(Sentencing Guidelines and Corporate Compliance and Ethics Programs)

The United States Sentencing Commission issued organizational sentencing guidelines in 1991. Under the guidelines, the punishment given to an organization for a violation of criminal laws is adjusted according to various factors, including whether the organization has an effective compliance and ethics program in place. An organization's culpability score is measured to determine whether a base fine should be adjusted upward or downward. Whether the crime occurred even though the organization had an effective program to prevent and detect violations is one issue considered in measuring the organization's culpability score.

1. The compliance program is "reasonably capable of reducing the prospect of criminal conduct";

2. Overall responsibility to oversee compliance is assigned to high level personnel;

3. Due care is taken not to delegate authority to those who may be considered more likely to engage in illegal activities;

4. The program is effectively communicated;

5. Reasonable steps to achieve compliance with program requirements are taken;

6. There is consistent enforcement of the standards of the program; and

7. The program requires the organization to take all reasonable steps to respond appropriately when an offense is discovered.

Substantial amendments to the corporate compliance program guidelines take effect November 1, 2004. The amendments require:

• Greater involvement of a company's board of directors in the development and continued oversight of effective programs;
• Increased training and a monitoring requirements for the programs; and
• Additional incentives and discipline designed to make the programs more effective.

An effective program requires organizations to determine where within the organization risks of criminal violations arise, to train management and employees regarding applicable legal standards and duties, and to provide compliance and ethics officers authority and resources needed to carry out their responsibilities.

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