March Madness is upon us, with the first ever #16 knocking off a Number 1 see. In the midst of this true madness, Jay Rosen and myself take a look at some of the top compliance stories over the past week.

  1. March Madness is here. So is corruption in NCAA basketball. Tom considers both stories in Compliance Week.
  2. Former FCPA Unit Head Chuck Duross says that self-reporting is still “probably not worth it”. See article in GIR (sub req’d)
  3. Elizabeth Holmes and Theranos were engaged in massive, years long fraud. She is fined, must return her Theranos stock and is banned from running public companies for 10 years. Sam Rubenfeld reports in the WSJ Risk and Compliance Journal. See SEC Complaint for full details.
  4. What are some of the compliance lessons to be learned from the Novartis journey? Jaclyn Jaeger considers them in Compliance Week. (Sub req’d)
  5. First DPA granted under new French anti-corruption law, Sapin II. See article in NYU Compliance and Enforcement Blog.
  6. SFO Director David Green pushed back on the myth that DPAs are sweetheart deals in the FCPA Blog.
  7. Are corporate monitorships on their way out? Adam Dobrik reports in GIR (Sub req’d)
  8. The Trace Global Enforcement Report is out.
  9. On Tuesday, March 20, Tom will premier an exciting new podcast Innovation in Compliance. It is available on the FCPA Compliance Report, iTunes, Libsyn, YouTube and JDSupra.
  10. Tom announces presales of his next book, the Complete Compliance Handbook, which will be published by Compliance Week in April 2018. It is available for PreSale here.
  11. Jonathan Armstrong will be in Houston on April 10 to put on a half-day GDPR workshop. You can find out more and register at the Greater Houston Business and Ethics Roundtable website, org.

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit this month’s sponsor Affiliated Monitors at

In this episode, Jay Rosen and myself take a look at some of the top compliance stories over the past week as we celebrate Texas Independence Day.

  1. The fallout and discussion from the Supreme Court decision in Digital Realty v. Somes continues. Tom examines the legal basis of the decision here; the issues raised by the decision here; considers some of the issues from the perspective of the compliance practitioner in a podcast with Roy Snell here; and takes a deep dive into the weeds of the decision in a podcast with Matt Kelly here.
  2. Tetradata and Exterran received declinations. Dick Cassin reports on Tetradata and Exterran in the FCPA Blog.
  3. Bill Coffin continues his string of great posts. He writes about the ethical and compliance lessons from the recently concluded Winter Olympics in his Compliance Week
  4. Want to open a bank account along the Texas-Mexico border? Better hurry as many branches are closing due to AML concerns. Sam Rubenfeld reports in the WSJ Risk and Compliance Journal. Matt Kelly considers it from the ‘derisking risk’ perspective in Radical Compliance.
  5. Fresenius Medical Care reserves €200 million in FCPA enforcement action. Jaclyn Jaeger reports in Compliance Week.
  6. Adam Winkler asks what rights should corporations have, in the Wall Street Journal.
  7. What are the top 5 security and compliance trends to watch for 2018? Anthony West explores in Corporate Compliance Insights.
  8. What is the difference in big data and small data? Ben Locwin explains it in Pharmaceutical Online.
  9. Will there finally be sunshine on sexual harassment settlements? Joe Mont reports on the proposed the Sunlight in Workplace Harassment Act, in Compliance Week.
  10. Jay reports on the ABA White Collar Conference recently concluded in San Diego.
  11. Tom announces presales of his next book, the Complete Compliance Handbook, which will be published by Compliance Week in April 2018. It is available for PreSale here.
  12. Happy Texas Independence Day!

