In business to business relationships, nothing is quite as valuable as gathering around a table and having a simple give and take conversation. I recently had the opportunity to talk with a number of our clients and get their perspectives on the current state of the ethics and compliance world. Without a doubt, the hottest topic was the Dodd-Frank legislation. Clients were extremely concerned about the potential impacts to their organizations. They expressed three top concerns:
1) Would the bounty provisions actually encourage their employees to circumvent their internal processes and go straight to the SEC?
2) Even though guidance on the act is still being developed, the SEC already has a hotline up to handle these calls.
3) Communication is a critical part of their strategy for building and maintaining an ethical culture. However, with bounty provisions that are part of this act and the lack of guidance, should they proactively communicate Dodd-Frank to their employees?
Most of the clients that I spoke with felt like the most important thing they could do was to train their front-line managers so that they would have a better understanding of the ramifications of the Act. Additionally, they felt like they should reemphasize to their employees the importance of talking to their supervisors if they had an issue or reporting it via the hotline. Many of these clients have spent years building this ethical culture and felt like they had established good credibility with their employee base. Then, lo and behold, the Dodd-Frank Act comes along and seems to go against the spirit of the original Sarbanes-Oxley Act of 2002.
No matter what the ultimate outcome of the guidance for Dodd-Frank will be, rest assured that every board of director member and senior level executive for these corporations will be keeping a watchful eye on the very murky future. I’m looking forward to continuing the conversation with our clients as the final rules are announced and to learn from their reactions.