At its core, any good compliance program educates employees about the value of doing the right thing and encourages thoughtful, proactive behavior.  Certainly a familiar concept, establishing the right “tone at the top” is a first step to solving endemic problems of corruption and fraud because it shapes the broader corporate culture and sets an example that other employees strive to follow.

In identifying potential conflict situations, there are four critical steps that must be taken.

After-the-fact disclosures are sometimes impossible and almost invariably inadequate. Firms must take four steps to identify potential conflicts of interest.

  • Determine what potential conflicts could arise, especially out of the multiplicity of businesses in which it is engaged.
  • Decide how it will deal with those conflicts should they arise.
  • Disclose, in language anyone could understand, the potential conflicts that could arise and the method by which those conflicts will be resolved.
  • If a conflict does arise, before finalizing any solution, assess whether the pre-conceived methodology produces a fair result for customers likely to be adversely affected by the conflict.
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