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Regulators fighting the merger plan of Office Depot and Staples face a decision from a judge that may hinge on the veracity of the government’s relevant product market, reports Policy and Regulatory Report, a Mergermarket Group company. The issue of whether the Federal Trade Commission (FTC) gerrymandered its market has repeatedly surfaced during the government’s pursuit of a preliminary injunction against the proposed merger.

PaRR Global (Policy and Regulatory Report) spoke to various independent sources to assess holes in the arguments of both the FTC and the merging companies.

In its case, the FTC defined the relevant product market as “consumable office supplies,” such as pens and paper, which constitute a so-called cluster market, according to the PaRR analysis.

A cluster market is used in antitrust theory to group separate individual relevant product markets, such as the individual market for paper and the individual market for pens, into a wider market for analytical convenience.

Clustering is appropriate “only when the individual products face similar competitive conditions,” according to the government’s proposed findings of fact.

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Quyen Truong, former assistant director and deputy general counsel of the Consumer Financial Protection Bureau (CFPB), has joined Stroock & Stroock & Lavan LLP as a partner in the firm’s Washington, DC office.

Truong, a member of the firm’s national Financial Services/Class Action Practice Group, was instrumental in building the new federal agency while implementing the Dodd-Frank Act for finance reform, the firm says in a release. Among other responsibilities, she advised leadership on analysis of consumer financial laws, oversaw review of all enforcement actions and responded to legal challenges to the agency.

“Quyen’s proven track record bridging the technical complexities of financial reforms and their regulatory implications will complement our already prominent Financial Services/Class Action practice and enhance our ability to provide high level strategy and counsel to our clients,” stated Julia Strickland, chair of the Financial Services/Class Action Practice Group and a member of the firm’s Executive Committee.  “We are thrilled that she chose Stroock when she decided to return to the private legal sector.”

While at the CFPB from 2012-2016, Truong was instrumental in helping the Bureau to define the scope of its authorities and develop a new regulatory and enforcement framework for the financial industry.  As a senior leader at the CFPB, she represented the Bureau on the inter-agency Financial Stability Oversight Council (FSOC), managed enterprise risks, and coordinated activities with the Department of Justice, Federal Trade Commission, and banking regulators in high stakes litigation, regulatory and oversight proceedings.  As head of litigation, she also directed the CFPB’s amicus program to advance the agency’s policy and legal interpretations in private litigation.

“Stroock to me epitomizes an ideal law firm in which to work with the financial industry, because of the high quality of its lawyers, their focus on this industry, and their close relationships with market leaders,” says Truong.  “The firm and its clients share my belief that doing right by customers is crucial to achieving business success. I am confident that as we continue to build the practice, we will advance both business and consumer interests.”

Prior to joining the CFPB, Truong served at the Federal Deposit Insurance Corporation (FDIC) as risk management and litigation counsel where she oversaw the investigation and litigation of claims of regulatory violation, fraud, officer/director and other professional liability, following the financial crisis.  In addition, she has held public and private positions with Dow Lohnes PLLC, the Federal Communications Commission (FCC), Howrey LLP and Mayer Brown LLP.

“Quyen’s unique government background, coupled with her 25 years of regulatory policy, compliance and litigation experience adds significant value for our market-leading financial services clients,” noted Alan M. Klinger, Stroock’s co-managing partner.  “We embrace every opportunity to grow our Washington, DC office through highly talented and skilled legal leaders from the government sector.”

Truong received her J.D. from Yale Law School where she was a John M. Olin Fellow in Law, Economics & Public Policy, and her B.A. from Yale University, summa cum laude and Phi Beta Kappa.

Atlanta-based LabMD was a successful company that tested blood, urine, and tissue samples for urologists, and had about 30 employees and $4 million in annual sales. Then one day in 2008, the company’s general manager received a phone call from a man who claimed to be in possession of a file containing LabMD patient information, including more than 9,000 Social Security numbers, reports Bloomberg.

Then came the sales pitch: His company, Tiversa, offered an investigative service that could identify the source and severity of the breach that had exposed this data and stop any further spread of sensitive information — at a cost of about $38,000. After some back-and-forth, LabMD told Tiversa to direct all communication through its lawyers. Then the Federal Trade Commission came calling.

LabMD’s woes could end up finishing off the once-promising business.

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Former Sprint Corp chief executive William Esrey and former chief operating officer Ronald LeMay sued the United States government for allegedly concealing its investigation into accounting firm Ernst & Young LLP’s promotion of tax shelters sold to the executives, Reuters is reporting.

