Case study: Media communications compliance lapse

When compliance officers come calling, employees would be wise to be as forthright as possible.

This was underscored in the recent charges that the state of Massachusetts settled with Citigroup over the failure to supervise a technology analyst that the company admits engaged in unauthorized communication with the media. The complaint details some email exchanges between the senior analyst and compliance professional. Citigroup, as most companies do, has strict policies governing outside communications by analysts, such as interviews with reporters and public speeches. The complaint details some cautionary exchanges.

A reporter asked the analyst three questions via email and copied someone in the internal Citigroup communications group. The analyst answered the question. The communications manager then told the analyst that he would need approval for his response, unaware that the analyst had already responded with the word "yes" written out three times in a reply. The analysts said he wouldn't respond, which of course was a fib.

The communications manager then informed the French journalist that the analyst would not be able to respond, to which the reporter wrote: "He did in fact answer by a triple yes." So the analyst was effectively caught fibbing. They went back and forth for a while, talking about post interview approval.

In the end, the analyst correctly intuited that all this might come back to haunt him.

"This could get me in trouble. Shoot," he said.

Indeed, it got him fired. The episode made him look really bad, and the communications folks (if you read all the emails) looked like they were abetting his efforts to circumvent policies. It may seem like a little things, but when regulators start looking for incriminating evidence, you never know what will be relevant.

For what might have seemed like a minor infraction, the whole company suffered. The bank settled the failure to supervise charge for $2 million. All in all, sticking to policy is a good thing.

For more:
- here's the complaint