Therefore, to understand her role, it is also necessary to understand the nature of a compliance program in the modern corporation. The Corporate Compliance Programīy the very terms of her title, the CCO is the overseer of a corporate compliance program. Part C ends with some comments on the integration of ethical principles into the corporate compliance culture. This is followed by a statement of the benefits of compliance programs in Part B. Part A enumerates the multifaceted role of the CCO, with an eye towards the regulatory themes introduced in Section III. Section IV expands on a reprise of the basic premise of this discussion - successful compliance as corporate culture. Next, part B fleshes out some discernable regulatory themes in the modern business entity while part C identifies important and associated compliance challenges, including general skepticism about these programs. Part A of Section III describes some illustrative provisions of federal and state laws. Section II of this article focuses on the basics of compliance programs, with overviews of the role of the Chief Compliance Officer ("CCO"), and the effect of regulations on corporate operations. Even industries not directly affected by specific governance rules have established such programs based upon regimes existing in the corporate realm, and modified by the addition of other norms of organizational conduct, particularly ethics. As a result, many corporate entities have turned with renewed vigor to compliance programs as a preventative measure. Recent changes in laws have created corporate accountability to various interested constituencies. These hazards may include insufficient internal controls in a publicly traded corporation, inappropriate disclosure of confidential information, conflicts of interest in hiring and referral practices, and proper reporting of consumer credit. The sails of corporate operations are beset with numerous regulatory hazards. To grasp the significance of these changes, one need only consider the typical view of the compliance horizon from the governance helm of the corporate ship. However, the real growth in corporate compliance programs has been a more recent phenomenon arising out of two other major changes in law: the passage of the Sarbanes-Oxley Act and the associated amendments to Federal Sentencing Guidelines. Thus, the Caremark decision created a significant impetus to corporate directors for ensuring compliance with applicable laws. In Caremark, the Court held that directors may be liable for losses resulting from the corporation's failure to comply with applicable legal standards. This culture underpins your business and the decisions and choices that you make every day, about small and not so small issues.… It is critical that firms establish a strong culture of compliance that guides and reinforces employees as they make decisions and choices each day." Ī corporate compliance program is "a system which is designed to detect and prevent violations of law by the agents, employees, officers and directors of a business." Modern corporate compliance programs can be traced back to the landmark In re Caremark International Inc. Certainly, the test for all firms is whether they maintain and each day, reinforce, a culture of compliance - which includes a culture of doing not only what is within the strict parameters of the law, but also what is right - whether or not a regulator or anyone else is looking. "A wise person once said that the test of a truly moral person, is whether he does the right thing when no one is looking. Introduction: The Origins of Corporate Compliance Programs