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Check out last week’s posts on Compliance Culture, in case you missed or want to revisit them.
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The Good Place is a US television comedy series. The show is about a group of people who are in the afterlife and must contend with their ideas about their own moral conduct, both before and after they died, as well as general perceptions of right and wrong. It draws heavily from the fantasy genre to make amusing and provocative philosophical observations on this theme. The characters grapple to develop their own internal moral registers, teach and learn from each other about morality, and contend with their existential ideas about the impact of good or bad behavior and personal ethics. Their home in the afterlife is a planned community with set rules and choices within which they attempt to identify and define their senses of morality. They are supervised in this process by an “architect” who functions as the executive of the community as well as a human-like android that uses artificial intelligence to provide virtual assistance.
In light of this very pertinent setting, The Good Place poses many questions and dilemmas about moral behavior and ethical decision-making. It touches upon classical theories from philosophy as well as very practical questions about conduct, governance, choice, and design ethics of artificial intelligence. Above all, questions of individual and organizational integrity, and the creation of shared code of ethics and culture of compliance are dominant throughout the series.
Here is a selection of some of the most interesting of these questions from the first season and a half of the show (with plot spoilers and proposed judgment/answers avoided for now in order to invite contemplation about these dilemmas which can have a variety of personal and provocative answers, just like all ethical dilemmas… future posts will offer more specific commentary on how these dilemmas could be approached and utilized in practical ethics and corporate compliance scenarios):
The above is merely a selection of interesting ethical dilemmas posed by The Good Place as the characters struggle individually and as a group to define their moral code and set expectations for their own conduct and choices within it. It will be interesting to see where the series takes these very relatable and thought-provoking questions, and what additional ones emerge, as the story continues.
This is the third in a series of seven posts about regulatory compliance priorities and enforcement trends. The first post was about the Commodity Futures Trading Commission (CFTC). Last week’s post was about the Federal Trade Commission (FTC). Today’s post will be about the Securities & Exchange Commission (SEC). On Thursday January 11, the post will be about the Food & Drug Administration (FDA). On Thursday January 18, the post will be about the U.S. Department of Agriculture (USDA). On Thursday January 25, the post will be about the Environmental Protection Agency (EPA). Finally, on Thursday February 1, the post will be about the Federal Communications Commission (FCC).
The Securities & Exchange Commission (SEC) is the US regulator charged with enforcing federal securities laws and supervising the securities industry, including the market exchanges. The SEC was created in 1934 by the Securities Exchange Act, which is one of the bodies of federal securities law it is now responsible for enforcing. Other significant statutes within the purview of the SEC include the Investment Company Act of 1940 (regulating registration and conduct of investment companies), the Investment Advisers Act of 1940 (regulating registration and conduct of investment advisory organizations), and the Sarbanes-Oxley Act of 2002 (regulating accounting practices of public companies and ensuring investor protection).
As indicated by this last piece of legislation, which was introduced into law in the aftermath of a series of corporate scandals such as the Enron bankruptcy, the regulatory scope of the SEC has grown in both breadth and depth as a reaction to financial frauds and crises of the last two decades. This increased emphasis on the role of the SEC in reaction to these events aligns with the SEC’s mandate, which is three-pronged: investor protection, maintenance of fair, orderly, and efficient markets, and facilitation of capital formation. Ensuring that investors can retrieve and rely on information provided by public companies and in the markets in order to make their investment decisions is a major priority for the SEC. Maintaining a level playing field in the markets is therefore the SEC’s objective, and preventing or eliminating market abuse and unfair corporate practices contributes to achieving this goal.
From both its Washington, D.C. headquarters and its regional office, the SEC offers education programs, promulgates rules and guidelines, conducts investigations, supervises self-regulatory organizations in the trading and markets industries, oversees disclosures by public companies, and brings enforcement actions in light of suspected violations of federal securities laws and regulations. Â Based on this diverse range of activities, the SEC is responsible for exacting competent authority over a wide variety of issues and interests that comprise its regulatory agenda and rule-enforcement practices.
Be sure to check back next week for a round-up on FDA regulatory compliance.
It is never too early, or too burdensome, to create a fundamental business compliance program. Small businesses, new businesses, and experimental businesses can all benefit tremendously from the foundation and organizational structure that a basic risk control framework can bring. A disruptive or innovative company does not have to eschew everything about traditional business in favor of transformative and novel ways of working. It is fair that some strategies or philosophies may be seen as staid or unlikely to keep pace with the competitive and development pressures these businesses face. However, the common sense responsibility (values-based) and implementation of legal and regulatory guidelines (rules-based) impact of a corporate compliance culture encourages and supports business sustainability.
All too often, however, start-up companies lack this structural backbone. They do not have adequate policies and procedures in place, are unable to cope with the employee and supervisory demands that emerge in their workplaces and marketplaces, and grow into business practices without the controls framework and governance, risk management, and compliance structures that they find they need. Most concerningly of all, with their attention span devoted to survival and then growth, these companies find themselves without genuine and integrity-supporting corporate cultures, and attempts to impose them over the top of the existing environment are artificial and difficult.
