The ongoing MF Global controversy provides corporate counsel an opportunity to share with client leadership an important and very practical lesson with respect to the role of the corporate compliance, or risk, officer. The multiple House and Senate hearings that took place last week have been primarily focused on finding the missing customer funds, and understanding how they were misplaced without executive or board awareness. The broader concern — and the more significant governance lesson — arises from the controversial role the MF Global risk officer is reported to have played in connection with the investment strategy.
A series of high-profile media reports allege that the MF Global risk officer’s warnings were marginalized in the process, which may have contributed to the ultimate investment losses. At their core, such allegations raise highly practical concerns relating to the management of the corporate compliance and risk functions to which every board must be attentive and sensitive. The corporate counsel is uniquely positioned to brief organizational leadership in this regard.
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