Tuesday, April 24, 2012

Questions to ERC re: FSGO Sec. 8B2.1(b)(6)

From: RDShatt@aol.com
To: pat@ethics.org
Sent: 4/24/2012 4:06:14 P.M. Central Daylight Time

Subj: Questions re: FSGO Sec. 8B2.1(b)(6)

Dear Dr. Harned,

Sec. 8B2.1(b)(6) of the Federal Sentencing Guidelines for Organizations provides that:
The organization 's compliance and ethics program shall be promoted and enforced consistently throughout the organization through (A) appropriate incentives to perform in accordance with the compliance and ethics program; and (B) appropriate disciplinary measures for engaging in criminal conduct and for failing to take reasonable steps to prevent or detect criminal conduct.

1. Does the Ethics Resource Center receive and study information about instances in which disciplinary measures have been taken by corporations, in order to evaluate whether corporations are employing disciplinary measures in an "appropriate" way, to evaluate the effectiveness of such measures, and to develop guidance, standards and procedures for corporations and their ethics officers concerning the use of disciplinary measures?

2. Does compliance and ethics extend beyond the strictly criminal, and does Sec. 8B2.1(b)(6) apply as well to corporate wrongdoing that gives rise to civil liability (i.e., are disciplinary measures to be used in the case of corporate wrongdoing that gives rise to civil liablity)?

3. Taking as a example the recent $25 billion robo-signing settlement agreement among the Justice Department, state attorneys general, and Ally Financial, JPMorgan Chase, Wells Fargo, Citigroup, and Bank of America, do you know whether, under the compliance and ethics programs of those banks, anything has happened or will happen as regards disciplinary measures being taken against officers and employees of the banks?

4. Taking again as an example the robo-signing settlement, what interaction do you think there is between, on the one hand, the actions of the banks in responding to and ultimately disposing of the civil action (or threat of civil action) by the Justice Department and state attorneys general, and, on the other hand, the use of internal disciplinary measures by the banks against officers and employees? Does the former (i.e., the actions in responding to and effectuating settlement with the government) facilitate the latter (i.e., the internal disciplinary measures)? Does the former impede or impair the latter in any way? Does the "no admission of wrongdoing" in the legal settlement and the lack of a determination whether wrongdoing has or has not taken place create difficulty in using internal disciplinary measures against officers and employees? Is there diversion of corporate resources and attention to the legal enforcement matter that deprives the compliance and ethics program of adequate attention and resources to do its job?

5. Questions 3 and 4 concern a very large legal case. There are probably hundreds of civil actions annually of all sizes against corporations in which corporate wrongdoing is alleged (which are frequently settled with no admission or determination of wrongdoing) , and about which questions such as those posed in 3 and 4 above could be asked. Do you feel ethics and compliance officers at corporations should be asking themselves and their management such questions?

Thank you.
Rob Shattuck

[Note: after sending above email I saw this article about government report detailing pressure on mortgage foreclosure workers.]

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