I’m in Chicago today at the SCCE Regional Compliance & Ethics Conference. I’m speaking in the morning on compliance and corporate governance.
If you’re also attending, grab me for a cup of coffee.
Meanwhile, here are some of the compliance-related stories that recently caught my attention.
Whistleblower Challenges SEC Over Delay on Award Decision
by Kristin Broughton
Risk & Compliance Journal in WSJ.com
Between 2014 and 2017, the SEC took an average of more than two years to decide if a whistleblower deserved a reward, according to an analysis by The Wall Street Journal. That is more than twice as long as in 2012 and 2013, the early years of the whistleblower program.
https://www.wsj.com/articles/whistleblower-challenges-sec-over-delay-on-award-decision-11556668694
The decision-making process has taken longer as the agency has sorted through a flood of requests for awards and tips on potential corporate wrongdoing. The SEC last year received 5,282 whistleblower tips, an increase of 18% from a year earlier, and nearly twice the number received in 2012, the first full year after the program took effect, according to an SEC report to Congress.
New Compliance Evaluation Guidelines
By Matt Kelly
Radical Compliance
In fact, that was my biggest impression when comparing the 2017 and 2019 guidelines; that the new guidelines are more comprehensive, so they can be used by people less familiar with corporate compliance. Whether that’s comforting news for corporate compliance officers sitting across the negotiating table, or exasperating news, I’m not sure.
Recall that when the Justice Department first developed their evaluation guidelines in 2016 and 2017, the department had a compliance counsel: Hui Chen. She was a seasoned veteran in corporate compliance, and the thinking at the time was that Chen (or subsequent compliance counsels) would help prosecutors evaluate the compliance programs of companies under investigation.
http://www.radicalcompliance.com/2019/04/30/new-compliance-evaluation-guidelines/
Benczkowski eliminated that compliance counsel role.
Insider Trading and Disclosure: The Case of Cyberattacks
By Eli Amir, Shai Levi and Tsafrir Livne
The CLS Blue Sky Blog
When a cyberattack with material negative consequences occurs, security regulations require companies to disclose information on the event to the public, as in other incidents with material negative effects. Executives can opportunistically sell shares (or avoid buying shares or granting stock options) before disclosing information on cyberattacks to the public. However, they are unlikely to trade on private information that the firm intends to disclose. Disclosure of the negative information will expose and label preceding sales as insider trading, and executives will not sell shares if they wish to avoid the legal ramifications of insider trading. In some cases, however, firms withhold information and do not disclose the cyberattack to investors; and if the firm chooses to withhold information on the cyberattack, insiders’ sales of shares are less likely to be identified as insider trading.
We predict that the likelihood of insider trading is higher for firms that withhold the information than for firms that voluntarily disclose it.
http://clsbluesky.law.columbia.edu/2019/04/25/insider-trading-and-disclosure-the-case-of-cyberattacks/
Teaching Compliance Part I of III
by Veronica Root Martinez
NYU Law’s Compliance & Enforcement
I decided to tackle teaching the course in a manner that I hoped would allow students to think through the different roles they might play within compliance efforts, followed by a few classes dedicated to specific compliance areas in an attempt to allow students to better understand how their role might look in practice. To do so, I draw on enforcement, compliance, behavioural ethics, and professional responsibility materials. Each class session has one dedicated case study to help students understand the concept being presented.
https://wp.nyu.edu/compliance_enforcement/2019/04/16/teaching-compliance-part-i-of-iii/
New SEC/Musk settlement spells out which Tesla tweets require preapproval
by Anne Sherry, J.D.
Jim Hamilton’s World of Securities Regulation
Musk’s response to the contempt proceedings argued that the “500k” tweet could not reasonably be considered material. Settlement 2.0 attempts to clear up any ambiguity by substituting a more specific list of topics for 1.0’s materiality standard. Pointedly, the list includes “potential or proposed mergers, acquisitions, dispositions, tender offers, or joint ventures” and “production numbers or sales or delivery numbers” that are new or deviate from previously published guidance.
https://jimhamiltonblog.blogspot.com/2019/04/new-secmusk-settlement-spells-out-which.html