For more information on how an independent monitor can help improve your company’s ethics and compliance program, visit our sponsor Affiliated Monitors at

In this episode I visit with Joel Solomon, author of “The Clean Money Revolution”. Solomon has worked in the investment community for many years, both in the United States and Canada. He heads Renewal Funds, which is Canada’s leading mission venture capital investment firm, with $98 million of assets under management in early growth stage Organics and EnviroTech companies in Canada and the USA. The Fund has over 150 individual, family, and foundation investors mostly split between Canada and the USA, with several in Europe and Asia. The goal is above market financial returns from a portfolio of companies offering positive societal advances. Renewal Funds dynamic team is led by Paul Richardson, President and CEO, and Joel Solomon, Chair, with crucial backing from Carol Newell. Renewal Funds has been named a “Best for the World Funds” by B the Change Media, for setting the measurement and management bar for impact investing. It has also been named a B Corp for “Best for the World Company.”

We discuss what is mission venture capitalism and Solomon’s leadership in this field. We discuss his book, The Clean Money Revolution and explore how clean money investing is different than other types of investing. We explore the role of money managers in the clean money revolution and explore the broader role of money managers in environmental, social and governance investing and management. We consider the role of the Boards of Directors in public companies in contributing to the clean money revolution. We conclude with a fascinating exploration of the role of US government pull back in ESG and clean money investments; leaving a very large role for corporations to step in and fill going forward.

For more about Joel Solomon, check out his website,

In this episode, Matt Kelly and I take a deep dive into the implications flowing from the Supreme Court’s decision last week in the Digital Realty Trust v. Somers decision. Matt initiated a ‘tweetstorm’ in articulating his thoughts on the effects of the decision, including its effect on corporations, Chief Compliance Officers, corporate compliance functions and the Securities and Exchange Commission.

We consider what possible remedies Congress to engage into to help fix the Dodd-Frank Whistleblower protections and remedies to support employees who want to report internally and still be protected from discrimination and harassment. We consider whether corporate legal departments will now use this decision to root out and cudgel employees who report actions they believe are securities law violations. Finally we consider the potential negative impact of this decision light of the requirement for self-disclosure under the new FCPA Corporate Enforcement Policy.

For more on the Digital Realty Trust v. Somers decision, see the following

Matt Kelly’s piece 16 Tweets About One Whistleblower Ruling 

Tom Fox’s pieces on the decision

Whistleblowers at the Supreme Court: Part I – Supreme Court Decision in Somers

Whistleblowers at the Supreme Court: Part II – Impact of the Somers Decision

Last week the US Supreme Court issued its decision in Digital Realty Trust v. Somers (Somers). It was a closely watched case in the compliance community. Yesterday, I reviewed the Court’s decision. Today, I want to consider the impact of the Court’s decision on a variety of actors; including the Securities and Exchange Commission (SEC) itself, Chief Compliance Officers (CCOs) and compliance practitioners, compliance programs and corporate America. I explored some of these issues with Roy Snell, in the FCPA Compliance Report – Episode 372.

While we both agreed the Supreme Court came to the correct legal decision, there are several areas which this decision may well lead to negative impacts. The first is the message that it sends to potential whistleblowers; if you do not report to the SEC you will not receive any legal protections against discrimination or retaliation. One cannot over-emphasize the strength of this message. There may be companies out there who say they will not terminate you for standing up, raising your hand about concerns and internally reporting but even if they do, you do not have any legal protection against termination or even simple discrimination. Remember Digital Realty Trust, Inc. (DLR) allegedly fired Paul Somers for raising concerns about suspected securities-laws violations.

An approach by companies such DLR certainly cannot sow trust among its employees. Trust is one of the most important factors that a corporate culture can engender. For if there is no trust employees will not come forward to report issues. For every CCO or compliance practitioner, this will negatively impact attempts to create a best practices compliance program. A key part of any best practices compliance program is an internal reporting mechanism (Hallmark 8 of an Effective Compliance Program). CCO and compliance practitioners continually work encourage reporting to not only comply with the Ten Hallmarks and US Sentencing Guidelines on internal reporting but also to create more effective compliance and a better culture in their organizations. Now much of that work may be for naught.

