CFO Securities Fraud

But what are these ethical issues, and how can CFOs ensure that the SEC, FBI or U.S. Attorney’s Office doesn’t come knocking on their door? On Wednesday, January 15, 2014, The CFO RoundTable Boston hosted Ethical Dilemmas: Perspectives from the FBI, SEC and U.S. Attorney’s Office,” where our panel discussed trends in securities fraud that CFOs should be aware of.

Our speakers included:

  • Peter Howe, Business Editor, NECN (Moderator)
  • Kevin B. Currid, Assistant Regional Director, SEC
  • Patrick J. Noone, Senior Staff Accountant, SEC
  • Sarah Walters, Unit Chief, Economic Crimes Unit, U.S. Attorney’s Office
  • Darryl Wegner, Supervisory Special Agent, FBI


What Did We Learn?

Fraud Happens. It’s Up to You to Find It Early.

As we all know, fraud starts small, and snowballs into something larger. It’s only through a thoughtful and complete compliance structure, including support from the CEO and CFO, will those smaller frauds be caught early, negating a larger fraud down the road. 

And the panelists advice on the best way to build a compliance program? The panel advised attendees to stay away from an ‘off the shelf’ program, but rather, build a tailored program that demonstrates knowledge of not only the regulatory environment that you operate in, but also your company industry, business model and available resources. (Check out our April 2013 article, “The Moral Dimension of Leadership: Why Ethics Matter,” for advice on building a culture of ethics.)

Where Fraud Is Happening These Days

Not surprisingly, foreign corrupt practices cases are becoming more prevalent than ever. Why? Because as more businesses expand globally, the more they expose themselves to foreign business practices, such as bribes and kickbacks. And while those practices may have a little more flexibility overseas, they’re certainly not legal in the United States.

To help combat potentially corrupt foreign business practices, the panel recommended excellent due diligence with your foreign partners, suppliers and other business parties. For example, be sure to check your partners’ compliance programs to ensure that they match the quality of yours. Go beyond the black and white of your contract and make efforts to meet them in person and see their operations live, to ensure that they can do what they are promising, and they are who they say they are.

Another interesting note is that international crime is becoming more sophisticated, and therefore, your company must be more vigilant. For example, there are companies who have reported that they’ve lost money to foreign companies who pose as overseas vendors demanding payment. Once the money is paid, it’s almost impossible to get it back.

The final message – whether domestic or international, always know who your business partners are and who you’re dealing with.

So You Found Some Fraud – Now What?

The panel stressed that they welcome questions from the community, and offer several ways that people can contact their office.

For example, the SEC encourages companies and their auditors to consult with the Office of the Chief Accountant (OCA) on “accounting, financial reporting, and auditing concerns or questions, especially those involving unusual, complex, or innovative transactions for which no clear authoritative guidance exists as well as on issues regarding auditor independence.” For guidance on how to work with the OCA, please click here.

The SEC is also offers the Office of the Whistleblower, which you can learn more about here.

Talk Back

Have another question about ethics that our panelists didn’t answer? Do you have advice that you’d like to share with your colleagues? Share with us in the comments today!

Photos and More Information

For more information on this or any of the upcoming events The CFO RoundTable has planned, please click here.

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