These are some of the compliance-related stories that recently caught my attention.
The S.E.C.’s Hazy Approach to Crime and Punishment by Peter J. Henning in NY Times.com’s DealBook
In Gilbert and Sullivan’s “The Mikado,” a line expresses the need “to let the punishment fit the crime.” The Securities and Exchange Commission is struggling with that notion when it decides whether to grant a waiver to an automatic bar from certain securities trading.
The issue has been nagging the S.E.C. for the last year in settlements with banks and brokerage firms for violations of the securities laws that earns them the label of “bad actor,” which results in the automatic bar, which can be costly. Last week, two commissioners, Luis A. Aguilar and Kara M. Stein, issued a dissent from an order that granted a waiver to Oppenheimer & Company despite what they described as “egregious misconduct.”
The most interesting conflict of interest case of the (still young) year by Jeff Kaplan in Conflict of Interest Blog
As reported initially by the Bergen Record: “Federal prosecutors have [launched a probe] into a flight route initiated by United [Airlines] while [David] Samson was chairman of the [Port Authority, which] operates [Newark Liberty Airport]. The route provided non-stop service between Newark and Columbia Metropolitan Airport in South Carolina — about 50 miles from a home where Samson often spent weekends with his wife. United halted the non-stop route on April 1 of last year, just three days after Samson resigned under a cloud. Samson referred to the twice-a-week route — with a flight leaving Newark on Thursday evenings and another returning on Monday mornings — as ‘the chairman’s flight,’ one source said. Federal aviation records show that during the 19 months United offered the non-stop service, the 50-seat planes that flew the route were, on average, only about half full. United… was in regular negotiations with the Port Authority and the Christie administration during Samson’s tenure over issues that included expansion of the airline’s service to Atlantic City and the extension of the PATH train to Newark…” A story from NJ.Com added that the flight’s booking rate of 50% was significantly lower than “the rate of 85 percent or higher common among carriers” and also that the Chair of the NJ assembly’s transportation committee said the benefit to United of running this unprofitable route “could be PATH. It could be how much they pay for landing planes. It could be for how flights are dispatched at the airport. It could be a multitude of things. And it could be none of them.” – See more at: http://conflictofinterestblog.com/2015/02/the-most-interesting-conflict-of-interest-case-of-the-still-young-year.html#sthash.mKOQRWa3.dpuf
The Chamber’s True Position is that Corporate Compliance Programs are a Tool for Corporate Attorneys to Collect Information in Order to Protect the Company – Not the Public by Stephan Kohn in Whistleblower Protection Blog
By Stephen Kohn
The Chamber of Commerce uses the phrase “corporate compliance” in a misleading and disingenuous manner. In a major U.S. Court of Appeals 2014 case, the Chamber’s position on such internal compliance programs was clarified. The Chamber vigorously argued that such programs were, as a matter of law, part of a company’s General Counsel. They argued that compliance departments were not independent investigatory bodies, but simply fact-finding bodies designed to provide information to company attorneys. As such, compliance investigations could operate in complete secrecy, and their findings could be kept secret from the government, even if subpoenaed.
Historical Echoes: No Valentines Please, We’re British by Amy Farber in Liberty Street Economics
It’s almost Valentine’s Day, and we’re not asking you questions or dispensing advice about it—that’s not (yet) our business. However, we can offer two attempts at humor regarding the Bank of England and amorous activity. The first touches upon a central bank’s fear for its reputation and the second its fear of being “manhandled” by the government.
