We would all agree that interaction with the federal government
and its regulatory agencies has become increasingly complex.
Nowhere is this more evident than in the area of organizational
liability for the misdeeds of corporate officers, agents, and
employees. Business organizations are more frequently being held
criminally responsible for the misconduct of those who act under
their authority. What ultimately happens to those organizations
held accountable for criminal conduct is largely determined by
rules and regulations promulgated by the United States Sentencing
Commission. Starting with the Sarbanes-Oxley Act of 2002, the
Commission has broadened and refined is guidelines regarding
organizational sentencing. SOX directed the Commission to review
and amend as appropriate, the guidelines and policy statements to
ensure that the guidelines that apply to organizations are
sufficient to deter and punish organizational
misconduct.1 The Commission has expanded its
Organizational Guidelines as a result. Chapter 8 of the Sentencing
Guidelines sets out in great detail, the considerations a
sentencing court should undertake when determining how to sentence
an organizational defendant.
Key to ameliorating punishment is the existence of a viable and
effective compliance and ethics program. Organizations should have
in place a compliance program tailored to meet the rigorous
expectations of the Commission before they come under
scrutiny by the authorities. Recognizing the complexities of
negotiating all of the requirements set forth in the Guidelines,
the commission has now adopted a policy statement encouraging
business organizations to "include the use of an outside
professional advisor to ensure adequate assessment and
implementation of the (compliance program)."2
An effective compliance and ethics program should be designed to prevent and detect criminal conduct, promote an organizational culture that encourages compliance with the law, and should include the following elements:
- Oversight of the program by the organization's governing authority
- Day-to-day operational responsibility for compliance assigned to specific high level personnel with direct access to the organization's governing authority.
- Communication of the standards set forth in the program throughout the organization
- Regular training in compliance and ethics
- A publicized system allowing confidentiality for employees reporting criminal conduct without fear of retaliation
- Periodic evaluation of the program's effectiveness
Business organizations should be aware of the need for an
effective compliance and ethics program and should have their
programs reviewed by an advisor familiar with the intricacies of
the federal sentencing guidelines. The Sentencing Commission puts
it best. "The prior diligence of an organization in seeking to
prevent and detect criminal conduct has a direct bearing on the
appropriate penalties and probation terms for the organization if
it is convicted and sentenced for a criminal
offense."3
Endnotes
1 Sarbanes-Oxley Act, Section 805(a)(2)(5).
2 Amendment 744, Effective Nov. 1, 2010.
3 U.S.S.G. Section 8B2.1, Background Note.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