Another reason articulated by Snell is that often an employee’s concern about possible illegal conduct may be simply a misunderstanding of the legal requirements. He stated, “what the compliance department does is quite often sit the employee down shown the regulation and help them understand” their interpretation is not correct. A CCO can provide to them documents, the internal process and what the organization is doing on the issue which concerns them. He concluded by noting “I am sure tens of thousands of times a year, employees are saying ‘oh I see I didn’t understand the law or I didn’t understand what we’re doing. Thank you for straightening that out.’”

Henry Cutter, writing in the Wall Street Journal (WSJ) Risk and Compliance Journal, quoted Thomas A. Zaccaro, vice chairman of the white-collar and investigations group at Paul Hastings LLP and a former chief trial attorney at the SEC’s Los Angeles office, for the following “I think for businesses, for companies, it’s a matter of ‘be careful what you wish for’. I think the consequence of the decision is whistleblowers are now made more likely to report to the SEC, and I think most companies would prefer that employees would report internally.”

Cut off from its best sources of information, that from its own employees, companies now will have less ability to detect and then remediate any problems before they become legal violations or keep legal violations from expanding. In addition to not being informed of issues closer to the ground, businesses where their employees have whistleblown to the SEC are now automatically behind the 8-Ball with the SEC as they cannot self-disclose. Even if they have the information from another source and do self-disclose they cannot receive credit for it because the SEC already knew about it.

Moreover, as noted by Greg Keating who heads the whistleblower defense practice at Choate Hall & Stewart LLP, “Companies want to do whatever they can to spot problems internally. They now may increasingly have to tackle problems while simultaneously dealing with SEC investigations. What employers want is, ‘come to us and let us nip the problem in the bud.’ If such a problem is not reported internally but an employee whistleblows to the SEC, the problem could well fester and get much worse.”

Next if an employee goes to the SEC but not the company, they may be bullet proof from termination or discipline. Snell said, “If an individual goes to the government reports an issue, doesn’t report it to their organization and that individuals start showing up two hours late or starts becoming unproductive for some other reason or has a legitimate issue and their supervisor is unaware of the fact that they cannot retaliate because they don’t know the individuals part it anything and they take what is deemed by any HR professional in the country appropriate disciplinary action on something completely unrelated.”

Finally, is the impact the decision will have on the SEC itself. Now there is no incentive to report internally because you are not eligible for any financial incentive nor will you receive any protections from discrimination or retaliation. It is possible the SEC will be literally inundated with potential securities-laws violations. This will cause the problem of such whistleblower reports taking years for resolution to increase, thereby allowing the potentially illegal conduct to continue and perhaps get worse. If an employee reports a problem internally, it can be more quickly acted on by the compliance function. Snell noted, “Now contrast that with the idea that a problem isn’t reported internally that it’s reported to the SEC and the problem lands in a pile of now an ever-increasing size of allegations. It may take them a year to get that case. It may take them the year to come to a conclusion that is that they would now want to engage the company with the issue.” He believes this narrowed definition of whistleblower “defeats some of the absolutely critical elements of a compliance program.”

What are some of the things a CCO or compliance practitioner can do now to ameliorate the effects of the Somers decision? You can re-emphasize your commitment not only to compliance and ethics BUT that there will be no retaliation or discrimination tolerated for employees who report internally. It would probably be a good idea to have your Chief Executive Officer (CEO) put out a video message to this effect and follow up with training for middle level managers. Some companies, notably Weatherford, have reported success with internal rewards and bonuses for whistleblowers.

The Somers decision was correct from the legal perspective. However, the negative effects may long weigh on CCOs, compliance functions and companies. As Sean McKessy, the first chief of the SEC’s Whistleblower Office, told Henry Cutter, “Corporate America has now litigated itself into a box. I do expect that our business is going to pick up because of the way the Supreme Court decision came down.”

Sometimes getting something you think you want is much worse for you than not getting it.


This publication contains general information only and is based on the experiences and research of the author. The author is not, by means of this publication, rendering business, legal advice, or other professional advice or services. This publication is not a substitute for such legal advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified legal advisor. The author, his affiliates, and related entities shall not be responsible for any loss sustained by any person or entity that relies on this publication. The Author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author. The author can be reached at

© Thomas R. Fox, 2018