The suit involves a 2002 Internal Revenue Service investigation into Ernst & Young’s promotion of tax shelters to its clients, including the two executives and settled the audit with EY in July 2003, without informing the executives, the lawsuit said.

The plaintiffs alleged that the IRS helped EY conceal the details of investigation from them, which meant they could not defend themselves against allegations by Sprint about their participation in the EY-promoted tax shelter schemes, Reuters reports.

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Elizabeth Holmes
Photo by Max Morse for TechCrunch

Federal prosecutors have launched a criminal investigation into whether Theranos Inc. misled investors about the state of its technology and operations, according to people familiar with the matter, The Wall Street Journal is reporting.

Walgreens Boots Alliance Inc. and the New York State Department of Health have received subpoenas in recent weeks seeking documents and testimony about representations made to them by the Palo Alto, Calif., blood-testing company, some of the people said.

Theranos once claimed it had made “breakthrough advancements” that made it possible to run “the full range” of lab tests on a few drops of blood pricked from a finger. But some regulators and former employees have voiced doubt about the tests.

“Theranos was valued at $9 billion in a funding round in 2014 and the majority stake of Elizabeth Holmes, the startup’s founder and chief executive, at more than half that,” The Journal reports.

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Michael J. Rivera has joined Schiff Hardin LLP as a partner in the Financial Markets and Products Group.

The firm said Rivera defends businesses and individuals in criminal and civil government investigations and enforcement proceedings and conducts internal investigations.

He has experience in securities and financial investigations by the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA) and Department of Justice (DOJ). He also counsels companies on compliance and regulatory issues under the federal securities, anti-money laundering, and anti-corruption (FCPA) laws.

He is resident in the firm’s Washington, D.C. and New York offices.

In a release, the firm said:

In addition to working over two decades in private practice at Fried Frank LLP, and, most recently, Venable LLP, Mike gained valuable experience as a government investigator and prosecutor. From 2010-2013, Mike served as Chief Investigative Counsel for the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). At SIGTARP, Mike managed a premier white collar fraud unit of seasoned federal prosecutors and law enforcement agents engaged in investigations and prosecutions of complex financial frauds. Mike also functioned as SIGTARP’s lead liaison to the senior staff of law enforcement agencies, federal prosecutor offices, securities and bank regulators, and President Obama’s Financial Fraud Enforcement Task Force (FFETF).

“Mike’s breadth of experience makes him a valuable counselor to a wide variety of our clients, from public companies, hedge funds, and accounting firms to securities professionals, executives, and lawyers,” said Marci A. Eisenstein, Schiff Hardin’s Managing Partner. “He is a welcome addition to our firm, particularly as we build out our regulatory capabilities in Washington, D.C.”

Paul Dengel, leader of the firm’s Financial Markets and Products Group, said, “As a public servant, Mike led complex, high-profile securities fraud investigations. In private practice, he helps clients understand, anticipate, and respond to investigations. Relying on his counsel, our clients can make smarter compliance decisions.”

Mike began his legal career as a staff attorney in the Enforcement Division of the Securities and Exchange Commission (SEC), where he conducted investigations into insider trading, disclosure and reporting violations, fraudulent securities transactions, and other violations of the federal securities laws.

“Given the current regulatory and enforcement climate, companies must be more mindful than ever of their compliance policies and obligations,” said Mike. “I look forward to advising Schiff Hardin’s clients on current and pending securities regulations and, when necessary, guiding them through complex investigations and enforcement proceedings.”

Mike earned his J.D. from the University of Pennsylvania Law School and his B.S. from St. John’s University, where he graduated magna cum laude.

Donald Trump has made another new significant hire as he prepares for the possibility of a contested convention, bringing William McGinley, a prominent Republican political attorney and a veteran of past delegate battles, into his campaign, reports Politico.

“In 2012, McGinley served as counsel to the convention’s rules committee and he is currently a partner at Jones Day, the same law firm as Don McGahn, Trump’s top political attorney. McGinley is expected to travel to Florida this week, POLITICO has learned, where Republican National Committee members are gathering for their spring meeting amid an ongoing fight over the rules that will govern the convention,” according to the report.

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The State Department has agreed to a conservative legal group’s request to question several current and former government officials about the creation of Hillary Clinton’s private email system, reports the Associated Press.

A judge granted the group, Judicial Watch, limited discovery to ask the officials why Clinton relied on an email server in her New York home during her tenure as secretary of state.

