Tag Archives: Michael W. Peregrine

New DOJ Policy Revises “Yates Memorandum”

by Michael W. Peregrine and Rebecca Martin

A new Department of Justice policy (the “Policy”) modifies critical elements of the prominent 2015 “Yates Memorandum” on individual accountability. Introduced on November 29 by Deputy Attorney General Rod J. Rosenstein (the “DAG”), the Policy is manifested, in part, by specific revisions to Justice Manual (previously referred to as the U.S. Attorneys’ Manual).

The Policy clarifies the relationship between the scope of a defendant’s disclosures regarding individuals and qualifying for cooperation credit, particularly in the context of civil litigation. In so doing, it also raises critical compliance oversight issues for corporate governance. Continue reading

Department of Justice Offers Incentive for Antitrust-Based Corporate Compliance

by Michael W. Peregrine and Mary N. Strimel

Board-level audit and compliance committees should support efforts to revise the organizational compliance plan to incorporate specific provisions focused on antitrust law-related guidelines.  This is especially important given the Department of Justice’s (“DOJ”) plans to credit pre-existing compliance programs that incorporate such provisions.  A company’s General Counsel, perhaps teaming with the Chief Compliance Officer, can support the committee in this initiative.

In a recent speech,[1] Principal Deputy Assistant Attorney General (“DAAG”) Andrew Finch stated that the Antitrust Division is examining whether, and to what extent, to recognize and credit pre-existing compliance programs, potentially during charging or at sentencing.  This consideration might mirror the approach taken by the Canadian Competition Bureau, which announced last month that it would recommend fine discounts of up to 20% for companies that have a “credible and effective” compliance program.[2]  Continue reading

Corporate Compliance and the Legacy of Sarbanes Oxley

by Michael W. Peregrine

This year marks the fifteenth anniversary of the Sarbanes Oxley Act, enacted July 30, 2002, providing an important compliance-based teaching moment for both the governing board and executive management

As many lawyers and compliance professionals may recall, the law was enacted in response to the series of notorious and crippling accounting controversies that had occurred in prior months   involving such companies as Enron and WorldCom. The goals of the Act included efforts to enhance the reliability and transparency of public company financial statements.

That seminal legislation has had an enormous impact not only on the development of corporate compliance programs. It has also affected the board’s relationship to compliance, the role of ethics and “tone at the top” within an organization, the general counsel’s role with respect to compliance, and laws affecting both whistleblower activity, and various forms of obstruction of justice. Continue reading

A “Wells Fargo” Briefing for the Audit Committee

by Michael W. Peregrine

The Board’s audit committee is well advised to receive an update on the risk and compliance lessons from the recent Wells Fargo sales practices controversy. The general counsel, teaming with the chief risk & compliance officer, would be well suited to deliver this update. As well-chronicled in the recently released special investigative report (“Report”), the “20/20” lessons from the controversy transcend the financial services industry, to offer value to corporate boards across industry sectors. These lessons demonstrate how matters of organizational structure, corporate culture, and risk identification and reporting can coalesce in undisciplined circumstances to create significant corporate exposure. In several respects, these lessons prompt comparisons to the conclusions reached by investigative counsel in the GM ignition switch controversy of 2014. This comparison may help underscore the basic risk oversight message to the audit committee; i.e., that these issues have arisen in several of the largest U.S. companies and may arise again without proper supervision. Continue reading

Important New Compliance Program Guidance from DOJ

by Michael W. Peregrine

The recent release of substantive compliance program guidance by the Fraud Section of the Department of Justice (“DOJ”) provides an excellent opportunity for corporations to re-examine the effectiveness of their current internal compliance mechanisms. While the “Evaluation of Corporate Compliance Programs (PDF: 202 KB)” (the Guidance”) is not specific to the any particular industry, it provides a practical set of benchmarks that can be referred to throughout an organization and is of particular relevance to the board of directors (logically through its audit & compliance committee), in the exercise of its compliance oversight duties. Continue reading

Beyond Caremark: Individual and Corporate Liability Considerations

by Michael W. Peregrine

Delaware court interpretations of the Caremark (PDF: 72 KB) standard provide a daunting pleading barrier to derivative actions based on alleged breach of compliance oversight responsibilities. The Chancery Court’s October 18 decision in Reiter v. Fairbank (PDF: 509 KB) is particularly notable for its thoughtful analysis of the duty of oversight. But corporate leadership should recognize that these decisions may not provide impenetrable protection to them, and to the corporation, from compliance-based liability exposure, especially in the current individual accountability environment. Continue reading

Has “Compliance” Had its Fifteen (Years) of Fame?

by Michael W. Peregrine

A series of recent developments calls into question to what extent corporate leadership remains committed to organizational compliance efforts.

The modern emphasis on maintaining an “effective” compliance program was one of the principal corporate responsibility reforms to emerge from the embers of Enron, and from the broader Sarbanes-Oxley environment. The provisions of the Federal Sentencing Guidelines establishing the parameters of an effective compliance program (PDF: 527 KB) were adopted in direct response to this environment. The compliance program provisions of the Department of Justice’s (PDF: 2,791 KB) corporate prosecution guidelines also reflect that era. Over the ensuing years, compliance oversight has become a principal responsibility of corporate leadership both as a matter of regulatory expectation and of fiduciary stewardship.

Yet, as the 15th anniversaries of both the Enron bankruptcy and the enactment of the Sarbanes-Oxley Act beckon, anecdotal evidence suggests that corporate compliance may no longer occupy the highest level of interest amongst corporate leadership. That it is no longer the principal corporate imperative that it once was–and may need to be, in order to compete with other legitimate organizational initiatives for leadership attention and support. This is a trend which should, and may well, be reversed. Continue reading