Ethics and Compliance

Case Study

Compliance, Ethics and Corporate Governance

Re: The continuous wave of financial scandals and whether regulators are often slow to respond by bringing enforcement actions against corporate wrong doers and so preventing widespread negative effects. Discuss the key reasons why this would occur and make recommendations to reduce the impact.

Waves of corporate shenanigans continue to shadow the financial sectors despite the near cataclysmic collapse of the global financial system in 2008-09. While it has been dubbed the most disastrous financial event since the 1929 Great Depression, the question arise whether the concerns of widespread negative effects justified and the relentless pressure on Regulators to do more to reduce the impact of financial disasters? The Icelandic financial crisis of 2008–2011 suggests that the insistence is necessary. Iceland’s economy collapsed and its stock market lost 90% of its value when its three major commercial banks failed following a bank run on one bank that spread to the others! Closer home, the January 2009 insolvency of Colonial Life Insurance Company (CLICO) of Trinidad and Tobago, the largest insurance provider then, represented a major financial shock to the Caribbean. CLICO’s collapse impacted all CARICOM states except for Jamaica and Haiti. In the wake of banks and Insurance failures, investors were further confronted with the demise of a plethora of ponzi schemes that also stretched across national boundaries - Bernard Madoff (USA); Allen Stanford (USA and Antigua); and Cash Plus, Olint and World Wise, the three largest schemes in Jamaica, to name a few. The speed and severity of these financial let downs - global, regional and or national - show how interconnected the financial system is and the wide effects one failure can have. The possibility of widespread financial disasters has placed regulatory regimes under intense scrutiny.

As an analogy, the Chinese word for crisis contains two...