Managing Conflicts of Interest:

Transcription

1 Managing Conflicts of Interest: A Compliance Officer s Challenge SCCE Compliance & Ethics Institute 2015 Vernon Speshock, Associate Director, Policy and Compliance Operations Jennie Watts, Program Manager, Policy and Operations Agenda Overview About Us Conflicts of Interest Overview Why is this important? Process Who Should Disclose, How Often, What Questions? Review and Approval Process Management Terms Role That Technology Can Play Group Scenarios Lessons Learned Enterprise Disclosure Process Ethics Survey Reporting Questions 2 1

2 Overview 3 About Us Apollo Education Group, Inc. (Apollo) is at the forefront of our industry and has made a quality education accessible to hundreds of thousands of students since 1973 Apollo provides private education services. It offers online and on-campus undergraduate, graduate, professional development, and other non-degree educational programs and services principally to working learners in the United States and abroad. Apollo is the parent company of University of Phoenix, Apollo Global, and other educational entities and organizations. 4 2

3 About Us Our mission is to help students achieve their goals in life through flexible, affordable, and effective education opportunities. We do this by providing academic support, state-of-the art learning platforms and tools, and motivated staff and faculty members, while meeting rigorous academic standards. 5 About Us Students: Over 200,000 Graduates: Over 900,000 Faculty: Over 19,500 Employees: Over 10,000 Subsidiaries: University of Phoenix, Western International University, Carnegie Learning, College for Financial Planning, Apollo Global: BPP (UK), Bridge School of Management (India), FAEL (Brazil), IACC Professional Institute (Chile), Milpark Education (South Africa), Open Colleges of Australia (Australia), UNIACC (Chile), and ULA (Mexico). 6 3

4 Conflicts of Interest Overview Duty of Loyalty to the Company Every Employee has a Duty to: Act in the Best Interest of the Company Disclose and Resolve any Potential Conflict in Advance Use Company Assets for the Benefit of the Company, Customers and Shareholders 7 Conflicts of Interest Overview Conflicts Occur When: Personal interests conflict with the interests of the company. Personal interests interfere with the performance of job duties. Personal interests conflict with employee objectivity or effectiveness. Employees use company information, assets, or position for personal gain. Employees outside employment, or that of an immediate family member, creates a conflict or appearance of one. There is the appearance of a conflict of interest. 8 4

5 Conflicts of Interest Overview Apollo s Code of Business Ethics Requires: Conflicts, potential conflicts, and business opportunities that are encountered through the course of an employee s work or position must be disclosed, (in advance if possible), for review and advice. These issues are reviewed by the Chief Ethics and Compliance Officer who advises on the potential conflict of interest, appropriate resolution and expectations. Apollo also distributes periodic surveys or questionnaires related to conflict of interest disclosure. 9 Why is this Important? Systemic Risk conflicts of interest, when not eliminated or properly mitigated, are a leading indicator of significant regulatory issues for individual firms, and sometimes even systemic risk for the entire financial system. Carlo V. di Florio, Director, Office of Compliance Inspections and Examinations, U.S. Securities and Exchange Commission, Speech to the National Society of Compliance Professionals, October 22,

6 Why is this Important? Organizational Justice According to the Corporate Executive Board, organizational justice occurs when employees agree that: 1) their firm responds quickly and consistently to proven unethical behavior and; 2) that unethical behavior is not tolerated in their department. The Importance of Integrity Capital in Corporate Culture, Tracy Davis Bradley and Tim Stafford, September 26, 2011, Corporate Compliance Insights 11 Why is this Important? Risk Summary Given the outsized impact that COIs can have on the overall efficacy of a company s C&E program, addressing them effectively should be a top priority for companies. That is, the danger of poor COI mitigation is not only the immediate impact from individual COIs (e.g., distorted procurement or hiring decisions) but a broader risk to the entire program. Jeff Kaplan, Organizational Justice and Conflicts of Interest, Conflict of Interest Blog, April 2,

7 Process 13 Who Should Disclose and How Often? Enterprise Disclosure Requests All U.S. based employees are surveyed for conflicts of interest every four (4) years; Employees in key departments are surveyed every two (2) years. These include: Ethics and Compliance, Internal Audit, Sourcing and Procurement, Legal, and Finance. Employees in management level positions are surveyed every two (2) years. Individual Self-Disclosure Self-disclosure is required when a conflict is discovered or circumstances change from a previous disclosure. 14 7

8 What Questions Should Be Asked? 15 Review and Approval Process 16 8

9 Management Term Examples 17 Role That Technology Can Play Apollo Utilized Systems: PeopleSoft (MyHR) SharePoint Other Options: Vendor Solutions 18 9

10 Group Scenarios 1. Identify the potential Conflict of Interest present 2. Brainstorm how to effectively manage the potential conflict 19 Lessons Learned 20 10

11 Lessons Learned: Enterprise Disclosure Process Total Enterprise Disclosures Over three-fourths (76.8% or 418 disclosures) of total affirmative responses from employees noted potential conflicts of interest reflecting engagement in outside employment (39.7% or 216 disclosures) or service on external boards (37.1% or 202 disclosures). 21 Lessons Learned: Enterprise Disclosure Process Disclosures by Employee Position Managers and senior leadership are three times more likely (9.9% or 264 disclosures) to affirm a potential conflict of interest than are staff members (3.3% or 280 disclosures)

12 Lessons Learned: Ethics Survey Questions Asked: My recent participation in the enterprise Conflicts of Interest disclosure process (through the MyHR acknowledgement system): Increased my understanding of Conflicts of Interest in general. Had a positive impact on the ethical culture at Apollo and its subsidiaries. Analysis: 72% of employees agreed that participation in the enterprise disclosure process increased their understanding of COI s and positively impacted the ethical culture of Apollo. 23 Lessons Learned: Reporting Regular Reports to Board of Directors and Senior Leadership Executive Training All Employee COI Training Ethics Advisors and Periodic Communications Ethics and Compliance Week 24 12

13 Questions? 25 Thank you! Vernon Speshock: Jennie Watts: 26 13