This challenge becomes only stronger when the company without a confident hold on compliance and ethics building blocks is dominated by a founder or CEO who is, him or herself, on unproven ground. Inexperienced CEOs may have amazing, ground-breaking ideas and new ways to develop and market them, but if they are not effective as either leaders or managers, then they may fall into leaning on personality ethic. These are the leaders whose individual credibility and identities dominate every aspect of their business, to investors, colleagues, employees, customers, and the public in general.
Without a prevailing independent corporate culture that relies on a collective character ethic and mature organizational integrity, these situations do not make for long-term viable business strategies. Instead, these companies all too often slip into misconduct, fraudulent practices, and an overall culture of non-compliance.  Risk from regulatory non-adherence, corner-cutting in basic business operational requirements, and other malfeasance is not controlled by the appropriate and thoughtful defense strategies that a compliance program could create, implement, and monitor.
There are a number of examples of companies which grew impressively and then suffered due to insufficient leadership or immature management. In each case these businesses are known for a prominent figurehead whose personality attracted the press and the public and whose ideas were exciting to the markets and enticing to investors. However, legal and regulatory inadequacies of these businesses and their cultures have hobbled these companies’ lasting ascent:
For an interesting counterpoint, check out the post on Eric Schmidt at Google: Google is not without its corporate culture challenges, particularly as shown in 2017 by the loud public discussion over diversity and engagement in its ranks and the company’s clumsy and performative handling of this bad publicity. However, Google has often portrayed Eric Schmidt at the grown-up in the room, not to prevent or obstruct innovation and success, but to steward and support these efforts while still taking care of the underlying business operations must-haves. Check out this Wired article on how this management structure enabled Google’s development into one of the major digital companies in the world: At Google, Eric Schmidt Wrote the Book on Adult Supervision
For similar discussions to this one, check out this post on essential compliance tips for small businesses, and this post on challenges faced by start-ups in Silicon Valley and other disruptive industries.
This is the fourth in a series of five posts on the topic of fraud in sports. The first post, from December 5, was about marathon cheaters and how the frauds they perpetrate are discovered, investigated, and reported. The second post, on December 12, was about fraud and falsification in the thru-hiking community. December 19’s post was about fraud in sports gambling and betting. Today’s post will focus on fraud in sports both in history and current-day worldwide via game fixing. The fifth and final post in the series, on January 9, will be about major doping scandals in different sports and will focus on the ways athletes cheated by doping and how their use of performance enhancing drugs were supported or not identified by various institutions.
Game fixing is when a match is played to a final result which is partially or totally pre-determined. Players, on their own or in conspiracy with others, may do this in an ongoing conspiracy in order to make money for and from gamblers. Coaches and team administrations may also orchestrate losses for various reasons, including to impact their odds for the next season, including in draft position as well as for a friendlier schedule or playoff access. For purposes of this post, game fixing also includes institutional operations to spy and cheat by teams personnel and coaches, with or without the cooperation of referees and/or players.
Happy New Year from Compliance Culture!
Compliance Culture will have lots of interesting content on the editorial calendar for the coming year. The topics explored here in the last four months, since Compliance Culture launched in August 2017 – including business compliance themes such as cybersecurity, privacy, regulation, and supervision in all industries, with special attention to technology and financial services; as well as broad themes from compliance and ethics such as organizational integrity, ethical decision-making, and moral engagement – will continue to be the focus of this blog in 2018. Additional subjects such as leadership, management, international/comparative compliance, design ethics, information security, and insights from behavioral economics and psychology will also be featured.
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Many thanks for reading and looking forward to a great 2018.
Be sure to visit Compliance Culture this week for posts on these topics.
Don’t miss it!
Check out last week’s posts on Compliance Culture, in case you missed or want to revisit them.
Many thanks for reading!
One of the most poignant and timeless discussions related to ethics is the concept of justice. Justice is the measurement of fairness and is defined by theories which vary wildly between and within cultures and countries. Administration of fairness is as crucial to ethics as are, for example, other fundamental ideas of morality such as trust and honesty. Theories of justice may focus on equal distribution, individual treatment, societal consequences, or even punishment and reparations. These differing theories all have their own foundation in a culture’s ethical values and are then impacted by historical events, jurisprudence, or religious beliefs in a variety of ways. Even though justice is so varying and individual, efforts toward and desires for it are indeed universal, and the ethical fundamentals of its moral pursuit are shared as well.
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In application, justice and the ethics of its interpretation and attempts to reach it in society is a major topic in the modern legal system, with the actions and decisions of lawyers, judges, and parties to cases all having major influence on the execution of different efforts toward fairness. Individual entitlements, such as to property, other wealth, basic goods, and social status, are also distributed with questions of equal rights or arrangement of inequalities under some vision of justice and ethics. Finally, as provocative as justice itself is the concept of injustice, or errors of justice, and how damage from this can be acknowledged, avoided, or corrected.