Toward the end of every week, Compliance Week puts a snarky spotlight on individuals, companies, and governments that “Failed It” in the areas of ethics and compliance during the week and gives out kudos to those that “Nailed It.” If we missed any or if you have any nominations for next week, let us know on Twitter (@ComplianceWeek) or in the comments section below.

Nailed It


CFTC: If the government was looking to signal to the business world that it’s getting serious about using data analytics to enhance its enforcement reach, it gave companies nearly a billion reasons to pay attention. The Commodity Futures Trading Commission-led $920 million action against JPMorgan Chase for allegedly manipulating the precious metals market with false trades in the early 2000s would not have been possible without the use of data analytics to prove its case. In fact, the CFTC initially walked away from the case seven years ago because it didn’t have the technological capacity to properly examine (or store) the vast amount of data needed to make its case. “We could not have brought the JPMorgan case without the data analytics program we have now,” outgoing CFTC Enforcement Director James McDonald told the Wall Street Journal. The resulting fine was the largest ever handed down by the CFTC. Rogue actors, you’ve been warned. —Dave Lefort

JPMorgan Chase: We crushed the company last week for the allegations noted in the item above, but this week we’re giving it a nod for being a leader in the ESG space. JPMorgan Chase is pledging to use its standing as the largest bank in the United States to push its clients to align with the Paris climate accord and work toward global net zero-emissions by 2050. The bank, according to a report in the Wall Street Journal, will pitch to clients the benefits of combatting climate change (makes them attractive to activist investors, reduces the risk of becoming outdated, etc.) from a business perspective. This move comes just a few months after JPMorgan said it would move away from coal companies and indicated its own operations would be carbon neutral this year. The actual impact of this latest policy change, which at this point is symbolic, remains to be seen, but these are both steps in the right direction. Dave Lefort

CFPB: The Consumer Financial Protection Bureau’s policy statement this week laying out how companies may apply for early release from a consent order should prick the ears of other regulators in terms of how to encourage compliance. CFPB consent orders usually cover a term of five years, but the agency explained how a company that “meets certain threshold eligibility criteria, has fully complied with the terms of the Consent Order, and has a satisfactory compliance management system in applicable areas” can apply for early termination of the order. “These conditions are designed to minimize the risk of new violations of law by the company and to protect consumers,” the CFPB stated. If that is to be the goal of any regulator (and it should be), the best way to accomplish it is to incentivize compliance at an organization, rather than just handing down a fine or putting temporary clamps on the firm. Kyle Brasseur


Failed It 


General Electric: The receipt of a Wells Notice from the SEC may be just the beginning of multiple enforcements at GE related to accounting violations. The company disclosed this week that it received the notice, which pertains to GE’s legacy insurance portfolio. Unaddressed, however, is SEC investigations into a $22 billion impairment charge to goodwill and the company’s revenue recognition practices. “[SEC] staff has not made a preliminary decision whether to recommend any action with respect to the other matters under investigation,” GE said. A Wells Notice is neither a formal allegation nor a finding of wrongdoing, so GE will get the chance to state its case regarding the insurance portfolio problems before any enforcement action is brought. Meanwhile, the impairment and revenue recognition probes linger, and allegations of fraud brought forth by Bernie Madoff whistleblower Harry Markopolos last year are sure to find their way back to the spotlight as the SEC winds down its investigations. Kyle Brasseur

AstraZeneca: The British drugmaker is developing a vaccine for COVID-19, and if the company can prove it’s safe and effective, could probably charge folks whatever it wants. But at the beginning of its vaccine development program, the drugmaker was one of nine companies that took a pledge not to profit from its vaccine “during the pandemic.” How long will that promise last? Just a few more months, according to a recent story in The Financial Times. The newspaper reports AstraZeneca included language in a contract with a Brazilian firm that it can begin selling vaccines once the pandemic is over—and predicts that will be July 2021. There are contingencies in the contract to delay that date, blah blah blah. While we here at Compliance Week are buoyed by AZ’s optimism that the worldwide coronavirus pandemic will be licked in less than a year, we’re not so pleased their first instinct is to cash in. —Aaron Nicodemus

John McAfee: I’m sure there’s an obvious answer here, but can someone please tell me why it’s always the wealthiest people who don’t pay their taxes? Al Capone … President Trump (allegedly) … and now John McAfee. The famous antivirus software engineer was indicted by the Justice Department for four years of tax evasion. McAfee allegedly failed to file tax returns between 2014-2018 while earning millions of dollars in income—not from the antivirus software company bearing his name, but from speaking engagements, consulting work, selling the rights to his life story for a documentary, and promoting cryptocurrencies. And speaking of that last income stream, McAfee is also being charged by the Securities and Exchange Commission for promoting investments in initial coin offerings to his 1 million Twitter followers without disclosing that he was paid to do so. I won’t lie … I’ll be watching the documentary. —Aly McDevitt