FCPA: The Saga of MF Global – Don’t Shoot the Messenger, Fire the Chief Compliance Officer

In a post last week on his site, Corruption, Crime and Compliance, Mike Volkov named the Chief Compliance Officer (CCO) his “Person of the Year”. He did so because “There is no other position in a company which has taken on more significance.” This significance was foretold, in part, by the Department of Justice’s (DOJ) minimum best practices compliance program, where they have listed in each Deferred Prosecution Agreement (DPA) and Non-Prosecution Agreement (NPA) released beginning in 2010 and continuing into 2011, the following:

“Senior Management Oversight and Reporting. A Company should assign responsibility to one or more senior corporate executives of the Company for the implementation and oversight of the Company’s anti-corruption policies, standards, and procedures. Such corporate official(s) shall have direct reporting obligations to the Company’s Legal Counsel or Legal Director as well as the Company’s independent monitoring bodies, including internal audit, the Board of Directors, or any appropriate committee of the Board of Directors, and shall have an adequate level of autonomy from management as well as sufficient resources and authority to maintain such autonomy.”

In November 2010, the US Sentencing Guidelines were also amended to make the role of the CCO more robust and allow direct reporting to a Board of Directors or subcommittee of the Board. The amendment read “the individual…with operational responsibility for the compliance and ethics program…have direct reporting obligations to the governing authority or any appropriate subgroup… (e.g. an audit committee or the board of directors)”. If a company has the CCO reporting to the General Counsel (GC) who then reports to the Board? Such structure may not qualify as an effective compliance and ethics program under the amended Sentencing Guidelines ...

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