If the judge approves of the agreement, lawyers from Judicial Watch will be allowed to depose Clinton’s top aides, including former chief of staff Cheryl D. Mills, deputy chief of staff Huma Abedin and undersecretary Patrick F. Kennedy, the report says.

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A coalition of U.S. state attorneys general received guidance from well-known climate scientists and environmental lawyers in March as some of them opened investigations into Exxon Mobil for allegedly misleading the public about climate change risks, documents seen by Reuters showed, Reuters is reporting.

The report says Peter Frumhoff of the Union of Concerned Scientists, which has urged action on climate change, and Matt Pawa, who litigated against Exxon in a global warming case, were listed as presenters at a March 29 meeting of more than a dozen state prosecutors. That information came from emails between the offices of attorneys general in New York and Vermont.

Environmental groups are pushing in court, at the U.S. Securities and Exchange Commission and in the offices of pension funds to demand more accountability on climate issues from big oil companies,” the report says.

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On April 6, 2016, after more than five years of anticipation, the Department of Labor (DOL) issued the final fiduciary rule and related guidance. The final fiduciary rule amends and expands the definition of a fiduciary that provides “investment advice” to reflect changes in the financial industry and the state of investment advice as it exists today, reports Sherman & Howard LLC.

“The final rule focuses on ‘conflicts of interest,’ and serves to sweep in a large number of investment advisers who were not previously treated as fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA). To temper the scope and impact of the final rule, the DOL also issued two new prohibited transaction exemptions (along with certain amendments to existing exemptions),” the report says.

in the article, the firm offers guidance intended to address concerns of these investment advisers with respect to certain prohibited transactions under ERISA and the Internal Revenue Code, while still protecting retirement plans and participants.

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Microsoft sued the U.S. government Thursday, arguing that a law that can prohibit technology companies from telling customers when law enforcement comes looking for their data is unconstitutional, reports The Seattle Times.

This action is seen as the latest high-profile challenge to the reach of law enforcement into cyberspace, following Apple’s fight against an FBI order to disable an encryption measure on an iPhone connected to the San Bernardino mass shooting.

“When law-enforcement agencies get a warrant to grab email or other data stored online, they can request a court order to bar Internet service providers from informing the user their documents were seized,” the report says. “Microsoft said it has received about 5,600 federal demands for consumer data in the past 18 months, almost half accompanied by such gag orders.”

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Donald Trump’s campaign lawyer, Donald F. McGahn II, the former chairman of the Federal Election Commission and a partner in Jones Day, will be instrumental in helping the candidate navigate the labyrinthine delegate and convention rules as the Republican presidential nomination fight enters the home stretch, according to a profile published by The Washington Post.

“For a while, McGahn’s colleagues at Jones Day either didn’t know the firm was representing Trump or didn’t mind. That changed late last month when McGahn organized a meeting between the candidate and more than a dozen lawmakers at the firm’s Washington office,” the report says.

A recent report by David Lat, a former federal prosecutor who runs the blog Above the Law and closely monitors the chatter within the nation’s white-shoe legal shops, quoted a number of his Jones Day sources, anonymously, saying that they were deeply embarrassed by the Trump affiliation.

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Abbott Laboratories didn’t cause medical providers to submit false payment claims to Medicare for unapproved stents, a Texas jury ruled, thwarting a whistle-blower’s lawsuit seeking as much as $1 billion, reports Bloomberg.

A former salesman for Abbott’s predecessor Guidant claimed the company pushed bile duct stents that were intended for short-term purposes for more complex vascular use. His 2006 lawsuit on behalf of the U.S. government accused the company of encouraging doctors and hospitals to code bills to Medicare falsely.

“Abbott, which acquired Guidant’s stent business in 2006, denied during the trial in Dallas federal court that it induced anyone to submit false claims to Medicare. Its lawyers told jurors the use of biliary stents for peripheral vascular or arterial disease was accepted medical practice and Medicare knowingly approved payments,” Bloomberg reports.

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The Justice Department has sued to stop Halliburton Co. from acquiring oilfield services rival Baker Hughes, the Associated Press and CNBC are reporting.

The deal would combine two of the world’s three leading providers of those services to oil and gas companies and would create a bigger rival to the industry leader, Schlumberger.

“But Justice Department officials say in their lawsuit that the Halliburton-Baker Hughes deal threatens to raise prices and eliminate competition,” the report says.

