As government agencies increasingly seek cooperation credit and emphasize voluntary self-disclosure, the distinction between companies in enforcement proceedings becomes more evident. In this landscape, an annual recap of commendable ethics and compliance accomplishments sheds light on companies that have taken the right steps. Here are five notable compliance-oriented triumphs from 2023.
1. Discover Financial Services: Acknowledging Compliance Shortcomings
In an unconventional move, Discover Financial Services made the list for openly admitting its historical underinvestment in compliance. CFO John Greene's admission in August became a pivotal moment, leading to investor lawsuits and a consent order with the Federal Deposit Insurance Corporation. Despite the challenges ahead, Greene's commitment to investing in compliance serves as a valuable lesson and bargaining chip for other compliance teams facing resource challenges.
2. Albemarle: Exemplary Cooperation in FCPA Case
Albemarle earned recognition for achieving the highest penalty reduction (45%) under the Department of Justice’s (DOJ) revised corporate enforcement policy. The chemical company's $218 million settlements with the DOJ and SEC stemmed from alleged Foreign Corrupt Practices Act (FCPA) violations across multiple countries. Acting Assistant Attorney General Nicole Argentieri praised Albemarle for its extensive cooperation, timely remediation, and commitment to anti-corruption compliance, setting a benchmark for companies navigating enforcement actions.
3. Lifecore Biomedical: Prompt Voluntary Self-Disclosure
Lifecore Biomedical stood out in November when it received a declination from the DOJ regarding apparent FCPA violations in Mexico. The pharmaceutical company's remarkable action was its voluntary self-disclosure within hours of confirming misconduct, aligning with the DOJ's emphasis on prompt reporting. While the circumstances may be unique, Lifecore's case provides a benchmark for companies seeking to avoid prosecution through swift and proactive disclosure.
4. Construction Specialties: Whistleblower's Role in Sanctions Violation Case
Construction Specialties, facing sanctions violations in Iran, showcased the significance of whistleblowing. A U.S. person working at the company's UAE-based affiliate raised suspicions, leading to their dismissal. Undeterred, the whistleblower reported the misconduct to Construction Specialties headquarters, prompting an internal review, termination of Iran-related business activity, and voluntary disclosure to the Office of Foreign Assets Control (OFAC). The whistleblower's actions not only helped the company avoid a substantial penalty but also exemplify the importance of internal reporting.
5. Perella Weinberg Partners: Self-Reporting in Off-Channel Communications Case
In a landscape where regulatory scrutiny on off-channel communications is prevalent, Perella Weinberg Partners distinguished itself. The firm received a relatively modest $2.5 million fine from the SEC for employee use of off-channel communications. Notably, Perella self-reported to the SEC and initiated remediation efforts, earning praise from SEC Enforcement Director Gurbir Grewal. As a result, Perella serves as an example of cooperation for financial firms navigating similar challenges in the realm of off-channel communications.
In a year marked by increased regulatory focus on compliance, these companies have demonstrated noteworthy commitment to ethical practices, cooperation with authorities, and proactive measures to rectify compliance shortcomings. Their stories provide valuable insights and benchmarks for companies navigating the complex landscape of regulatory compliance.
By fLEXI tEAM