Investigations, Reporting, and Ethics Flashcards

What does 'attorney-client privilege' protect in the context of an internal compliance investigation?

Answer: Confidential communications between an attorney and client made for the purpose of obtaining legal advice

Attorney-client privilege covers confidential communications between an attorney and client specifically for legal advice, not all attorney involvement in business matters.

An employee submits an anonymous tip through the hotline alleging financial fraud. The tip lacks specific details. What is the best initial compliance response?

Answer: Conduct a preliminary inquiry to determine if the allegation has merit

A preliminary inquiry allows the compliance team to assess whether the allegation warrants a full investigation without prematurely escalating or closing the matter.

Under the Dodd-Frank Act, which of the following individuals is eligible to receive an SEC whistleblower award?

Answer: An employee who reports information that leads to a successful SEC enforcement action exceeding $1 million

Dodd-Frank awards go to individuals who voluntarily provide original information leading to a successful SEC enforcement action resulting in sanctions over $1 million.

What is 'spoliation of evidence' and what are its potential consequences in a compliance investigation?

Answer: Destruction or alteration of relevant evidence after a legal hold is triggered; adverse inference or sanctions

Spoliation occurs when relevant evidence is destroyed after a litigation or investigation hold is in place, and courts may instruct juries to draw adverse inferences.

Which element is NOT typically part of a root cause analysis conducted after a compliance violation is found?

Answer: Determining disciplinary outcomes for the responsible party

Root cause analysis focuses on systemic causes and control failures, not on determining individual disciplinary outcomes, which is a separate process.

A compliance officer suspects that an ongoing investigation may be compromised because the subject has access to the investigative files. What should the officer do?

Answer: Restrict the subject's access to relevant systems and files immediately

Restricting the subject's access to investigative materials immediately protects the integrity of the investigation and prevents evidence tampering.

What is the primary purpose of a compliance program's Code of Conduct?

Answer: To establish clear behavioral expectations and ethical standards for the organization

A Code of Conduct communicates the organization's values and expected behaviors, providing an ethical framework for all employees.