CORPORATE COMPLIANCE OVERVIEW David Meisels OSB Corporate Counsel Roundtable April 26, 2012

What is Corporate Compliance?  It’s a program to identify, prevent and report improper conduct within an organization.  Typical compliance programs include policies for:  Document Retention  Code of Conduct (Ethics)  Antitrust  Anti-Bribery (FCPA & UK Bribery Act)  Import/Export Regulation  Reporting Mechanism

Why Have a Compliance Program?  The requirement to have a corporate compliance policy stems from various rules and statutes specifically:  Sarbanes Oxley for publicly traded companies  The Federal Sentencing Guidelines for Organizational Defendants of 1991 which gives credit for having and enforcing an effective compliance program (mitigating factor in culpability score)  The Office of Inspector General (for health care entities)  Various federal laws and regulations in the financial services industry

Characteristic of an Effective Program  Written policies & procedures  Designate a compliance officer and other appropriate bodies  Conduct effective training and education programs  Develop effective lines of communication  Enforce standards through well publicized disciplinary guidelines  Conduct internal monitoring and auditing  Respond to offenses promptly and develop corrective action (source OIG)

What Else is Required?  Cannot be merely a paper program – is it designed and implemented in an effective manner?  Training  Updating  Enforcement  Remedial Action Taken  Discussed/Publicized

Compliance – Who Leads?  Who should lead compliance efforts?  Typically a Chief Compliance Officer and a Compliance Committee  No requirement as to who leads  OIG in its settlement agreements says it cannot be the in-house legal department, the GC or CFO  The CCO should have at minimum dotted line reporting to the CEO and/or Board of Directors  Duties: developing, operating, and monitoring the compliance program  Some companies have an independent CCO; others use an HR, Finance or Legal department employee (but see legal issues)

Issues: In-House Lawyer as CCO  Different skill set: team building, encouraging communication, dialogue and disclosure, openness, approachability  Conflict in Roles: “It doesn’t take a pig farmer from Iowa to smell the stench of conflict in that arrangement” (Chuck Grassley chair of Senate Finance Committee)  Attorney: duty to defend client  CCO: duty to make sure laws are being followed  Attorney Client Privilege Issues  Emphasis on self reporting, voluntary disclosure and transparency vs. confidentiality, maintaining Privilege  Deferred prosecution in exchange for Privilege waiver  Sufficient time to wear both hats?