“Just when we thought the ethics and compliance landscape was “stable,” the Justice Department pulled the compliance profession further and announced heightened expectations for corporate compliance programs.”
– Michael Volkov, CEO, The Volkov Law Group
This week, we explore how Morgan Stanley has fined some of its own bankers for conducting business on unapproved messaging platforms. We learn how to build effective compliance program design and the importance of automation to ensure business systems are compliant and secure. Finally, we consider why revising compensation systems and enhancing data preservation technology will be the next focus of CCOs.
Morgan Stanley Fines Its Bankers Over Messaging Breaches
Morgan Stanley fined some of its own bankers more than $1 million each for conducting business on WhatsApp and other messaging platforms. The funds were either clawed back from previous bonuses or taken from future pay. The individual penalties at Morgan Stanley ranged from a few thousand dollars to more than $1 million, based on a points system. The consideration factors included seniority, number of messages sent, and whether they were issued prior warnings. The bank now gives employees training on scenarios for shifting conversations from personal devices to official platforms such as their work email.
Operationalizing Compliance: Part 2-Compliance Program Design
You might have solid compliance training information, but the information may not stick if not designed effectively. The key to an effective compliance program design is relevance and clarity. If your training or communication isn’t relevant, it doesn’t matter how perfect the design is or even how perfect the message is when shared with someone that’s the wrong person;, it will fall flat.” Content design aims to leverage the information to be on point to the audience that will receive it. Explore the importance of clear compliance messaging and how to design effective compliance program training tools.
The Cost Of Non-Compliance: Mitigating Personal And Corporate Risk
Using 175 applications on average, businesses continue to increase the use of connected technology innovations to stay competitive in today’s marketplace. Keeping all these devices, software, servers, and operating systems up to date can quickly strain resources and take time from achieving more strategic objectives. But failing to update these systems leaves them open to data breaches, ransomware attacks, and sizeable fines from regulators. Most organizations strive for compliance but often lack the tools, resources, or best practices to ensure success. Organizations that still rely on predominantly manual processes will find themselves quickly falling behind. Modern enterprises require the help of automated technology to move at the speed of business while ensuring they meet the high compliance standards that exist to protect them, their partners, and their customers.
Next Steps for CCOs – Revising Compensation Systems and Enhancing Data Preservation Technology
The Justice Department recently announced heightened expectations for corporate compliance programs. As a result, many predict that companies will have to focus next year on proactively reviewing their compensation systems and data preservation capabilities. In addition, CCOs must push their organizations to examine clawback policies and deferred compensation systems to create disincentives against misconduct and supervisory failures. Compliance professionals should also re-examine what positive incentive programs exist to encourage employee compliance. A fresh look at these programs and a new push are needed to meet DOJ expectations in these areas.
