CCCP Regulatory Compliance & Legal Frameworks 5 — Questions and Answers
Question 1: A compliance officer at a publicly traded company learns that the CEO may have engaged in insider trading. Under SEC Rule 10b-5, which element is NOT required to establish a violation?
- Use of a device or scheme to defraud
- Trading in a security while in possession of material nonpublic information
- Proof that the defendant profited from the trade (Correct answer)
- A misrepresentation or omission of a material fact in connection with securities trading
Correct answer: Proof that the defendant profited from the trade
SEC Rule 10b-5 does not require proof of actual profit; liability can attach even when the trader loses money, as long as the other elements of fraud in connection with a securities transaction are met.
Question 2: Under the Equal Employment Opportunity laws enforced by the EEOC, which employer action would most likely constitute a 'disparate impact' violation rather than 'disparate treatment'?
- A manager explicitly refusing to promote female employees to senior roles
- A neutral hiring test that disproportionately screens out minority applicants without job-related justification (Correct answer)
- An employer paying male employees more than female employees for the same work
- A supervisor subjecting only Black employees to heightened performance scrutiny
Correct answer: A neutral hiring test that disproportionately screens out minority applicants without job-related justification
Disparate impact occurs when a facially neutral employment practice has a disproportionately adverse effect on a protected class and cannot be justified as job-related and consistent with business necessity.
Question 3: When must a company conducting a Reduction in Force (RIF) comply with the Worker Adjustment and Retraining Notification (WARN) Act?
- Any time a company lays off more than 10 employees in a calendar year
- When a plant closing or mass layoff affects 50 or more employees at a single site within a 30-day period (Correct answer)
- When seasonal layoffs affect any employee covered by a collective bargaining agreement
- When a company with more than 50 employees terminates any worker without cause
Correct answer: When a plant closing or mass layoff affects 50 or more employees at a single site within a 30-day period
The WARN Act requires employers with 100+ employees to provide 60 calendar days' advance notice of plant closings or mass layoffs affecting 50 or more employees at a single site.
Question 4: Under the Racketeer Influenced and Corrupt Organizations (RICO) Act, what is the minimum number of predicate acts required to establish a 'pattern of racketeering activity'?
- One act within a five-year period
- At least two related acts within a ten-year period (Correct answer)
- Three or more acts within a single criminal enterprise
- Five or more acts demonstrating continuity of criminal purpose
Correct answer: At least two related acts within a ten-year period
RICO requires proof of at least two predicate acts of racketeering activity within a ten-year period that are related and constitute or threaten continued criminal activity.
Question 5: A company's compliance team is implementing a new third-party due diligence program. Under the UK Bribery Act 2010, which standard of corporate liability applies to a company whose associated person bribes a foreign official?
- The company is liable only if a senior officer authorized or acquiesced in the bribe
- The company is strictly liable unless it can prove it had 'adequate procedures' to prevent bribery (Correct answer)
- The company is liable only if the bribery resulted in a financial benefit exceeding £1 million
- The company is liable only if the bribery was carried out within the UK or by a UK national
Correct answer: The company is strictly liable unless it can prove it had 'adequate procedures' to prevent bribery
The UK Bribery Act creates a strict corporate offense for failing to prevent bribery by an associated person; the only defense is demonstrating that the company had adequate anti-bribery procedures in place.
Question 6: Under the Americans with Disabilities Act (ADA), an employer is required to provide a 'reasonable accommodation' to a qualified individual with a disability. At what point does this obligation end?
- When the cost of accommodation exceeds $5,000 per employee per year
- When the accommodation would impose an undue hardship on the employer's operations (Correct answer)
- When the employee has been with the company less than 12 months
- When the accommodation would require modifying the employee's job title or grade level
Correct answer: When the accommodation would impose an undue hardship on the employer's operations
An employer's obligation to provide reasonable accommodations under the ADA ends when doing so would impose an 'undue hardship,' assessed based on the cost, the employer's financial resources, and the nature of the business.
Question 7: The DOJ's Corporate Enforcement Policy offers companies the most favorable treatment when they meet which combination of conditions?
- Voluntary self-disclosure, full cooperation, timely remediation, and disgorgement of all profits (Correct answer)
- Full cooperation and remediation even without voluntary self-disclosure
- Self-disclosure within 30 days of discovery and termination of all involved employees
- Proactive voluntary self-disclosure before a government investigation has begun, even if imperfect
Correct answer: Voluntary self-disclosure, full cooperation, timely remediation, and disgorgement of all profits
Under the DOJ's Corporate Enforcement Policy, companies that voluntarily self-disclose, fully cooperate, timely remediate, and disgorge profits are eligible for the most favorable outcomes, including declinations or reduced penalties.
CCCP Regulatory Compliance & Legal Frameworks 5
A compliance officer at a publicly traded company learns that the CEO may have engaged in insider trading.
Under SEC Rule 10b-5, which element is NOT required to establish a violation?