Section 2

Building Your Foundation

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Implement What You Know with Confidence

Discover action-based tools that provide simple steps for program improvement or robust plans for new ways of doing business. 

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Your ethics and compliance program is an ecosystem of moving parts. New laws and regulations, new lines of business, new geographies, mergers and acquisitions become part of a growing enterprise that your compliance ecosystem must support. 

Effective compliance programs are able to deftly navigate these complexities because they have built strong foundations that were developed with the nature of the compliance industry in mind.

This section will give you the expert advice and programmatic best practices to ensure the first steps you take to develop your program are in the right direction. Or if your program is more mature, these resources and insights will give you the necessary guidance to course correct and improve your program’s foundation at whichever stage it is in. 

 

How to Survive a Conflict of Interest

Chapter 12 of The Worst-Case Scenario Survival Guide for Compliance Professionals

Conflicts of interest can be expensive legally and culturally. Knowing the early warning signs can aid in preventing future corruption as well as reducing the perception of conflicts. Learn how you can best survive a conflict of interest.

Tom Fox 06/27/2018

Chapter 12 of The Worst-Case Scenario Survival Guide for Compliance Professionals

Conflicts of interest can be expensive legally and culturally. Knowing the early warning signs can aid in preventing future corruption as well as reducing the perception of conflicts. Learn how you can best survive a conflict of interest.

 

4. Consider Questions From Regulators

If the Department of Justice (DOJ) or Securities and Exchange Commission (SEC) came knocking, how would the company respond? What internal controls exist around the company’s conflict of interest policy? Does each employee sign a form confirming that they are not in violation of the company’s conflict of interest policy? Is it something more robust? What would a more robust control look like for a company CEO?

With CEO involvement, this may well be a violation of corporate internal controls and thereby subjecting the company to civil penalties.

 

5. Approach the Board Compliance Committee

The first call you should make is to the chair of the compliance committee. This demonstrates the importance of a CCO having a direct line reporting into the board compliance committee. It also points out the need to have a professional relationship with the compliance committee chair, such that you can pick up the phone and make the report without fear of retaliation.

This situation demonstrates that if there is a potential violation of the conflict of interest policy, it must be reported to the highest level in an organization.

 

6. Open the Investigation

The chair of the compliance committee should immediately engage outside counsel, who is not doing any other legal work for the company, to conduct an investigation. This investigation must be ring-fenced off so the CEO/board chair does not get wind of it before counsel is ready to interview him. A final report should be made to the entire Board, in executive session, without the CEO/board chair present.

A quick, efficient and thorough review by truly independent outside counsel is mandatory in this situation.