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The U.S. Commodity Futures Trading Commission (CFTC) Whistleblower Office announced on April 4 that it would issue an award of more than $10 million to a whistleblower whose information led to a successful CFTC enforcement action, reports Katz, Marshall & Banks on its website.

“The award was the largest the agency has ever issued. The recipient of the award and the company penalized were not disclosed — steps purposefully taken by the CFTC to protect the confidentiality of whistleblowers who are concerned about the effect that blowing the whistle may have on their career,” the firm wrote.

“Awards like this one show whistleblowers that blowing the whistle is worth the risk, and will go a long way toward solidifying the CFTC Whistleblower Program,” said Lisa J. Banks a partner in the firm.

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The FBI’s upcoming interview of Hillary Clinton will be a turning point in the race for Democratic nominee, especially since Clinton won’t be able to speak to FBI director James Comey and his agents in the same manner her campaign has communicated with the public, writes H.A. Goodman in the Huffington Post.

The questions could include: “Why didn’t you know that intelligence could be retroactively classified?” and “Did President Obama or his staff express any reservations about your private server?”

Others could include: “How was your private server guarded against hacking attempts?” and “What was the political utility in owning a private server and never using a State.gov email address?”

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Just days after the city of Dallas filed an R-rated defense of the City Council’s vote to ban Exxxotica from the city-owned convention center, the porn expo has fired back that Dallas officials knew exactly what they were getting when they took the porn expo’s $28,080 last year, writes Robert Wilonsky for The Dallas Morning News.

The porn expo’s response is in response to a March 25 Dallas filing, which claimed Exxxotica’s organizers misrepresented the amount of nudity and sexually oriented activity that would take place during Exxxotica’s first event at the Kay Bailey Hutchison Convention Center last August. “As far as Dallas’ attorneys are concerned, broken promises to keep women (mostly) clothed trump Exxxotica’s allegations that the City Council trampled its First Amendment rights when it voted to ban the event two months ago,” reports Wilonsky.

U.S. District Judge Sidney Fitzwater will hear Exxxotica’s motion for a preliminary injunction on April 18.

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Day Pitney LLP and Cohen Seglias Pallas Greenhall & Furman PC announce the launch of their joint Title IX Investigations Initiative. This initiative will allow the firms to provide both existing and new clients greater services in the wake of a growing number of Title IX investigations, the firm says.

Title IX, enacted in 1972, prohibits discrimination on the basis of sex in federally funded educational programs and activities. This is a growing area of concern for many public and private schools, colleges and universities. Besides applying to faculty employment and sport team participation, Title IX also applies to how academic institutions are handling complaints of sexual harassment and sexual violence.

“Our collaborative practice will promptly investigate allegations and provide the results of that investigation to the academic institution – the idea is to combine the best practices from law enforcement and internal corporate investigations with experience in working within the unique setting of academia,” says Day Pitney attorney Steven Cash, who has served at the federal and state level in the executive, legislative and judicial branches, including the Manhattan District Attorney’s Investigations Division, and as Counsel on the Senate Committee on the Judiciary.

The New York Times recently reported how some colleges have increased budgets and have even hired teams within schools to handle the increasing number of cases in an article, “Colleges Spending Millions to Deal With Sexual Misconduct Complaints.”

“Our goal is to provide academic institutions with a team that has the necessary skills that are not generally found in educational facilities, including prosecutorial, investigative, and Title IX litigation experience,” said Paul Thaler, Managing Partner of Cohen Seglias’ Washington, DC office. “ In addition we understand the sensitivity required by academic institutions to oversee these investigations.”

The Title IX Investigations Initiative’s team also includes Christopher Carusone, former Chief Deputy Attorney General in the Pennsylvania Attorney General’s Office and Secretary of Legislative Affairs and Executive Deputy General Counsel in the Pennsylvania Governor’s Office; Stanley A. Twardy, Managing Partner at Day Pitney and former United States Attorney for the District of Connecticut; and Helen Harris, Day Pitney partner and White Collar group chair.

By  Jose Tabuena, JD, CFE, CHC

As the compliance field evolves, auditors should take heed of the power of data analytics and predictive models. The area of program evaluation is one that is ripe for opportunity to apply such techniques for both assessing compliance effectiveness and for nudging employee behavior toward supporting an ethical workplace. But keep in mind predictive models yield benefits only if appropriately acted upon.

Behavioral science provides a powerful set of tools for acting on data analytic indications when behavior change is the order of the day. Specifically, “behavioral economics” combines elements from economics and psychology to understand human behavior— even when it’s irrational.

