This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Corporate America, Police Yourself

Further, boards should not take a shortcut here: Compliance oversight should not fall on the already-overburdened members of the audit committee. If left to audit committees, compliance runs the risk of being neglected or simply becoming another box for busy directors to check.

It makes perfect sense to have some overlapping membership of these two committees, but they should function separately. Having a separate committee permits a group of directors to give the necessary attention and time to this critical component of any successful corporation.

The compliance committee should regularly ask questions and look beyond pieces of paper and other presentations from management. The committee should have access to independent legal counsel and, periodically, forensic accountants. And, of course, the members of the committee should be properly trained in the meaning of compliance oversight and the most effective means of accomplishing it.

Fourth, the compliance committee and the CCO should put in place a rigorous compliance program. There should be a clear structure for compliance, established reporting relationships, a periodically updated identification of corporate risks as well as plans to mitigate those risks, clear policies and procedures in every area of required compliance, effective training programs as well as monitoring and reporting systems, clear reporting requirements and access to the CCO by every employee of the company.

Over the past ten years, more responsibilities have been placed on directors, particularly independent directors. We do not believe that one needs to be Hercules to be an independent director, but one does need to put one's shoulder to the wheel, as Hercules himself advised. This is especially true with regard to corporate compliance, because failure in that realm can be devastating for a company.

Ultimately, every organization is a mirror reflection of the people on top. People with the right outlook taking seriously their obligations of compliance will run good companies that have the least exposure to compliance risk.

Corporate compliance belongs at the board level precisely because it sets the tone at the top, where compliance properly belongs, and demonstrates a commitment to an ethos of following the highest standards. This, in turn, permeates a company and helps attract people of integrity.

Conversely, companies that relegate compliance to a back office run the risk of marginalizing compliance and not reaping the benefits of a robust program, which has its own manifest rewards.

Finally, run properly, a corporate compliance program can be an important -- and positive -- part of a company's identification of opportunities to run better businesses, beat the competition and improve shareholder returns. A well-run compliance program can also provide employees, management, directors and shareholders with comfort that they are a part of a company that is not only committed to doing, but actually does the right thing every day.

No matter how many laws are passed or regulations written, illegal activity will never be eliminated. But with a good compliance program, overseen by independent directors, companies can not only avoid lawsuits and regulatory action but also achieve a higher level of excellence.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Jack Quinn is co-founder and chairman of QGA Public Affairs, former White House Counsel to President Clinton and member of the board of ACADEMI LLC and co-chair of its governance committee with former U.S. Attorney General John Ashcroft.

Suzanne Rich Folsom is executive vice president, general counsel and chief Compliance Officer of ACADEMI and previously joined AIG as chief compliance officer and deputy general counsel during the financial crisis to assist in stabilizing the company.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs