Author: Doug Cornelius

You can find out more about Doug on the About Doug page

Record Keeping Under the Family and Medical Leave Act

The Family and Medical Leave Act does impose some record-keeping requirements on employers. [See 29 CFR 825.500].

The law does not impose any particular form or order of the records. Employers umst keep the records for at least three years.

Covered employers who have eligible employees must maintain records that must disclose the following:

  1. Basic payroll and identifying employee data, including name, address, and occupation; rate or basis of pay and terms of compensation; daily and weekly hours worked per pay period; additions to or deductions from wages; and total compensation paid.
  2. Dates FMLA leave is taken by FMLA eligible employees (e.g., available from time records, requests for leave, etc., if so designated). Leave must be designated in records as FMLA leave; leave so designated may not include leave required under State law or an employer plan which is not also covered by FMLA.
  3. If FMLA leave is taken by eligible employees in increments of less than one full day, the hours of the leave.
  4. Copies of employee notices of leave furnished to the employer under FMLA, if in writing, and copies of all general and specific written notices given to employees as required under FMLA and these regulations (see Sec. 825.301(b)). Copies may be maintained in employee personnel files.
  5. Any documents (including written and electronic records) describing employee benefits or employer policies and practices regarding the taking of paid and unpaid leaves.
  6. Premium payments of employee benefits.
  7. Records of any dispute between the employer and an eligible employee regarding designation of leave as FMLA leave, including any written statement from the employer or employee of the reasons for the designation and for the disagreement.

Gibson Dunn 2008 Year-End FCPA Update

gibsondunn
Gibson Dunn & Crutcher LLP has published its 2008 Year-End FCPA Update.

By any measure, 2008 was a monster year in Foreign Corrupt Practices Act (“FCPA”) enforcement.  With thirty-three enforcement actions between the Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”), the statute’s dual enforcers, 2008 was the second busiest numerical year on the books, trailing only 2007.  But beyond the numbers (after all, with the massive Siemens resolution, 2008 dwarfs all other years combined in fines and disgorgement), 2008 saw the FCPA’s enforcement regime mature like never before.  There were no unimportant FCPA enforcement actions this year.  Whether the trend was increasingly aggressive enforcement against individuals, ramped up international coordination, the joining of FCPA prosecutions with prosecutions for distinct federal crimes, or others trends discussed herein, every case fits an important trend in foreign bribery enforcement that we expect to continue into 2009 and beyond.

They go on to highlight five trends in FCPA enforcement:

1.  Escalating corporate financial penalties;
2.   Increasing focus on individual prosecutions;
3.   Internationalization of foreign anti-corruption enforcement;
4.   DOJ’s coupling of FCPA prosecutions with other charges; and
5.   Continuing upswing in FCPA litigation.

The Growing Importance of Enterprise Risk Management

Kyle McNabb writes about The Growing Importance of Enterprise Risk Management on his Forrester blog. In this article he lets us know about the things he learned after talking with a large number of professionals that work for or directly support executives responsible for compliance and risk management endeavors

  1. Boards and CFOs will prioritize initiatives supporting their enterprise risk management efforts.
  2. They will focus on driving risk management into business decisions.
  3. They believe technology’s fundamental to helping them succeed.

What it means for information and knowledge management:

  1. Understand the business context of an important role – those responsible for risk management.
  2. Redefine how information management technologies provide value to the enterprise.

AICPA Exposure Draft on Compliance Audits

aicpalogoThe AICPA released a Proposed Statement on Auditing Standards for Compliance Audits (.pdf) This would replace SAS No. 74 Compliance Auditing Considerations in Audits of Governmental Entities and Recipients of Governmental Financial Assistance.

Comments or suggestions on any aspect of this exposure draft would be appreciated. To facilitate the ASB’s consideration of responses, comments should refer to specific paragraphs and include supporting reasons for each suggestion or comment.

Written comments on the exposure draft will become part of the public record of the AICPA and will be available for public inspection at the offices of the AICPA after June 1, 2009, for one year. Responses should be sent to Sharon Macey at [email protected] or Audit and Attest Standards, AICPA, 1211 Avenue of the Americas, New York, NY 10036-8775 in time to be received by April 30, 2009.

