Compliance &Ethics - Society of Corporate Compliance and Ethics

More documents

Recommendations

Info

FeatureCompliance & Ethics Professional May/June 2012criminal counts of fraud for stealing billions ofdollars from investors. 5 If the SEC would haveheeded Preuitt’s calls for action in the late1990s, it could have prevented Stanford fromstealing as much money as he did.The recent whistleblower case of SECattorney Darcy Flynn shows improvementin agency treatment toward whistleblowers,yet some troubling signs remain. In 2010,Flynn was given an assignment to destroydocuments related to past investigations offinancial firms, which he later realized wasillegal, according to the Washington Post. 6 Ifthe SEC later received more information thatcould show a pattern of fraud when tied to theprior investigation, getting rid of the past evidencecould prevent the SEC from connectingthe dots. Flynn’s concerns were brought to theattention of SEC senior management, yet SECstaff continued to discard documents. Flynnalso made requests to Chairman Schapiro’soffice for certain protections for himself, whichwere not granted.Flynn then alerted Senator CharlesGrassley, as well as other members of government,and invoked federal whistleblowerprotections. Of even greater concern, Flynnallegedly witnessed his seniors at the SECtrying to concoct an evasive response to theallegations, according to the report of SECInspector General Koch. 7According to Taibbi, Flynn also broughtanother troubling allegation to the government’sattention that he witnessed back in2001. 8 At that time, Flynn and other agentswere investigating Deutsche Bank for fraud,when the investigation was mysteriously shutdown by the agency’s enforcement division.A few months later, the director of the SEC’sEnforcement Division, Dick Walker, was hiredas Deutsche Bank’s general counsel.While there have been no reports of directretaliation against Flynn, it is noteworthy thatFlynn has retained the former SEC lawyerAguirre as private counsel. ConsideringAguirre’s prior victory over the SEC, theagency may be loathe to attempt anotherpublic battle with him.The SEC’s troublesome past with internaland external whistleblowers leaves an impressionthat the agency does not value them. Afailure to treat internal whistleblowers appropriatelywill only further reduce the agency’scredibility with the general public, and callinto question its dedication to fair and ethicallaw enforcement.However, recent developments at theOffice of the Whistleblower show improvement.Former SEC attorney Jordan Thomas,who was instrumental in developing theoffice, stated that it received hundreds of tipswithin weeks of its opening, according to theWall Street Journal. 9 Thomas, who now practicesin the private sector, said that the agencyis doing its best to encourage whistleblowersto report wrongdoing.The Dodd-Frank whistleblower provisionsprovide the SEC with an opportunity for afresh start in its treatment of whistleblowers.The SEC must do more to change its negativereputation for protecting the high-levelfinanciers that the agency is supposed to bepolicing, as well as preventing any retaliationagainst internal and external whistleblowerswho wish to bring such fraudsters to justice.Otherwise, the Office of the Whistleblowerwill likely fail in its mission and scare awaypeople who wish to expose Wall Streetwrongdoing.It is clear that there are well-meaning andtenacious investigators who work for the SEC.This fact cuts against its negative public image,which has suffered terribly since the 2008meltdown. Regardless, the agency has a poortrack record in terms of dealing with whistleblowers.Thus, it is time for the agency’s36 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977
