Fraud

Compliance Rescues Morgan Stanley From FCPA Prosecution

May 08, 2012

Morgan Stanley was exonerated from Foreign Corrupt Practices Act violations last month, despite a guilty plea by one of its top executives. The Justice Department and the SEC are citing the bank's strong compliance program for why it declined to pursue charges. "Corporate America has been sent a clear message that those who try will be rewarded," says Roy Snell, CEO of the Society of Corporate Compliance and Ethics.
 

Recipe for Anti-Corruption Successes: Due Diligence, Diverse Messaging

May 08, 2012

Much goes into doing anti-corruption properly, but there are four broad categories that top companies focus on: assessing corruption risks, devising controls against them, implementing those controls and procedures with the local workforce, and then following up with constant monitoring. Inside, more lessons for building an effective anti-corruption program.
 

Finding FCPA Violations in Employee Expense Reports

May 01, 2012

Travel and entertainment expenses have long been a haven for abuse, but since the dollar amounts are often insubstantial, companies don't always pay close attention to them. Companies are now finding, though, that they can be a conduit for bribes. "If T&E goes unchecked, it can make a company susceptible to allegations of corruption," says Andrew Levi, head of the Miami office at investigation firm Nardello & Co. How to root out fraud? More inside.
 

Banks Collaborating on Account Management Automation

May 01, 2012

The world's largest banks are working together to build a system that will standardize and simplify the management of their corporate clients' bank accounts. Known as eBAM, the system automates the process and uses common terms to manage accounts. It also simplifies creation of reports that aggregate and analyze data, makes it easier to audit the accounts, and improves security features for clients. Details inside.
 

New Tax Man Tactics in United Kingdom

April 03, 2012

The United Kingdom begins another fiscal year this week with the country short on cash, meaning yet another year of the Crown stepping up collection of corporate taxes to help close the gap. This year, however, the government will employ a new tool to force companies to disclose possible tax evasion more quickly if they want to stay on the government's good side. Full details inside.
 

A Holistic Approach to Diagnosing Corruption

March 06, 2012

Companies with the most sophisticated anti-corruption capabilities do more than resolve the issue and identify its direct cause; they also periodically examine their entire portfolio of corruption issues to better understand how those issues all interact. Inside, the latest installment of our GRC Illustrated series offers insights on the challenges of corruption issue management.
 

Olympus Fraud Renews Focus on Corporate Governance

February 07, 2012

The accounting fraud at Olympus Corp. could serve as a catalyst to corporate governance reform in Japan, as a series of accounting scandals did here in the United States. According to an independent investigative report, the problems at Olympus stem from a "yes men" culture that is too common among Japanese companies and discourages whistleblowers from coming forward. Details inside.
 

Chinese Accounting Scandals Leave Bankers Jumpy

January 24, 2012

A wave of accounting scandals emerging from China in 2011 has caused investment bankers to get more cautious about new offerings, according to a recent BDO poll.
 

Pharma Rang Up Record FCA Fines in 2011; 2012 Will Be Worse

January 24, 2012

No rest for compliance officers at government contractors: 2011 saw a record-setting $2.8 billion in penalties for the False Claims Act last year, with 2012 looking no better. Already GlaxoSmithKline is edging toward a $3 billion settlement, and industry totals this year could hit $9 billion. Among the violations that can snare drug companies is failure to return Medicare overpayments on time. More details inside.
 

Workplace Ethics on the Decline?

January 17, 2012

A new survey from the Ethics Resource Center indicates that workplace ethics may be deteriorating. The survey found a rise in retaliation against whistleblowers, more employees who say they feel pressure to compromise standards, and an increase in the number of companies that are considered to have weak ethics cultures. More survey results inside.
 

SEC Takes Tougher Stance Against Investment Advisers

January 03, 2012

The SEC wrapped up 2011 with a series of enforcement actions against investment advisers, complete with allegations of deficient compliance programs, since investment advisers are legally obligated to maintain reasonable compliance procedures. "Not all compliance failures result in fraud, but many frauds take root in compliance deficiencies," says SEC Enforcement Director Robert Khuzami.
 

Anti-Corruption Programs Enable Business Agility

December 20, 2011

One of the most frequently asked questions about manag­ing corruption risk demonstrates the compliance profession's passion for benchmarking: "What do companies with the best anti-corruption programs do dif­ferently?" The answer is less about process or technology, at least not directly, than it is about philoso­phy and vision. Inside, our GRC Illustrated series returns with this look at anti-corruption programs.
 

SEC Pursues Small Company Over Lax Internal Controls

November 22, 2011

The SEC is sending a message to small companies that it will pursue cases where internal controls are so poor that they don't reasonably assure accurate financial reporting. Case in point: Koss Corp., where CEO Michael Koss agreed to pay back $450,000 in compensation because he failed to recognize a fraud by another senior executive. "It's a shot across the bow," says Cynthia Krus, a partner at law firm Sutherland Asbill & Brennan.
 

SEC May Pursue More Negligence Cases

October 18, 2011

The SEC may be more willing to bring charges on the basis of negligence rather than the harder-to-prove standard of fraud with intent or recklessness. In a recent case, it charged three executives with fraud and a fourth, the chief financial officer, with negligence for signing off on the 10-K without checking the numbers. More details inside.
 

