The Board of Directors’ Relationship with Your Compliance Officer & the Evaluation of Corporate Compliance Programs & Three Questions with Jean-Marc Levy

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What does the Department of Justice Fraud Section’s new Evaluation of Corporate Compliance Programs say about your compliance officer’s relationship with your Board of Directors?  There are three salient points that you can take away from the Evaluation of Corporate Compliance Programs with regard to the Board of Directors.  Some of these points aren’t necessarily new concepts, but they certainly give us more guidance in terms of what the Department of Justice is looking for when considering this relationship. In this episode, Eric takes a deep dive into the Evaluation of Corporate Compliance and how it relates to your Board of Directors.

The Evaluation of Corporate Compliance Programs asks: What compliance expertise has been available on the Board of Directors? What does this mean? Does the DOJ care about the personal experience of you Board members with regard to compliance? Compliance expertise is not only about what individual Board members bring to the table, but also the type of expertise that Board members develop as they sit on your Board of Directors. Compliance expertise can be developed through training.  This is a very good reason to think about how you are training your Board of Directors and what type of expertise that you are helping them develop. Eric talks about training your Board of Directors to ensure that they have the type of compliance expertise that this new guidance contemplates.

We already know from the Federal Sentencing Guidelines that the person in charge of the day-to-day operation of your compliance and ethics program should have regular access to your Board of Directors. The Evaluation of Corporate Compliance Programs reinforces this idea of regular contact between the Board of Directors and you compliance officer. It’s important to note that this new guidance asks about private meetings between your Board and your compliance officer.  Eric discusses what this means and how you might accomplish private meetings effectively.

An interesting new point that the Evaluation of Corporate Compliance raises is your compliance officer’s access to external auditors. In this guidance, the Department of Justice talks about your compliance officer’s access to the Board of Directors and/or external auditors.  This is surprising and different than previous guidance.

The Evaluation of Corporate Compliance Programs also asks about the information that your Board of Directors has examined. What kind of information gets to your Board of Directors in quarterly reports? You need to consider what you are providing and why so that you have justifiable reasons for the type of information that you give the Board quarterly. There are good reasons not to do a data dump, but you must think about what information gets to the Board of Directors.  You may want to think about making reports to the Board of Directors outside of the quarterly meeting.

The relationship between your Board of Directors and your compliance function is a key relationship. This relationship is as important as your organization’s ethical culture.  Without a strong relationship between your compliance officer and your Board of Directors, you will be facing trouble down the road.

Three Questions with Jean-Marc Levy, Chief Executive Officer of ComplySci

Jean-Marc came to the field of compliance as the former Vice President of the New York Stock Exchange and the Head of Global Issuer Services. He has extensive experience in the financial services industry. Jean-Marc has a track record of building fast-growing information and services businesses. He was Chief Financial and Business Development Officer with TheMarkets.com, a financial technology firm he helped grow to a user base of more than 2,400 institutional investment management firms worldwide. He is formerly a member of the Board of Directors of ACE Portal.  Jean-Marc and Eric have an interesting conversation about compliance and ethics, including why Jean-Marc thinks compliance is sexy.

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