Recent media reports say that certain parties associated with Fox News have been subpoenaed by federal prosecutors to obtain testimony and information about allegations that Fox may have quietly settled a series of sexual harassment cases brought by Fox employees against former Chairman Roger Ailes. This is all far too sketchy and preliminary to draw any inferences about actual violations of law, especially as the reports came out in the course of nasty private litigation. But the news is a timely reminder to lawyers and compliance officials of how treacherous the waters are for anyone caught up in this kind of narrative—one where a key company official (often the one sitting on the corporate throne) may have engaged in serious unethical or unlawful behavior, with a strong desire in-house that the troublesome allegations never become public. Continue reading
by Donald C. Langevoort
Each new compliance scandal triggers something of a “what were they thinking” response among those who consider it self-evident that sensible people inside a business organization would try hard to avoid behaviors that can bring such serious legal and reputation harm. So it is with the current subject of fascination, Wells Fargo. “Salespeople” (many of whom were branch employees serving customers’ basic banking needs) created millions of unauthorized customer accounts of various sorts in order to generate fee revenues. While some corporate legal violations are implicitly blessed from above because any sanctions can be seen as just the cost of doing business, such was probably not the case here.
To me (working only from official documents and press reports, which admittedly never give the whole story), Wells Fargo probably illustrates a few points consistent with the emerging research in what is becoming known as behavioral compliance. Continue reading
How to develop a corporate culture supporting corporate compliance is a key topic. Directors and officers both play roles in creating corporate culture; they are responsible for tone at the top, and that tone is key to compliance. The role of directors is what we explore today – as well as how the securities and corporate laws set the contours of that role. Our interest is in whether and how directors can and do play a role in building a culture of candor and its contribution to a culture of compliance.
Various actors on the federal level have been pushing boards of directors to become more involved in disclosure quality control, and as boards do so, they are increasingly engaged in setting the compliance and candor culture. Continue reading