Voice of the Global In-House Bar

A word on compliance…from the Enforcers

In an effort to improve both enforcement practices and corporate compliance efforts, the Ethics Resource Center hosted a Policy Summit on February 12, 2013, called “Improving Corporate Conduct through Pro-Compliance Enforcement Practices”.  ACC Advocacy staff attended the summit, as part of its continuing initiative to ensure that in-house counsel are represented in dialogues on corporate compliance efforts and the usefulness of the Federal Sentencing Guidelines for Organizations (FSGO).

Key takeaways from the conference*:

  • ANCHORING THE COMPLIANCE PROGRAM:  The “nine factors” set forth in the DOJ’s Principles of Federal Prosecution of Business Organizations do work and should guide the development, implementation, and enforcement of any corporate compliance program.
  • COMPLIANCE & ANTITRUST:  Compliance programs matter for antitrust violations:  If a company can detect an antitrust violation using its compliance program and be the first to report, it may be able to receive corporate leniency, which could include no prosecution and a reduced fine.
  • THE CRUX OF COMPLIANCE:  To get to the heart of compliance, three things matter:  culture, self-policing, and the facts:
    • Compliance programs must permeate the corporate culture.  To permeate corporate culture, regulatory enforcers emphasized that the CEO must be the change-driver, setting the tone for compliance from the top of the organization.
    • More than copious documentation, the implementation and internal enforcement of a compliance program matter most in a regulatory enforcer’s evaluation of a program’s effectiveness.
    • “There is not a list of things that must be done” in a corporate compliance program, in the sense that if something cannot be checked the company would fail eligibility for credit.  Government prosecutors are “flexible and subjective” in how factors are analyzed.  The inquiry is fact-dependent.
    • REPORTING STRUCTURE:  The government is not taking a stand on the details of where Chief Compliance Officers should report.  In evaluating the effectiveness of compliance programs, the government is not inclined to take an interest in “how it works, as long as it works.”
    • 2013 ENFORCEMENT PRIORITIES:  Although not an exhaustive list, panel guests highlighted these key enforcement priorities:
      • US Department of Commerce: unauthorized transfers of military weapons and increased prosecution of individuals as opposed to companies.
      • Securities and Exchange Commission: Investment advisers, broker dealers, insider trading, market abuses, and alternative trading venues
      • Federal Energy Regulatory Commission:  market manipulation, anti-competitive conduct, and serious transparency issues
      • BEYOND 2013:  Judge Patti Saris, the Chair of the United State Sentencing Commission, suggested that public discourse should soon resume on whether environmental and food and drug offenses should be included in Chapter 8 of the United States Sentencing Commission Guidelines Manual.
*This policy summit’s panel guests included officials from the following:
  • United States Sentencing Commission
  • Antitrust and Criminal Divisions the United States Department of Justice
  • Division of Enforcement, United States Securities Exchange Commission
  • Office of Export Enforcement, Bureau of Industry and Security, US Department of Commerce 

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