The U.S. Department of Justice (DoJ) has signaled strong messages on the importance of having an “effective” compliance program finally bringing the conundrum of program measurement to the forefront. Although the Federal Sentencing Guidelines and its “elements” of compliance have existed for over twenty years, the formal standards and processes by which compliance programs are currently measured for effectiveness remain notoriously sketchy. This trend of the government to provide more guidance has continued with the DoJ stating it plans to release a set of sample questions to give companies an idea what investigators and prosecutors are concerned with. Apart from the ability of “effective” compliance programs to reduce the risks of high fines and liability, management has a financial stake in measuring the effectiveness of a compliance program. Operating a compliance program requires a significant investment in time and resources. Poorly functioning compliance programs are likely to waste money, divert scarce resources and operate sub-optimally with respect to mitigating serious, business-threatening risks.

Moreover, the positive effects of a compliance program may include better financial performance. Studies have started to show that in the long-run, a truly ethical and lawabiding corporation is more likely to foster on several measures—customer loyalty, increased employee retention, and strengthened public reputation.

The new DoJ compliance counsel in assisting federal prosecutors develop appropriate benchmarks for evaluating compliance programs, is to provide expert guidance to help prosecutors evaluate whether the implementation of such measures has been effective and has had a remediation effect. Naturally there is acute interest by compliance professionals in the work and impact of the DoJ compliance counsel. This position will be a focus for determining the benchmarks for effective compliance programs, and there is legitimate concern whether sufficient input from the industry compliance community will be considered in connection with future developments. Compliance professionals have had more than 20 years’ of practical experience in direct observation of what effectiveness means for organizational compliance programs, and the DoJ is only now embarking on zeroing in on this in a focused and systemic manner. The hope is that the DoJ will allow for constructive input from the compliance community on the meaningful measures of an effective compliance program.

Applying the “law” is not enough

The legal system is replete with examples where assumptions on how the world works as the basis for establishing laws and regulations has proven dreadfully wrong. Take the value of eyewitness testimony as one example. For a long history, prosecutors could argue for convictions based on the strength of a single eyewitness—the more confident the witness, the more seemingly infallible the testimony. That is, until psychologists conducted controlled studies on the reliability of eyewitness perceptions and the ability to accurately recall from memory.

An auditor evaluating an established compliance program could start with evidence that the organization has consistently implemented the elements of a program as defined by the Federal Sentencing Guidelines. But that is just the beginning. The experienced program evaluator recognizes that measuring implementation is different from the more difficult task of evaluating effectiveness.

After initial resistance, there was eventual recognition by the criminal justice system that eyewitness testimony can be extremely unreliable depending on the circumstances of the event and how potential suspects are presented to the witness. As a result, strict procedures for showing photographs and lineups for suspect identification have evolved. The use of psychologists to provide expert testimony during trials on eyewitness reliability is allowed by many judges. The emergence of DNA testing and the release of wrongly convicted individuals further demonstrate the danger of untested assumptions.

The modern American law school started with the belief that law can be understood and taught as a science. This belief was based on ideology that what mattered was understanding and rationalizing the law applied in courtrooms by judges. The search for the underlying principles provided the basis for the science of law. The body of cases, correctly analyzed, would reveal a set of internally consistent principles inherent in either human nature or culture and expressed case by case through the judges.

This approach of the law as a science has since fallen by the wayside. One only has to look at the divided opinions of the U.S. Supreme Court to recognize the fallacy of the law as a robust science. However, the myth that legal principles result in rational truth still persists. One example is the definition of an effective compliance program under the Federal Sentencing Guidelines. The elements of an effective program seem conceptually sound, but how do we know that applying them actually promotes a culture of compliance and prevents violations of law?

The fallacy is that while legal principles may seem rigorous in theory, they may not reflect actual reality. The idea of a classic mathematical proof is to begin with a series of statements that can be assumed to be true or that are self-evidently true. Then by arguing logically, it is possible to arrive at a conclusion. If the statements are correct and the logic is flawless, then the conclusion will be undeniable.

Scientific theory, on the other hand, can never be proved to the same level of a mathematical theorem. It is only considered highly likely based on the evidence available. Scientific proof relies on perception and observations both of which are fallible and provide only approximations to the truth. This is why experiments are performed to test the predictive power of a scientific hypothesis.

Legal principles often make assumptions about human behavior—such as the accuracy of eyewitness perceptions or the view that investors act rationally in financial markets. But science has started to reveal the weaknesses and subtleties underlying those assumptions.

