Scrutiny alerts and updates, just plain silly, #precisionmatters, and for the reading stack. It’s all here in the Friday roundup.
Scrutiny Alerts and Updates
Societe Generale
As highlighted in this 2014 post, Societe Generale, among other companies, has been under FCPA scrutiny regarding its dealings with Libya’s government-run investment fund. The French financial services company recently disclosed:
Since ISO 37001 was released in October 2016 (see here), there have been many creative attempts to market ISO 37001 services.
This recent article with the click bait headline “How ISO 37001 Might Protect You From Shareholder Lawsuits” is the latest example.
However, contrary to the suggestion in the article, corporate boards do not need ISO 37001 to act consistent with fiduciary duties. Moreover, as discussed below, the article contains incomplete and inaccurate statements of law.
This August 2016 post titled “Taking Care of Caremark” highlighted the often thin analysis of the so-called Caremark standard by many FCPA commentators.
By way of background, a corporate director’s duty of good faith has evolved over time to include an obligation to attempt in good faith to assure that an adequate corporate information and reporting system exists. In Caremark (a 1996 decision by the Delaware Court of Chancery – a trial court), the court held that a director’s failure to do so, in certain circumstances, may give rise to individual director liability for breach of fiduciary duty.
Whereas Caremark answered the “could” question, Stone v. Ritter (a more important 2006 decision by the Delaware Supreme Court) answered the “when” question and the “when” question (when can directors face individual liability for internal control failures) is not nearly the boogeyman that many FCPA commentators make it out to be.
A corporate director’s duty of good faith has evolved over time to include an obligation to attempt in good faith to assure that an adequate corporate information and reporting system exists.
In Caremark (a 1996 decision by the Delaware Court of Chancery – a trial court), the court held that a director’s failure to do so, in certain circumstances, may give rise to individual director liability for breach of fiduciary duty.
Search for the term “FCPA” and “Caremark” and you will find enough reading material to last the rest of the day. However, much of the analysis is thin and more importantly often fails to mention Stone v. Ritter (a more important 2006 decision by the Delaware Supreme Court). Whereas Caremark answered the “could” question, Stone answers the “when” question and the “when” question (when can directors face individual liability for internal control failures) is not nearly the boogeyman that many FCPA commentators make it out to be.
