November 25, 2014

DOJ: Compliance Should Be Independent (If Not Separate)

Regardless of staffing or other resources, companies are increasingly feeling pressured to separate their legal and compliance functions as a result of regulatory actions and commentary. However, recent comments by DOJ Senior Deputy Chief James Koukios provide some welcome assurance that a separation of the functions isn’t critical from a regulatory standpoint – provided the compliance function remains independent and autonomous.

According to this article, Koukios recently indicated that the DOJ will look to see: (i) if the compliance function is well-designed, (ii) whether it’s applied in good faith, and (iii) whether it works. In addition, regardless of the organizational structure, the DOJ will expect compliance leadership to have a direct line of communication to the board and the audit committee.

We have heaps of helpful compliance resources in our “Compliance Programs” Practice Area – including this podcast, where Kaplan & Walker’s Jeff Kaplan discusses his take on the compliance officer & GC independence issues and reporting relationships.

Regulatory Compliance Concerns Rank High for GCs & Boards

According to this new Law in the Boardroom survey, both GCs and directors ranked regulatory compliance as among their chief concerns that keep them up at night.

What Keeps You Up At Night?

Directors say:

  1. Data security
  2. Succession planning
  3. Operational efficiency
  4. Regulatory compliance
  5. (TIE) Corporate reputation and crisis preparedness


GCs say:

  1. Regulatory compliance
  2. Data security
  3. Corporate reputation
  4. Crisis preparedness
  5. FCPA


Regulatory compliance also ranked 2nd – just behind Enterprise Risk Management – in terms of areas that GCs indicate they need better information and processess on. Not surprisingly, IT strategy & risk made both directors’ and GCs’ Top 5 list:

In Which Areas Do You Need Better Information & Processes?

Directors say:

  • Strategic planning 56%
  • IT strategy & risk 52%
  • Competitive environment 44%
  • Succession planning 41%
  • M&A strategy 36%

GCs say:

  • ERM 48%
  • Regulatory compliance 46%
  • IT strategy & risk 44%
  • Social media risk management 38%
  • Legal & consultant fees 33%

The survey also reveals a much greater level of anticipated M&A activity than in prior survey years, with over 50% of both GCs and directors indicating an expectation to devote considerable time to M&A – compared to 36% and 42%, respectively, reported last year.

Podcast: Independent Board Leadership Trends

In this podcast, Jamie Carroll Smith discusses board leadership trends based on EY’s review of S&P 1500 companies, including:


– by Randi Val Morrison