U.S. REGULATIONS’ LEGAL “GUILLOTINE” FOR UNWARY COMPANY EXECUTIVES

 

Knowledge of U.S. industry-specific regulations and federal laws are imputed to corporate executives. Such a blame may be attributed regardless of their intent to commit or actual knowledge of their company’s law violations involving anti-competition, anti-corruption, anti-money laundering, lobbyist/foreign agent registration, fraud, and U.S. Russia-related sanctions which must be complied with by non-sanctioned companies. The wrongful conduct could be perpetrated by the company’s employees, subsidiaries, business associates or suppliers, who collectively generate thousands of emails, texts, social media posts and solicited or unsolicited promises and opinions.

 

A long arm of the U.S. agencies, departments, or commissions enforcing U.S. criminal and civil laws may reach any company or individual in the world. Thus, all participants in local and global economies must comply with U.S. laws, regulations and rules related to each aspect of their business. The cases of Apple, VW, Audi, Uber, Enron, WorldCom, Takata, UBS, PNC, HSBC Holdings, Barclays PLC, Citicorp, JP Morgan Chase & Co., AIG, RBS, Deutsche Bank AG, Société Générale, Qualcomm, McKinsey & Company, IBM, Intel, Goldman Sachs, Credit Suisse Securities (USA), and Wells Fargo show that no one is immune to U.S. government’s civil claims and criminal charges. Said companies’ losses and damages comprised:

 

• Awards and cost of defense in consumers’ class action lawsuits

• Stock-drop or company breakup/ dissolution/ bankruptcy

• Litigation-dedicated time of key employees

• Loss of employees’ pension benefits

• Shame and reputational cost for executives and board members

• Criminal charges against the executives

 

Well-educated, experienced and hard-working executives of these companies by and large intended to do good for their companies. They considered advice of excellent attorneys and consultants, checked the company’s Code of Business Conduct, and cleared their decisions in most cases by the board of directors or management committees. One intuitive explanation of why these legal disasters occurred is that the companies lacked focused digests of legal requirements related to their business and coming from:

 

• The annual 50-title Code of Federal Regulations (“CFR”) codifying the permanent rules and regulations (“administrative law”) published in the Federal Register (82,036 pages of Regulations in 2015 and incessantly increasing thereafter).

• Hundreds of executive branch agencies’/departments’/ commissions’ manuals, circulars, guides, notices, bulletins, advisory opinions, circulars, memoranda and decrees interpreting the statutes and regulations.

• President-issued executive orders and memoranda.

• The 53-title U.S. Code codifying the federal statutes. http://uscode.house.gov.

• Decisions of the U.S. Supreme Court, federal courts, treaties, or laws enacted by state or local governments.

• Federal laws preempting any U.S. state laws being in conflict with them.

 

U.S. government published manuals reveal specific measures which can prevent corporate misconduct and minimize harsh legal penalties for not following said myriad of mandatory requirements. The Tekapult’s products are not intended to give legal advice but only yield the federal regulations’ main points for quick comprehension of involved complex issues and respective strategic decisions. A regulations’ guidelines analysis behooves corporate steps inquired about by the government’s investigators, such as:

 

1. Creation of an Independent In-House Legal Council, which would be free of corporate politics and job retention fears and have decisive authority to influence correction of and advise against the corporate wrongful conduct. The Council made up of independent advisors would report to the CEO, oversee legal reporting / disclosures required for publicly traded companies, assess / revise legal risk and initiate investigations of regulation compliance practices, facilitate mass training of staff in key laws’ takeaways, and give authoritative opinions on corporate strategic decisions. The Council’s opinions may alleviate or shield the executives from liability in legally unfavorable consequences of their opinion-based decisions. The Council works with, oversees, and incorporates work-products of in-house and outside counsel. This accountability hierarchy eliminates typical problems of outside counsels’ conflicting and untimely (due to attorney’s own schedule) advice; re-education (begetting duplicative time charges / legal fees) in company’s business; the inherent danger of inadvertent trade secret data loss; production of memoranda not sufficiently clear and condensed for immediate mass educational purposes; and the need for a company’s situation-based search/ engagement of attorneys specializing in labor, intellectual property, securities, antitrust, or ethics matters.​​​

​​

2. ​​Establishment of a Legal Assessment Risk and Crisis Management Plan to be created per government agencies’ guidelines for common-to-all areas of law (entailing criminal liability of executives and managers plus corporate liability). These areas encompass corporate fraud on public/ government/ investors; insider trading; corporate ethics, bribery of foreign officials; foreign agent registration; anti-monopoly or competitors’ illegal agreements; and anti-money laundering. The Plan involves the staff’s “do” and “do not do” education, discovery of corporate misbehavior (via investigations, “whistleblower” notices, social media, etc.), guidance in settling or defending claims and charges, and post-fact damage / crisis control.

 

Tekapult’s tPrimers digests complemented by tCanons, which further abridge tPrimers, provide insightful and multidisciplinary/multi-industry summaries with legal authority references and examples for standardized mass education throughout the organization and quick reference for company’s strategic and daily decisions. Customizable tPrimers serve as a tool for the legal crises’ cost-effective prevention and staff training in potential legal pitfalls. These “Big Data” digests of federal rules, regulations, and government agencies’ manuals / guidelines are beneficial for the global audience of business managers, key executives, governments, attorneys, and salesforce for avoidance or minimization of severe U.S. government’s criminal and civil penalties imposed on companies and their executives.

​

​