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Compliance Community to DoJ: More Info Please

Melissa Klein Aguilar | February 3, 2011

Members of the compliance and ethics profession are pushing the U.S Department of Justice to provide more information about when and how it gives credit to organizations for ethics and compliance programs in its enforcement actions.

The DoJ “could significantly help ethics and compliance officers by initiating a specific, coordinated effort to gather E&C-related information about its enforcement decisions from all its prosecutors and then make that information easy for the private sector to obtain,” according to a joint report by the Ethics Resource Center, Ethics & Compliance Officer Association, and the Society of Corporate Compliance and Ethics. The report and recommendations are based on surveys of more than 1,200 members of those groups.

The report cites four types of information compliance and ethics professionals would like the DoJ to make public:

  • General statistics on the consideration given E&C programs in enforcement decisions.
  • Descriptions (without identifying information) of individual cases in which E&C programs were a mitigating factor in enforcement decisions.
  • Information about what specific aspects of an E&C program factored into enforcement decisions.
  • Information about the benefits of an effective E&C program, such as helping avert a decision to prosecute or avoidance of other sanctions such as appointment of a monitor.

The Justice Department declined to comment.

Among 525 respondents who hold the chief ethics and compliance officer title, 87 percent report that they personally provide ethics and compliance updates to top leadership – either the full board, the CEO, a board committee or combination of the three. Among them, 70 percent say they “always” or “sometimes” reference available information related to DoJ enforcement actions in board presentations or in compliance training and updates for senior management in the organization. About 14 percent use DoJ enforcement-related information only occasionally, while 17 percent don't use it at all because they say the data is difficult to obtain and less valuable than it could be. CECOs who don't routinely use DoJ data most often indicate it's because they're not aware that information is available (38 percent) or they can't make a clear link between current information about DoJ enforcement and support for their ethics and compliance program (24 percent). Almost 13 percent say there simply isn't enough information to provide much insight.

The report also includes recommendations about the types of ethics and compliance program criteria DoJ could include in its reporting of enforcement decisions. For instance, it says the department could identify the number of decisions where it gave certain benefits to a company that had an effective program, such as permitting the organization to conduct an internal investigation, declining to prosecute criminally or to take any action, or not imposing a monitor or fine. In cases where the Department didn't give credit to an organization for its ethics and compliance program, the report suggests that the department could identify key features that were lacking.

The DoJ could provide more specific information on the extent to which an E&C program factored into enforcement decisions. In addition, DoJ could provide a range of the percentage weight given to the E&C program in a prosecutors' decision or a range of the estimated reduction in the financial penalty to a company from the E&C program. Finally, the report suggests DoJ could provide case descriptions of enforcement decisions, with reference to consideration given to ethics and compliance efforts. As an example, it cites the Securities and Exchange Commission 2009 settlement with former ACL CFO Christopher Black on Regulation FD charges. In that case, the Commission publicly noted that it declined to bring an enforcement action against the company, citing the fact that ACL cultivated an environment of compliance by providing training regarding the requirements of Regulation FD and by adopting policies that implemented controls to prevent violations as one of the reasons.

The complete report is available on the SCCE and ERC Websites.