Featureleaders to change its culture by promotingpositive attitudes towards internal whistleblowers,and encouraging outsiders to reportindustry wrongdoing. ✵Marlowe Doman is an attorney practicing in general litigation in New YorkCity. He may be reached at marloweusa@yahoo.com.1. Harry Markopolos: No One Would Listen: A true financial thriller.Wiley, 2011.2. Matt Taibbi: “Why isn’t Wall Street in jail? Financial crooks broughtdown the world’s economy—but the feds are doing more to protectthem than prosecute them.” Rolling Stone Magazine, February 16, 2011.www.rollingstone.com/politics/news/why-isnt-wall-street-in-jail-201102163. David Scheer and Jesse Westbrook: “Pequot, Samberg Pay $28Million to End Insider-Trading Probe.” Bloomberg News, May 27, 2010.www.bloomberg.com/news/2010-05-27/pequot-chief-samberg-to-pay-28-million-to-settle-sec-insider-trade-probe.html4. David Hilzenrath: “Preuitt says she paid ‘ heavy price’ for protestingSEC handling of Stanford probe.” Washington Post, May 13, 2011.www.washingtonpost.com/business/economy/preuitt-says-she-paid-heavyprice-for-pushing-sec-to-probe-stanford/2011/05/13/AFqRqo2G_story.html5. Clifford Krauss: “Stanford Convicted by Jury in $7 BillionPonzi Scheme.” New York Times, March 6, 2012. www.nytimes.com/2012/03/07/business/jury-convicts-stanford-in-7-billion-ponzi-fraud.html6. David Hilzenrath: “SEC still destroying records illegally,whistleblower says.” Washington Post, September 6, 2011.www.washingtonpost.com/business/economy/sec-still-destroying-recordsillegally-whistleblowers-lawyer-says/2011/09/06/gIQAAD7E7J_story.html7. H. David Koch, SEC Inspector General: “Report of Investigation:Destruction of Records Related to Matters Under Inquiry andIncomplete Statements to the National Archives and RecordsAdministration Regarding that Destruction by the Division ofEnforcement.” October 5, 2011. www.sec.gov/foia/docs/oig-567.pdf8. Matt Taibbi: “Is the SEC Covering Up Wall Street Crimes?” RollingStone Magazine, August 17, 2011. www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-201108179. Jean Eaglesham: “After Tip, the Claim for Reward.”Wall Street Journal, November 16, 2011. http://online.wsj.com/article/SB10001424052970203503204577040443550817570.htmlSCCE Web Conferenceswww.corporatecompliance.org/webconferencesGet the latest on breaking issues andbest practices. Hear directly fromregulators and practitioners fromthe convenience of your own office.• Timely, quality trainingwith no travel required• With one registration, yourwhole office can participate• A convenient way to earncontinuing education unitsReceive CEUs for each90-minute conferenceAll conferences are at12:00 pm central timeCompliance & Ethics Professional May/June 2012+1 952 933 4977 or 888 277 4977 | www.corporatecompliance.org 37
Page 3 and 4: Letter from the CEOby Roy Snell, CH
Page 5 and 6: “ ”Ethics and compliance operat
Page 7 and 8: NewsWebsites uncover petty briberya
Page 9 and 10: SCCE NewsSCCE conference NewsNation
Page 11 and 12: SCCE NewsNewsContact Eric Newman at
Page 13 and 14: Help Keep YourCompliance ProgramFul
Page 15 and 16: FeatureMueller places on compliance
Page 17 and 18: Featurea copy of which is provided
Page 19 and 20: 10th AnnualHigher EducationComplian
Page 21 and 22: Boehme of Contentionby Donna Boehme
Page 23 and 24: Ohio··Tim Butler, Teradata Corp·
Page 25 and 26: FeatureBased on the wording of the
Page 28 and 29: Get expert guidance with:The Comple
Page 30 and 31: Featureby Peter J. CrosaBuyers on t
Page 32 and 33: Featurecannon and will eventually s
Page 34 and 35: Featureby Marlowe DomanIt’s time
Page 38 and 39: Compliance & EthicsRegional Confere
Page 40 and 41: Featureby Roz BlissEthical decision
Page 42 and 43: FeatureHowever, it takes more than
Page 44 and 45: y Dan Small and Robert F. RoachPowe
Page 46 and 47: it is amazing, wonderful work, if i
Page 48 and 49: y Adam TurteltaubThe economy, compl
Page 50 and 51: y Justin EstepOverzealous I-9 compl
Page 52 and 53: Frederico Melville NovellaChairman
Page 54 and 55: y Gilbert Geis, PhD and Henry N. Po
Page 56 and 57: It is the policy of the company to
Page 58 and 59: Compliance & Ethics Professional Ma
Page 62 and 63: prosecutors from demanding waivers.
Page 66 and 67: y Dawn LomerSocial media evidence:A
Page 70 and 71: y Eric R. FeldmanBuilding transpare
Page 76 and 77: of a company’s “ethical culture
Page 78 and 79: Feature The last wordby Joe Murphy,
Page 80 and 81: SCCE’s 2012 Upcoming EventsLearn
Page 82: Join us for SCCE’s 10th AnnualHig

Compliance &Ethics - Society of Corporate Compliance and Ethics

Create successful ePaper yourself

Delete template?

Save as template?