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Are compliance violation ‘smoking guns’ hiding in the board minutes?

Teri Quimby (teri@teriquimby.com) is an attorney, speaker, author, consultant, and former state regulator in Lansing, Michigan, USA.

History has recorded many cases of emails or other written documents that have caused the collapse of organizations big and small. These often unstructured, informal communications help prove cases by showing what board members knew or didn’t know, and when. While Enron provided an example, it’s not only large corporations that have smoking guns hiding[1] —every company and organization likely has something hidden away that may surface sooner or later. But with statutory enactments like the Sarbanes-Oxley Act of 2002,[2] the U.S. Federal Sentencing Guidelines provisions related to compliance,[3] and the widely discussed Department of Justice Evaluation of Corporate Compliance Programs,[4] virtually no organization can claim to be unaware of the detailed records that must be maintained for compliance purposes. Hidden records can help tell compliance stories, including some that may end with violations, reputation damage, shareholder discontent, or more.

Beyond smoking gun emails, memos, apps, and other corporate documents or database records, there are board meeting minutes. As fundamental corporate records, meeting minutes may not be getting enough attention. For example, shareholder derivative cases highlight the importance of using board minutes to substantiate allegations. Written words recording board discussions and actions may show whether fiduciary duties were fulfilled—or not.

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