In-house counsel, compliance officers and internal auditors are under various legal obligations to report wrongdoing, and it is worth refreshing your recollection of the relevant statutes and some details about those duties.
First, though, take a moment to consider and appreciate why you have been given the job of safeguarding the public interest. Your role puts you in the middle of the action in our capitalist arena, and your work directly supports the ethical foundation on which it was built. That is empowering. If the obligation to report potential criminal acts feels like a heavy responsibility, remember that the flip side of responsibility is trust. You have been entrusted with doing the right thing if and when needed, and you have the confidence of lawmakers, government agencies, the judiciary, and the public. They have clarified through various laws their ask and made it your task. Let’s review some of the key ones.
1. Section 307 of the Sarbanes-Oxley Act is the basis for 17 CFR Part 205, which emphasizes "up-the-ladder" reporting requirements for lawyers employed by Issuers. In-house counsel is required to report evidence of a material violation of securities law, breach of fiduciary duty or similar has occurred, is, or is about to occur to their General Counsel or CEO, and if an appropriate response is not provided within a reasonable time, make the report to the audit committee or full board of directors.
2. Rule 10b-5 of the Securities Exchange Act of 1934 prohibits securities fraud. To briefly summarize, Rule 10b-5 makes it unlawful to: (a) employ any device, scheme, or artifice to defraud, (b) make any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading, or (c) engage in any act, practice, or course of business which operates or would operate as a fraud or deceit. The Rule also requires lawyers to be aware of their role in preventing and not participating in fraudulent activities related to securities transactions. Upon encountering fraud or deceit, in-house counsel has an obligation to report this internally and possibly externally.
3. Insider Trading and Securities Fraud Enforcement Act of 1988 requires in-house counsel at issuers to report knowledge of insider trading. It also expanded the scope of civil penalties to control persons who fail to take adequate steps to prevent insider trading. Compliance teams must ensure that proper policies and procedures are in place for handling material non-public information and to prevent insider trading.
4. Whistleblower Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank enhances whistleblower protections and rewards, encouraging employees to report securities violations to the Securities and Exchange Commission (SEC). The Whistleblower Hotline has been a critical component of the SEC's efforts to encourage and protect whistleblowers reporting securities violations. In 2023, the SEC received 18,000 tips, nearly a 50% increase from the previous year. Almost $600 million in awards were granted, including a record single award of nearly $279 million, the highest in the program’s history. Under the applicable rules, employees whose primary job responsibilities involve compliance or internal audit functions are excluded from the program unless a narrow exception is met. In-house counsel also would need to consider complex attorney-client privilege issues. But none of us got into Compliance for the money, and the Hotline is available if your company’s internal controls and processes fail.
5. The Foreign Corrupt Practices Act (FCPA) and UK Bribery Act 2010 do not impose an obligation on in-house counsel or compliance officers to report suspected violations. Of course, you should report any concerns internally and help lead the discussion about whether to self-report to the enforcement authorities, especially if the violation is significant.
6. The Bank Secrecy Act and Anti-Money Laundering (AML) Regulations primarily target financial institutions, although AML regulations can affect issuers. In-house counsel must ensure their employer complies with AML laws and report any suspicious transactions that may indicate money laundering activities. This duty includes situations in which in-house counsel suspects their employer is engaging in violations of AML regulations.
7. The Model Rules of Professional Conduct of the American Bar Association, Rule 8.3(a), imposes an ethical duty on lawyers to report misconduct to regulatory authorities if it involves a violation that raises substantial questions about a lawyer’s honesty, trustworthiness, or fitness to practice law.
Beyond specific statutes, in-house counsel and compliance officers have a general duty under corporate governance principles to report significant legal issues or violations internally to the CLO or CEO and if necessary to their company’s board of directors or appropriate board committee. The laws discussed above also anticipate and support that employees will report any suspected wrongdoing through internal channels before going to an enforcement agency. The compliance team must ensure that employees know this, have confidence that their report will be handled earnestly and without delay, and feel protected from any potential retaliation.
Be sure to familiarize yourself with reporting obligations required under laws and regulations applicable in your jurisdiction or region and in your industry. Finally, before making a report of possible illegal activity to enforcement authorities, it is advisable to seek advice from external counsel.
Independent Compliance and Ethics Attorney
Both translation and localization are important considerations when administering eLearning content to a global audience. While translation and localization are related, there are subtle differences between these concepts of which to be cognizant, and that, if utilized properly, can improve the user experience when taking a training course.
A translation is simply converting text or content from one language to another language. Localization takes a translation and makes it more specific to an audience, by accounting for items such as cultural differences, legal regulations, precision for local linguistic considerations, formats (date/time), slang, and imagery. Translation can work in conjunction with localization, but localization makes a product more authentic and appealing to participants, which can also encourage further engagement with compliance trainings.
