Howard B. Iwrey, Michigan-based antitrust and trade regulation attorney with the law firm of Dykema Gossett PLLC, was quoted extensively in the Law360 article, “How Banks Can Build Strong Antitrust Compliance Programs,” which discusses various ways that banks can add new preventive measures against antitrust violations.
Banks and other financial institutions have been under a high level of scrutiny by the antitrust enforcement authorities for a number of years. Investigations and civil litigation have focused on, among other things, manipulation of the Libor and the foreign exchange markets.
The problem in this industry, however, is that the financial industry necessarily involves aspects cooperation and competition. Consequently, the line between legal and criminal conduct can be blurred. Additionally, management and employees are not necessarily as sensitive to antitrust issues as those in industries typified by competition though RFQs and bids.
Another challenge noted by Mr. Iwrey is that new technologies and platforms could lead to new types of antitrust conduct, pointing out that he could see how there might be a vulnerability now that people have begun applying for mortgages online. Antitrust conspiracies may no longer take place in smoke-filled rooms.
All of these factors make antitrust compliance efforts in the financial industry a unique challenge.
Mr. Iwrey recommends that financial institutions hold in-person training sessions where bank employees can ask specific questions about the kinds of situations they might encounter in their work. Furthermore, the compliance efforts need to have the support of the highest levels of management, provide a confidential whistle-blowing mechanism and impose penalties for non-compliance (even if the non-compliance does not result in any antitrust violation).
Mr. Iwrey also highlights the importance of making employees aware of the potential for individual legal consequences or internal penalties for violating the bank’s antitrust compliance policy and for not reporting violations. Doing so incentivizes employees to take compliance seriously.
Another feature of an effective compliance program relates to clearing and monitoring communications with competitors. Iwrey points out that communications, such as discussions of a potential joint venture, should be precleared and reported to the compliance department. He also says that it might make sense to limit or ban certain methods of communication altogether, pointing out that communicating through LinkedIn messages or online chat rooms are very hard to monitor and that people tend to be less careful on social media than they are in more traditional forms of business communications.
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Dykema Gossett PLLC assists clients in setting up compliances program. Please click here for information on Dykema’s antitrust compliance practice.