A robust system of internal policies, procedures, and protocols, effectively disseminated to a workforce fully educated as to the contents of such guidelines, can be one of the best ways for a corporation to mitigate and minimize risk – if those policies are followed. Conversely, a company’s deviation from established policies and best practices can be one of the most damaging evidentiary arrows in a plaintiff’s quiver and the basis of substantial claims.
JP Morgan Chase Bank NA has found that out, as an Ohio federal judge’s recent denial of a motion to dismiss means that it will have to face the better part of a $650 million class action suit largely premised on the allegation that it “knowingly and systematically disregarded” its purported underwriting standards and internal risk guidelines to sell billions of dollars in securitized mortgage loans.
Whether risk guidelines, employment practices, accounting protocols, or procedures that apply to any other aspect of a company’s business, it is crucial that these standards be treated with the same seriousness and deference that one would place on compliance with external legal and regulatory requirements.
Establishing a strong system of corporate policies and procedures means little if they are quickly tucked away in a desk drawer or dark corner of a hard drive. Monitoring and ensuring compliance, detecting and reporting deviations, and taking timely remedial measures when such deviations are discovered are all essential aspects of a company’s efforts to minimize exposure.
Perhaps the biggest challenge in ensuring compliance with internal policies is the speed with which so many actions are taken and decisions are made. A manager pressing “send” on an ill-advised e-mail containing a non-compliant directive can be almost impossible to stop, and it is fairly certain that such an e-mail will be contained in the evidentiary record should that directive be the basis of a claim against the company.
If you are seeking counsel and guidance on how to establish a comprehensive program of internal protocols and compliance procedures for your company, please contact Ohrenstein & Brown at (888) 260-6821.