet of improperly recorded compensation? Classic. They should’ve talked to compliance folks who study books-and-records violations of the FCPA. We would have told them how stupid that is.

Put me in the camp of people who believe compliance functions, properly supported, can assume the expanded ESG duties that are coming to Corporate America soon. Compliance professionals have plenty of relevant experience for the ESG tasks at hand, and it’s a great opportunity for people with ambitions beyond anti-corruption issues.

My unscientific hunch: for those people fully vaccinated with Pfizer, Moderna, or Johnson & Johnson shots, the pandemic is over. Even if you get covid, it won’t be worse than a normal flu. Those who chose to be unvaccinated, however, are still gambling with a potentially fatal illness.

The Sustainability Accounting Standards Board’s ESG materiality map is an excellent resource — practical, simple, and specific. 

Lordstown Motors is an excellent example of why SPACs are such a pernicious force in the capital markets. Lordstown was not ready to be a publicly traded company, but went public anyway thanks to a SPAC, and investors were left holding the bag.

There are still way too many compliance job postings out there that say the role reports into the legal team. I even saw one recently that said the compliance officer “may have the opportunity” to present to the board, like it’s a reward for toiling away on due diligence reports. Uh, no; that’s not how ethics and compliance is supposed to work.

When workers say they want higher wages and a business says it can’t make ends meet with that higher cost, the business is really saying the success of its business model depends on paying workers inadequate wages. I can’t muster much sympathy for that argument. 

I’m somewhat amazed at the number of compliance and audit professionals who aren’t aware of CMMC, the new cybersecurity standard for defense contractors. In the fullness of time, this will be a big burden.

Monthly open meetings, a revived rulemaking agenda, more vigorous enforcement — it’s going to be fun watching Lena Khan run the Federal Trade Commission. 

On the other hand, good riddance to William Duhnke fired from the Public Company Accounting Oversight Board. He was a bad manager for an already-suffering organization. His tenure there did nobody any good.

So, that FCPA enforcement case involving Amec Foster Wheeler. Foster Wheeler was acquired by Amec, which was subsequently acquired by John Wood Group, and neither of those firms sniffed out Foster Wheeler’s corruption during pre-acquisition due diligence? You gotta wonder how that happened.

I wholly support British regulators banning cryptocurrency group Binance from the country. Cryptocurrency still has far, far too many corruption risks to make it worth the trouble for regulators. Just ban these businesses and be done with it.

Astonishing corporate governance drama happening with Toshiba these days. Which is a good thing, because Corporate Japan is still far too cosseted and clubby. 

The NYC Bar Association can offer a framework for compliance officer liability for program failures if that’s what the association wants, but let’s be real: enforcement against CCOs is exceedingly rare, usually involves gross negligence or criminality, and never happens outside of financial services. It’s just not a risk most compliance officers need to worry about.

Interesting report from the Securities & Exchange Commission that the portion of customized XBRL tags filers use in their financial statements has been rising lately. That means more complexity in financial statements and less comparability among firms. Over the long run, the SEC and the Financial Accounting Standards Board can’t allow a trend like that to continue.

Glad to see that college athletes will now be able to earn an income from their names and images. The NCAA has been far too exploitative of college athletes for years. 

Want an example of how a rapidly growing business can under-invest in compliance capabilities and cause a trainwreck? Read FINRA’s $70 million enforcement action against Robinhood. Good lord.

Fixed, staggered terms for Supreme Court justices, and then they rotate elsewhere onto the federal bench. It’s the only way to end these pitched, to-the-death battles for American democracy. 

A compliance colleague recently described a “hybrid team meeting” of four people in the office, two others Zooming in from their laptops. The four tried to include the other two as much as possible, “but there was plenty of body language and other cues that they just didn’t see or get,” he told me. That’s always going to be true, and people who go back to the office will have a natural career advantage.

I can’t wait to see compliance folks in person again at the Society of Corporate Compliance & Ethics 2021 conference

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