Model Due Diligence Questionnaire for Hedge Fund Investors

The Managed Funds Association put together a Model Due Diligence Questionnaire for Hedge Fund Investors (.pdf). This questionnaire was designed to identify the kinds of questions that a potential investor may wish to consider before investing in a Hedge Fund. The questions that may help amplify on or provide additional details to the disclosure in a Hedge Fund’s offering documents.

Sound Practices for Hedge Fund Managers

The Managed Funds Association updated its Sound Practices for Hedge Fund Managers (.pdf) in November, 2007 in response to the initial drafts of the President’s Working Group on Financial Markets.

The objectives of Sound Practices are to:

  • Strengthen business practices of the hedge fund industry through a strong framework of internal policies and practices
  • Encourage individualized assessment and application of recommendations
  • Enhance market discipline in the global financial marketplace

Sound Practices, which was originally published in 2000 and is now in its fourth edition, provides peer-to-peer recommendations for establishing standards of excellence in virtually every aspect of business. The recommendations included in Sound Practices are divided among the seven topics listed below:

  • Management, Trading, and Information Technology Controls
  • Responsibilities to Investors
  • Determination of Net Asset Value
  • Risk Management
  • Regulatory Controls
  • Trading Relationship Management, Monitoring, and Disclosure
  • Business Continuity, Disaster Recovery, and Crisis Management

What is a Hedge Fund?

The President’s Working Group on Financial Markets Report of the Asset Managers’ Committee uses this as a definition of “hedge fund.”

By “hedge fund” we mean a pooled investment vehicle that generally meets most, if not all, of the following criteria:  (i) it is not marketed to the general public (i.e., it is privately offered), (ii) its investors are limited to high net worth individuals and institutions, (iii) it is not registered as an investment company under relevant laws (e.g., U.S. Investment Company Act of 1940), (iv) its assets are managed by a professional investment management firm that is compensated in part based upon investment performance of the vehicle, (v) its primary investment objective is investing in a liquid portfolio of securities and other investment assets, and (vi) it has periodic but restricted or limited investor redemption rights. (This description is based in part on the definition in the Managed Funds Association’s 2007 Sound Practices for Hedge Fund Managers.) Although hedge funds may invest in private equity and real estate, this Report is not addressed to the specific considerations of private equity or real estate funds.  We use the terms “alternative asset manager” and “manager” to refer to the entity that establishes the investment profile and strategies for the hedge fund and makes the investment decisions on its behalf.

What is Enterprise Risk Management?

The Committee of Sponsoring Organizations of the Treadway Commission adopts this definition of Enterprise Risk Management:

Enterprise risk management is a process, effected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.

The definition reflects certain fundamental concepts. Enterprise risk management is:
• A process, ongoing and flowing through an entity
• Effected by people at every level of an organization • Applied in strategy setting
• Applied across the enterprise, at every level and unit, and includes taking an entity level portfolio view of risk
• Designed to identify potential events that, if they occur, will affect the entity and to manage risk within its risk appetite
• Able to provide reasonable assurance to an entity’s management and board of directors
• Geared to ac

You can find that definition in the Enterprise Risk Management – Integrated Framework Executive Summary (.pdf) by Committee of Sponsoring Organizations of the Treadway Commission

Second Circuit Affirms Ionia Management Case

The Second Circuit Court of Appeals focused on the standard for convicting a company of criminal charges for acts of its managers and employees in US v. Ionia.

The Second Circuit declined to change the standards for corporate criminal liability and keeps Respondeat Superior in place.

The court found there was ample evidence that the crew acted within the scope of their employment and acted within in their authority in committing the bad acts. There was also evidence that the company benefited from these bad acts.

Unfortunately, the court chose not to take into account whether the company had effective policies and procedures to deter and detect criminal actions.

“Adding such an element is contrary to the precedent of our Circuit on this issue. See Twentieth Century Fox Film Corp., 882 F. 2d at 660 (holding that a compliance program, “however extensive, does not immunize the corporation from liability when its employees, acting within the scope of their authority, fail to comply with the law”). And this remains so regardless of asserted new Supreme Court cases in other areas of the law. As the District Court instructed the jury here, a corporate compliance program may be relevant to whether an employee was acting in the scope of his employment, but it is not a separate element.”

There was some hope that the court would alter the doctrine of respondeat superior and include a good faith defense or limit the doctrine to higher level employees. A company can be brought down by lower level employees violating company policies.

See also: