Legal & Ethical Compliance Standards Flashcards

A multinational company's subsidiary in a high-corruption-risk country is audited and found to have paid local officials to pass health inspections. Under the FCPA, liability could extend to the U.S. parent company under which theory?

Answer: Agency liability / respondeat superior

The FCPA can hold a U.S. parent liable for a subsidiary's corrupt acts under agency theory when the parent authorized, directed, or controlled the subsidiary's conduct.

The 'three lines of defense' model assigns compliance oversight responsibilities to which line?

Answer: Second line — compliance and risk management functions

In the three lines of defense model, the second line consists of compliance, risk management, and legal functions that provide oversight and guidance to the first line.

Which antitrust violation is treated as a per se illegal under U.S. law, requiring no analysis of market effects?

Answer: Horizontal price-fixing among competitors

Horizontal price-fixing agreements among competitors are per se illegal under Section 1 of the Sherman Act, meaning no market analysis is needed to establish a violation.

A company's code of conduct prohibits conflicts of interest. An employee who owns 2% of a publicly traded supplier is required to:

Answer: Disclose the interest and recuse from decisions involving that supplier

Best practice and most codes of conduct require employees to disclose potential conflicts of interest and recuse themselves from related decisions, regardless of the percentage owned.

Under the False Claims Act, qui tam relators (whistleblowers) who file suit on behalf of the government can receive what percentage of the government's recovery if the government intervenes?

Answer: 15–25%

When the government intervenes in a False Claims Act qui tam lawsuit, the relator is entitled to between 15% and 25% of the government's total recovery.

Which of the following best describes 'willful blindness' (also known as conscious avoidance) in the context of corporate criminal liability?

Answer: An executive refuses to read compliance reports to maintain deniability

Willful blindness occurs when a person deliberately avoids learning facts that would establish knowledge of wrongdoing, and courts treat this as equivalent to actual knowledge.

The EU General Data Protection Regulation (GDPR) requires organizations to appoint a Data Protection Officer (DPO) when:

Answer: The organization processes special categories of data on a large scale or conducts large-scale monitoring

GDPR mandates a DPO for public authorities, organizations that engage in large-scale systematic monitoring, or those that process special categories of data on a large scale.