Translations are typically effective in text that might not carry many nuances for interpretation of the content – for example, this could apply to areas such as technical or medical materials. Localization is more essential when appealing to specific global audiences and is beneficial in areas such as digital content, software, and marketing collateral.
Technological advancements in machine translation and localization software platforms, some with AI capabilities, have made it easier and faster to tailor compliance training content for different global audiences. This is certainly a convenience, yet there continue to be gaps in accuracy of the translation, along with some misinterpretations in the material.
While translations can be accommodated by machine translation systems, localization exactness is still best handled by humans. For example, the phrase “slipped through the cracks,” went through machine translation, including localization, for a recent TRACE project. The output into another language was a literal translation of the phrase. During a review of the output, a native linguist shared that there is a better, more culturally appropriate phrase for “slipped through the cracks.” An inaccuracy such as this could be seen as a minor oversight, but if similarly missed localizations are repeated throughout a training course, it can show a lack of attention to detail and potentially raise questions about the professionalism, quality, and reliability of the content.
All TRACE courses are translated into 6 core languages, which are those most utilized by our multinational audience—French, Portuguese, German, Japanese, Simplified Chinese, and Spanish. Each translation begins with an AI machine tool and is then rigorously reviewed and re-reviewed by two native linguists for accuracy.
In short, the best way to ensure compliance training courses are “global-friendly” is to:
· Begin with a machine translation tool to allow AI and machine learning to translate the course quickly and efficiently (there are many free translations software applications online, such as Google Translate)
· Have text and any voice over features in a course localized by linguists who are native speakers for each region in which the courses will be administered
· Watch out for colloquialisms and phrases that may require a change when localized
· Use local offices and departments within different regions to assist with translations reviews to save costs and ensure accuracy in jargon and terminology specific to your organization
· Whenever possible, keep a “translations memory” of terms that your company uses often to ensure accuracy each time these terms are used
Be sure to audit your tools regularly and always ask questions of native speakers to ensure your translations and localizations in compliance trainings create the most “global-friendly” approach.
Manager, Compliance Training Benefits, TRACE
This post is part of our “Ask an Expert” series where we take questions submitted by readers and ask an expert in the compliance field to provide insight. If you have a question you would like answered, please submit here. |
Creating and maintaining a compliance training library can be an arduous task whether you have a team of one or one hundred! It’s not always easy to obtain resources in support of compliance efforts (a conversation for another day!) whether that’s human resources, access to software or budget. But, all hope is not lost! You CAN effectively build out a compliance training library even if you only have one course to start. Furthermore, breaking up a longer e-learning course into microlearning modules can greatly enhance learner engagement and knowledge retention.
Here are a few best practices you can employ to truncate and restructure one full length training into microlearning:
1. Identify Learning Objectives: Begin by revisiting the learning objectives identified for the original full length course. These objectives will guide the creation of your microlearning modules.
2. Chunking Content: Divide the course content into smaller, manageable sections. Each section should ideally cover one specific topic or concept that tracks back to your learning objectives.
3. Focus on Single Learning Points: Each microlearning module should focus on a single learning point or objective. Sticking to one point/objective will ensure the content remains focused and thus prevents cognitive overload.
4. Keep it Short: Aim for short durations, typically between 5 to 15 minutes per microlearning module. This length is optimal for maintaining learner engagement and attention.
5. Use Multimedia Elements: Incorporate a variety of multimedia elements such as videos, interactive quizzes, infographics, and simulations to make the content more engaging and cater to different learning styles.
6. Utilize a Learning Path: If deploying all at once, be sure to arrange microlearning modules in a logical sequence to ensure that they build upon each other progressively. This helps learners grasp complex concepts more effectively.
7. Promote Interactivity: Include interactive elements within each module to encourage active participation and reinforce learning. This could include quizzes, scenarios, discussions, or reflective exercises.
8. Assessment and Feedback: Integrate assessments or quizzes at the end of each microlearning module to gauge learner comprehension. Provide immediate feedback to reinforce learning outcomes.
9. Mobile Compatibility: Ensure all microlearning modules are accessible via multiple devices, including smartphones and tablets, to accommodate learners who prefer mobile learning.
10. Encourage Application: Include practical examples, case studies, or real-life scenarios within each module to illustrate how the learning can be applied in the real world.
By following these best practices, you can effectively break up a long eLearning course into microlearning modules that are engaging, digestible, and conducive to effective learning outcomes.
Manager, Compliance eLearning Development, TRACE
This post is part of our “Ask an Expert” series where we take questions submitted by readers and ask an expert in the compliance field to provide insight. If you have a question you would like answered, please submit here. |