Applying behavioral science

Principles, such as compliance program components, shouldn’t be taken on faith. When practical, the underlying elements should be field-tested using randomized controlled trials to measure their validity.

For instance, simply having a code of conduct and related compliance policies is obviously not enough to influence employee behavior. So what is it about a code of conduct, how it is written, communicated, and trained to the workforce, that can make a real difference?

In the field of behavioral economics, priming has proven to be an effective tool to subtly encourage honest behavior. Priming occurs when an individual is exposed to a specific stimulus that influences his or her ensuing actions. In studies by behavioral economist, Dan Ariely, experiments were designed to influence honest behavior when researchers “primed” people with a stimulus that involved morality and then observed how often cheating occurred when solving small math problems. When the participants were asked to recall the Ten Commandments, cheating significantly decreased compared with those who were instead asked to recall the names of Shakespeare’s sonnets.

Similar studies provide additional behavioral insights. It is easier to be just a little dishonest. Experiments show that we are more likely to cheat over a small amount of money than a large amount. People also tend to find it harder to be dishonest when interacting with another person than with an impersonal mechanism. The belief that we make rational decisions is a myth that belies the complexity of human behavior.

How do you know a program is working?

How can the auditor tasked with evaluating a compliance program take into account the findings of behavioral scientists? In the short history of the compliance profession, a variety of distinct approaches have been attempted. Yet any approach taken in isolation may yield unreliable information.

An auditor evaluating an established compliance program could start with evidence that the organization has consistently implemented the elements of a program as defined by the Federal Sentencing Guidelines. But that is just the beginning. The experienced program evaluator recognizes that measuring implementation is different from the more difficult task of evaluating effectiveness.

One might look to see if the compliance program incorporates “best practice” features adopted by leading companies. As to the code of conduct, one could inquire whether it was written with simple, understandable text and distributed to all employees. However, experience shows that just because employees received a reasonably well designed code of conduct does not necessarily mean that they understood it, found it useful or took it seriously.

Academic research indicates that the highest indicator of workplace misconduct is fear of retaliation and the confidence employees feel when raising issues. So data on employee willingness to address matters with their immediate supervisor or to use the compliance hotline, as well as their views on what would happen if they reported misconduct, can prove meaningful as a measure of effectiveness.

The current obstacle is the lack of an accepted methodology for consistent measurement along with the absence of a comprehensive set of metrics in which to benchmark your compliance program. The means by which organizations measure the effectiveness of their programs still vary, and in some cases organizations can be lulled into a false sense of security by evaluations that may not be empirically based or reliable.

Which is why the recent moves by the DoJ and particularly the hiring of a compliance counsel are such promising developments. Compliance professionals have been seeking open discussion and analysis on the measurement challenge, including consideration of possible outcome measures by which organizations could demonstrate the impact of their programs (e.g., observed misconduct, frequency and nature of reporting, fear of retaliation, direct measurement in risk areas where this is possible). Doing so could encourage companies to undertake high-quality evaluative efforts, and prompt boards of directors to review and reflect on the results of such efforts.

Subject matter expertise

When considering the compliance program as a broad control and evaluating program elements, don’t neglect the value of technical expertise. While auditors have expertise in the methodology of program evaluation (itself a valuable skill), subject matter expertise is just as essential. It does occur that auditors miss a significant problem because the evaluation approach was structurally blind to the domain and members of the review team not truly understanding the details of “how it works.” And technical folks are nudged outside their core expertise such as when audit and professional services teams strive for high utilization of its staff. Have a fraud specialist on the team for financial controls, a cyber-expert during an information security review, and definitely have a compliance specialist when evaluating a compliance program.

As the field of compliance management continues to mature, reliable means to evaluate compliance program effectiveness will increasingly become imperative. This is true not only for auditors assisting operational leaders who must effectively manage risk, but for those in enforcement who need to make informed decisions, consistent with announced policies, relating to prosecution and punishment.

Originally published in Compliance Week

Donald Trump’s prediction that the U.S. economy was on the verge of a “very massive recession” hit a wall of skepticism from economists who questioned the Republican presidential front-runner’s calculations, reports Reuters.

In a wide-ranging interview with the Washington Post published on Saturday, the billionaire businessman said a combination of high unemployment and an overvalued stock market had set the stage for another economic slump. He put real unemployment above 20 percent, Reuters said.

“There is a very low probability of a massive recession, less than 10 percent,” said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo. “If it happens, it would be because of what is happening overseas, especially in China and Europe.”

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