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Supreme Court Should Protect Internal Whistleblowers: Azish Filabi in the FCPA Blog

This post originally appeared on The FCPA Blog. It is cross posted here.

On November 28, 2017, the Supreme Court will hear arguments in Digital Realty Trust v. Paul Somers on the question of whether the whistleblower protections of the Dodd-Frank Act extend to internal whistleblowers, or only to those who report to the SEC.

Research shows that the majority of employees who report misconduct do so internally, through informal discussions with managers and other conduits.  If the Court interprets the Act’s protections as extending only to those who provide information to the SEC, it could stymie and complicate the important work of ethics & compliance officers.

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Cathy O’Neil to the Ivory Tower: Stop ignoring the ethics risks in tech

The use of artificial intelligence (AI) in most all aspects of modern business and social life is now ubiquitous. From wealth management, to hiring employees, assessing the effectiveness of teachers, and our news feeds, AI impacts most every aspect of our day-to-day life — whether or not we are aware of it.

As the use of AI has grown, so has a corresponding gap in the ability of many companies and people to explain what, how, and most importantly, why these bots make certain decisions.  In a NYT op-ed this week, Cathy O’Neil gives academics a call to action — the time has come to provide a deeper, and unbiased view of the risks of AI and the ethics challenges we face as their power and influence grows.

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Featured Ethics and Compliance Expert: Hui Chen

Featured Interview: Hui Chen, Compliance and Anti-Corruption Consultant and First-ever Compliance Counsel Expert at the United States Department of Justice

 

As the first lawyer to hold the post of Compliance Counsel in the DOJ, how would you articulate the goal of the DOJ’s expansion with respect to the role of compliance in corporate crimes?

DOJ Policy requires federal prosecutors to consider certain factors in corporate prosecutions, including the state of the company's compliance program at the time the misconduct occurred, and any enhancements made in remediation to the misconduct. By creating the Compliance Counsel role, the Fraud Section in the Criminal Division sought to bring in-house expertise to that evaluation. In doing so, the Fraud Section both recognizes compliance as an area of professional expertise, and heightens the significance of that expertise as something that is critical to companies.

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The Flip Side of the Quarter: Only 25% of employees think colleagues model ethical behavior

A recent survey by Gartner (formerly CEB) indicates some bleak stats for companies —  the 2017 poll of 5,000 workers in the U.S. indicates that “only 25 percent of employees believe their teammates and colleagues engage in and model the right ethical behaviors.”

This is a lost opportunity for many organizations. Research that shows that running an ethical organization pays off financially in the long-run. The CEB/Gartner findings also indicate, “Employees from strong cultures of integrity are 90 percent less likely to observe misconduct and are more likely to report that which they do see. They are also more likely to over-perform on individual and team goals. Gartner also notes financial opportunities – notably, that companies with strong cultures of integrity have 10-year total shareholder returns 7 percentage points higher than companies with low perceptions of integrity.”

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ECI Webcast Recording: New Behavioral Science Tools from Ethical Systems

Azish Filabi (Executive Director of Ethical Systems) and Jeffrey Kaplan (ES collaboarator and Partner at Kaplan & Walker, LLP) recently led a webcast about ethics, research, and culture highlighting new behavioral science tools for the ethics and compliance field. The slides and recording are now available.

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Richard Thaler, The Nobel Prize and Nudge

All of us at Ethical Systems extend a hearty congratulations to Richard Thaler on the announcement of his Nobel Prize for his pioneering research around nudging.

From The New York Times announcement:

The Nobel committee, announcing the award in Stockholm, said that it was honoring Professor Thaler for his pioneering work in establishing that people are predictably irrational — that they consistently behave in ways that defy economic theory. People will refuse to pay more for an umbrella during a rainstorm; they will use the savings from lower gas prices to buy premium gasoline; they will offer to buy a coffee mug for $3 and refuse to sell it for $6.

The committee credited Professor Thaler, who teaches at the University of Chicago Booth School of Business, for moving economics toward a more realistic understanding of human behavior, and for using the resulting insights to improve public policies, notably a sweeping shift toward the automatic enrollment of employees in retirement savings programs.

 

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Featured Culture and Business Ethics Expert: Marshall Schminke

Featured Culture and Business Ethics Expert: Marshall Schminke, BB&T Professor of Business Ethics at the University of Central Florida

 

 

What are your main areas of research around business ethics?

 

I focus on the idea that ethics don’t happen in isolation.  They emerge from a complicated mix of individual and situational factors.  My research explores this messy stew and how it drives ethical behavior.  More specifically, I study the impact of organizational structure and culture on individual ethics, such as trying to understand climates that support or resist ethical decision making, abusive supervision, moral emotions, and ethical efficacy.  My work also examines how ethical and unethical action drifts through organizations.  I study how factors like trust and fairness—which provide the foundation for organizational ethics—“trickle down” the organization from managers to supervisors to line employees. Understanding these patterns helps to explain why relatively small changes in ethical or unethical activity may lead to profound, organization-wide effects.

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[Updated] The Ethics Case for Due Diligence: Azish Filabi's New "Expert Analysis" on Law360

The case for business ethics was recently made very clear to me when I co-chaired at the New York State Bar Association International Section’s Seasonal Meeting in Guatemala, particularly as it relates to hidden ethics risks in M&A transactions.  I wrote a piece for the Law360 site as part of their "Expert Analysis" explaining these risks.  It's a case study about A.P Moller-Maersk who purchased a port in Guatemala in 2016 just before it became embroiled in a corruption scandal, eventually adding another $43M to their acquisition costs to get a new, clean permit.

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Ethical Systems is a Compliance Officer Day Champion

Ethical Systems is honored to have been chosen as a Compliance Officer Day Champion. Compliance Officer Day, on September 26, is an annual event put on by SAI Global recognizing the professionals who have dedicated their careers to the field of ethics and compliance. The goal is to raise awareness of resources, support wellness, and promote growth among the ethics and compliance community.

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Our New Collaborator: Marshall Schminke

We welcome Marshall Schminke as our newest Ethical Systems collaborator. Marshall serves on the working group for our culture measurement project and is both a leading voice on business ethics in the media and in the classroom. 

Bio:
 

Marshall Schminke is the BB&T Professor of Business Ethics at the University of Central Florida, where he specializes in business ethics and strategy.  He received his doctorate from Carnegie Mellon University, and has served as a Visiting Scholar at Oxford University and the London School of Economics. 

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