These are some of the compliance related stories that recently caught my attention.
Thinking About the Applicability of SOX Whistleblower Protection to Private Company Employees by Kevin LaCroix in the D&O Diary
Since their 2002 enactment, the whistleblower protections in Section 806 of the Sarbanes-Oxley Act have been presumed to apply only to employees of publicly traded companies. After all, the provisions are entitled “Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud.” However, in its March 4, 2014 holding in Lawson v. FMR, LLC (here), the U.S. Supreme Court held that Section 806 protects whistleblowing activity by employees of a private contractor of a public company.
Confronting the Two Faces of Corporate Fraud by Miriam H. Baer in CLS Blue Sky BLog
From this typology, one can see why corporate fraud so often mixes planned and impulsive conduct and why the corporate compliance department is likely to have its hands full: With the exception of the employees in category (a), everyone within the corporation has the potential to contribute to or perpetrate a fraud.
How should a compliance department respond to these prototypes? The latter half of the Article concludes that much of the compliance officer’s work falls within two categories: corporate policing and corporate architecture. The policing approach is the most familiar one: It reduces corporate crime by empowering internal corporate policemen to identify and punish actual and would-be transgressors. The latter approach is different in feel and effect: It encourages corporate personnel to seek out and mitigate problematic situations by adopting different decision-making structures and systems, thereby reducing the opportunity and temptation for fraud. The policing approach is more judgmental and punitive, while the architectural approach is more regulatory and intrusive.
Behold the Burrito Bond by Josie Coz in WSJ.com’s MoneyBeat
London high street fast food outlet Chilango, favored by City types with elastic waistbands, is offering an 8% coupon on a four-year corporate bond that gives some buyers a free burrito* every week for the lifetime of the debt. All you have to do is cough up £10,000 pounds ($16,800) and trust that it is as good at servicing its debt as it is at serving bankers their lunch.
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It is unclear whether the free burritos come with guacamole. It is also unclear whether anyone genuinely can eat that many burritos.
Bricks and Timber is by Patrick Dalton
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