Principles of the Law, Compliance, Risk Management, and Enforcement

The following entry is excerpted from the Black Letter of Tentative Draft No. 1, § 3.07 The Role of the Board of Directors and Executive Management in Promoting an Organizational Culture of Compliance and Risk Management.

The full draft contains Comments. This draft will be presented to membership at the 2019 Annual Meeting for approval. Until approved, this is not the position of The American Law Institute and should not be represented as such.

§ 3.07. The Role of the Board of Directors and Executive Management in Promoting an Organizational Culture of Compliance and Risk Management

          (a) The board of directors and executive management should promote an organizational culture of compliance and sound risk management.

          (b) To promote this culture, among other ways, the directors and executive management should:

            (1) approve the values represented in the compliance policies and procedures, the ethical standards in the code of ethics, and the risk culture in the risk-management program;

            (2) satisfy themselves that the organization’s practices foster these values, standards, and risk culture;

            (3) be assured that employees and agents of the organization are willing to adhere to, and their organizational activities reflect, these values, standards, and risk culture; and

            (4) communicate, and demonstrate by their actions, adherence to these values, standards, and risk culture throughout the organization, to all its employees and agents, and, if appropriate, to those outside the organization.

Read the complete Black Letter and Comments from this Section.

Geoffrey P. Miller

Reporter, Compliance, Enforcement, and Risk Management

Geoffrey Miller, Stuyvesant P. Comfort Professor of Law at NYU Law School, is author or editor of eight books and more than 200 articles in the fields of compliance and risk management, financial institutions, corporate and securities law, constitutional law, civil procedure, legal history, jurisprudence, and ancient law. He has taught a wide range of subjects including property, corporations, compliance and risk management, financial institutions, land development, securities, the legal profession, and legal theory.

Jennifer H. Arlen

Associate Reporter, Compliance, Risk Management, and Enforcement

Jennifer Arlen, the Norma Z. Paige Professor of Law at NYU Law School, is one of the nation’s leading scholars on corporate liability, specializing in corporate crime, vicarious liability, and securities fraud. She also has written extensively on medical malpractice liability and experimental law and economics. Arlen received her BA in economics from Harvard College and her JD and PhD in economics from New York University. She is co-founder and director of the NYU Program on Corporate Compliance and Enforcement. She also is a co-founder, director, and past president of the Society of Empirical Legal Studies, is a former director of the American Law and Economics Association, serves on the editorial board of the American Law and Economics Review, and chaired the Law and Economics, Remedies, and Torts sections of the Association of American Law Schools.

James A. Fanto

Associate Reporter, Compliance, Enforcement, and Risk Management

James Fanto, Gerald Baylin Professor of Law at Brooklyn Law School, teaches courses on banking, broker-dealer law, regulation and compliance, corporate and securities law, corporate finance, and comparative and international corporate law and governance. His extensive writings and lectures both in the United States and abroad focus on the law relating to banks, broker-dealers, corporate boards, comparative corporate governance, cross-cultural securities disclosure and merger decision making. He is the co-director of the Center for the Study of Business Law and Regulation, and is affiliated with the Dennis J. Block Center for the Study of International Business Law, and the Center for Law, Language & Cognition.

Claire A. Hill

Associate Reporter, Compliance, Risk Management, and Enforcement

Claire Hill is the James L. Krusemark Chair in Law at University of Minnesota Law School. She teaches corporate law, mergers and acquisitions, contracts, and a seminar in law and economics. She is the founding director of the Law School’s Institute for Law and Rationality, and the associate director of its Institute for Law and Economics. She is also an affiliated faculty member of the University’s Center for Cognitive Sciences. Before becoming a law professor, she practiced corporate law at several law firms. Her research interests include corporate governance, capital structure, structured finance, rating agencies, secured debt, contract theory, law and language, and behavioral economics.

Pauline Toboulidis

The American Law Institute

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