Study: Fraud Reporting Hits Record Levels

September 13, 2011

Reports of corporate fraud now account for one in every five calls to compliance departments, according to a new study. The increase is due partly to more fraud, but also to an increase in employees' willingness to report it, say the study authors. "There is more awareness in regard to fraud in the market today and less tolerance," says Glenn Pomerantz, a partner at BDO Consulting. Full details inside.
 

Regulators Eye Chinese Wall for Reverse Mergers

September 13, 2011

Fed up with sketchy Chinese corporations sneaking onto U.S. stock exchanges through reverse mergers, Nasdaq and the New York Stock Exchange are proposing tough new rules to crack down on the process. The proposals would require reverse-merger companies to file an annual report with the SEC, go through a waiting period, maintain a minimum share price, and trade for one year on another regulated foreign exchange. More details inside.
 

GAO Report Lends No Support to 'Secondary Actor' Liability

August 02, 2011

The Government Accountability Office recently issued a report on the legal liability of professional service firms that help companies commit fraud. The neutral stance of the report may influence regulators to maintain the status quo, which would be a victory for those who oppose "secondary actor" liability. More details inside.
 

The BRIC Wall of Anti-Corruption Law

July 06, 2011

Britain's Bribery Act went into effect on July 1, but that's not the only new anti-bribery hurdle compliance departments are facing. Brazil, Russia, India, and China have all either enacted or proposed new anti-bribery legislation, and a slew of other countries have measures in the works. In short, anti-corruption compliance just got a whole lot more complex. Details inside.
 

Fraud Chief Warns Foreign Companies as Bribery Act Goes Live

July 01, 2011

Britain's tough new anti-bribery legislation finally took effect today, and was greeted with a warning from the head of the Serious Fraud Office that foreign companies would be in his firing line.
 

Life Under New Whistleblower Rules

June 21, 2011

The SEC's new whistleblower bounty program is here, and corporate compliance departments should start acting accordingly. That means a review of employees exempted from collecting the rewards, a fresh look at confidentiality agreements, and more. Above all, encourage a culture of speaking up, because "The SEC is clearly pushing companies to self-report," says Robert Wild of the law firm Katten Muchin Rosenman.
 

The Summer of FCPA

June 14, 2011

Enforcement actions of Foreign Corrupt Practices Act violations are intensifying as the summer begins. In May alone, several notable FCPA cases transpired, including the first ever jury conviction of a corporation, the first deferred-prosecution agreement by the Securities and Exchange Commission, and challenges to the law's defining language. Inside, Columnist Bruce Carton recaps the latest.
 

Whistleblower Rules Could Set Off a Rash of Internal Investigations

June 01, 2011

The Securities and Exchange Commission has adopted final rules to reward whistleblowers whose tips lead to successful enforcement actions. While the final version added incentives for employees to report wrongdoing internally, corporate lawyers say the rules will lead to more internal investigations and make them more complex. Details inside.
 

FCPA Officers Aim for Global Anti-Corruption Program

June 01, 2011

Compliance officers at CW 2011 debated the challenges of the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, and mapped out strategies to craft one common anti-bribery policy that could be applied worldwide as more and more risks pile up around corruption and improper payments. The full discussion is inside.
 

Fraud Reporting Near Record Levels

May 24, 2011

Employees are reporting more incidents of fraud via whistleblower hotlines, with more than 20 percent of calls relating to fraud, misuse of assets, conflicts of interest, or violations of the Foreign Corrupt Practices Act. Timothy Mohr, a partner at BDO Consulting says that an increase in regulation is "allowing for fraud to be discovered in a more timely fashion." More survey data inside.
 

Wayward CFOs Often Coerced by CEOs, Study Says

May 20, 2011

When CFO are caught fudging the numbers, it's more likely they were pressured by upper management than looking for some immediate financial benefit.
 

Justice Department Targets Foreign Documents in Antitrust Probe

May 17, 2011

Defense attorneys are lashing out over an aggressive new tactic by the Justice Department to retrieve foreign documents by subpoenaing them from law firms that are involved in parallel civil lawsuits—which critics say is an over-reach of the department's subpoena power. The matter has split federal courts and is nearly certain to head to the U.S. Supreme Court. Details inside.
 

High-Profile Data Breaches Raise Security Alerts

May 03, 2011

The data security theft at Sony, which compromised the personal information of as many as 77 million users, is just the latest in a string of attacks on corporate databases. Even before that breach, Treasury officials were urging companies, especially those in the financial sector, to conduct periodic risk assessments of their information security programs and to institute other safeguards. Details inside.
 

Criminals Only Winners From British Fraud Plan

April 28, 2011

The U.K. government is coming under further pressure to abandon controversial plans to scrap the Serious Fraud Office, the agency responsible for prosecuting high-profile financial crimes.
 

China Passes Anti-Bribery Law

April 12, 2011

At just two lines of text, China's new anti-bribery law is open for interpretation—but it is certain to complicate corporate anti-bribery efforts. "The government is concerned that corrupt officials are besmirching the good name of the Communist party," says Amy Sommers, national China partner for law firm Squire, Sanders & Dempsey.
 

In Court, FCPA Comes Under Fire

April 05, 2011

The question of whether state-owned companies fall within the scope of the Foreign Corrupt Practices Act is finally getting a hearing in court. Three cases over so-called "foreign instrumentalities" are pending this spring; the question is urgent, Butler University law professor Mike Koehler says, because companies are spending "a lot of wasteful money to comply with a law based [solely] on what the Justice Department says." Details inside.
 

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