Can Corporate Monitorships Improve Corporate Compliance?

60 Pages Posted: 3 Jan 2009

See all articles by Cristie Ford

Cristie Ford

Peter A. Allard School of Law

David Hess

The Stephen M. Ross School of Business at the University of Michigan

Date Written: January 2, 2009

Abstract

Over the last few years, prosecutors and SEC enforcement attorneys have increasingly relied on settlement agreements (such as deferred prosecution agreements) to combat securities violations and other corporate criminal acts. Many of these agreements require the use of corporate monitors to oversee the corporation's compliance with the settlement and its implementation of a compliance program to prevent future violations of the law. Although these agreements have received significant attention from legislators and scholars, there has been no investigation into the critically important question of whether or not the use of corporate monitors achieves its intended goals. Based primarily on interviews with individuals directly involved in monitorships, we look at the entire monitorship process - including the selection of the monitor, how the monitor conducts his or her work, and what happens after a monitorship - and find that decisions at critical points during this process lead to monitorships that are significantly less ambitious than government pronouncements behind them and seem unlikely to achieve their goals on any consistent basis. After identifying these problems, we suggest measures for reform.

Keywords: Compliance Programs, Corporate Crime, Corporate Culture, Corruption, Deferred Prosecution Agreements, FCPA, Monitors, Organizational Ethics

JEL Classification: K14, K20, K22, G38, L50, M14, D23

Suggested Citation

Ford, Cristie L. and Hess, David, Can Corporate Monitorships Improve Corporate Compliance? (January 2, 2009). Journal of Corporation Law, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1322558

Cristie L. Ford

Peter A. Allard School of Law ( email )

University of British Columbia
1822 East Mall
Vancouver, British Columbia V6T 1Z1
Canada

David Hess (Contact Author)

The Stephen M. Ross School of Business at the University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-763-9779 (Phone)

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