A Growing Divide Between Compliance Have’s and Have-Not’s

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2012-07-10


Editor’s Note: The following post comes to us from Jeffrey M. Kaplan, partner at Kaplan & Walker LLP.

In Semi-Tough: A Short History of Compliance and Ethics Program Law, presented at a May 2012 RAND Symposium on Corporate Culture and Ethical Leadership Under the Federal Sentencing Guidelines: What Should Boards, Management and Policymakers Do Now, I explore the legacy of the Federal Sentencing Guidelines for Organizations (“FSGO”) with respect to compliance and ethics (“C&E”) programs.

Since the advent of the FSGO in November 1991, the legal drivers for corporations to implement strong C&E programs have seemed to be ever on the increase, at least in the U.S. Indeed, the past few years alone have seen:

  • Rigorous enforcement, to an unprecedented extent, of the Foreign Corruption Practices Act (“FCPA”) – a law which, because of its internal controls provisions, strongly encourages companies to have effective C&E programs.
  • The imposition, also to an extent never before seen, of very large federal criminal fines, including but by no means limited to those meted out in FCPA cases.
  • The initiation of a significant number of “Caremark” claims alleging failures by directors to oversee sufficiently their respective companies’ C&E programs.
  • Revisions in 2010 to the FSGO to encourage independent C&E officer functions.
  • Numerous other subject-matter-specific legal developments including (but by no means limited to) those regarding government contracting and energy utilities.

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Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation,

Date tagged:

07/10/2012, 13:16

Date published:

07/10/2012, 09:23