Compliance Bricks and Mortar: Post-Comey Edition

Politics aside, one of the key items I saw in the Comey testimony yesterday was the effect of perception on interactions between a boss and his employees. Mr. Comey said he did “take as a direction” the president’s words to mean he should drop the investigation. That may or may not have been the intention of President Trump. Mr. Comey likened the statement to one made by King Henry II, referring to the archbishop of Canterbury, Thomas Becket, “Will no one rid me of this meddlesome priest?” That resulted in the murder of Thomas Becket.

These are some of the compliance-related stories that recently caught my attention.


DLA Piper’s 2017 Compliance & Risk Report: Compliance Grows Up

Chief Compliance Officers (CCOs) are less worried than they were a year ago about personal liability – likely a result of program improvements and increased independence and prominence of the compliance function, according to a new survey released by DLA Piper.

But DLA Piper’s 2017 Compliance & Risk Report still found that 67 percent of CCOs are at least somewhat concerned, and see significant areas for improvement – including in regard to compliance’s relationship with boards of directors. This year’s survey was expanded to query directors, who noted a higher level of concern than their CCO counterparts. [More…]


How to Improve Corporate Compliance with the Law by Vincent DiLorenzo in the CLS Blue Sky Blog

Regulatory philosophy in the U.S. and U.K. long reflected an assumption of corporate commitment to law-abiding behavior. Mainstream corporations were viewed as embracing an ethical obligation to comply with legal mandates. The result was a light-touch approach to enforcement policy—a policy relying on agreements to cease violations and not emphasizing the imposition of civil penalties. When law-abiding behavior was absent and a breach of legal standards was substantial, recurrent, or systemic, then financial penalties were imposed. More recently, regulatory philosophy has been modified to embrace the view that corporate actors are rational decision makers, choosing to comply, evade, or violate legal obligations based on cost-benefit evaluations. This regulatory philosophy reflects a neoclassical economic view, which assumes that corporate actors will comply with legal requirements if all potential costs of noncompliance exceed their benefits. In this scenario it is assumed that corporate actors assess risk based on a full appreciation of all the short-term and long-term consequences of their actions. The related assumption is that corporate decisions are linear, so that increasing the size of fines, for example, will have a direct and proportional impact on future decisions concerning legal compliance. This is both a reductionist and a linear view of human decision-making. The 2008 financial crisis has revealed flaws in both of these viewpoints. [More…]


The Limits of Gatekeeper Liability by Andrew F. Tuch in the HLS Forum on Corporate Governance and Financial Regulation

In The Limits of Gatekeeper Liability, I assess an original and provocative strategy intended to address many of the challenges facing gatekeeper liability. Proposed by Professor Stavros Gadinis and Mr. Colby Mangels in their paper Collaborative Gatekeepers, the strategy is inspired by rules that have proven effective in anti-money laundering regulation. [1] In my response, I examine some of the often overlooked subtleties involved in both justifying gatekeeper liability regimes for controlling corporate wrongdoing and in calibrating the deterrent force of these regimes. [More..]


SEC Names Stephanie Avakian and Steven Peikin as Co-Directors of Enforcement

Ms. Avakian was named Acting Director of the SEC’s Division of Enforcement in December 2016 after serving as Deputy Director of the Division since June 2014. Before being named Deputy Director, Ms. Avakian was a partner at Wilmer Cutler Pickering Hale and Dorr LLP, where she served as a vice chair of the firm’s securities practice and represented financial institutions, public companies, boards, and individuals in a broad range of investigations and other matters before the SEC and other agencies. . . .

Most recently, Mr. Peikin was Managing Partner of Sullivan & Cromwell’s Criminal Defense and Investigations Group. His practice focused on white-collar criminal defense, regulatory enforcement, and internal investigations. Mr. Peikin also is Adjunct Professor of Law at New York University Law School, where he teaches a class on the criminal enforcement of securities and commodities laws.

[More…]


SEC Administrative Law Judges: The Sequel by Greg Morvillo in the NYU Law’s Compliance & Enforcement

Back in February, I wrote a blog piece on the state of the law as it relates to the litigation over SEC Administrative Law Judges.  As, I’m sure you know, all good sequels recap the previous incarnation without belaboring the point so here goes:  a circuit split is brewing.  In Lucia v SEC, the D.C. Circuit held that SEC ALJs are not inferior officers and do need not be constitutionally appointed. Thereafter, the Tenth Circuit, took the exact opposite position in Bandimere v. SEC.  ALJ’s are inferior officers under Article III and if not appointed by the head of a department, are unconstitutionally presiding over cases before them.  While it is not as exciting as seeing an old Luke Skywalker at the end of Star Wars: The Force Awakens, it is, in fact, where we left off in February. [More…]


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