Dos and don'ts for managing a monitor: worried that a compliance issue may result in a government-imposed monitor in your midst? Be proactive to help select the monitor, demonstrate remediation, and avoid disruption of the company's operations.

• Author: Stamboulidis, George A.
• Position: REGULATORY OVERSIGHT

THE DUTY OF DIRECTORS and management of any business is to protect the company and its shareholders' interests. In today's heightened regulatory enforcement environment, an additional core responsibility of the board and good management is setting a tone at the top of the organization that prioritizes ethical business practices and compliance with law. More and more companies are finding themselves negotiating with government enforcement agencies to settle cases involving questionable business practices without criminal charges, and the government has increasingly resorted to the use of independent monitors or examiners to resolve investigations of corporate misconduct. This article seeks to guide directors and business leaders in the selection and management of monitors that may be required to oversee and report on a company's compliance operations for a period of time under non-prosecution or deferred prosecution agreements with the government.

At all stages and well before a monitor or examiner arrives to occupy office space on the company's premises, under the direction of the board, management needs to actively engage in the process of negotiating settlement agreements with the government. This includes demonstrating the company's commitment to a well-defined compliance program, collaborating on the selection of the monitor, and being responsive to the monitor to ensure she has access to pertinent information to execute her duties.

We set forth below some dos and don'ts to provide guidance for directors once it becomes clear that a monitor is likely to be appointed to examine and oversee the company's operations.

Do: Play an active role in selecting the monitor

When it becomes clear that a government investigation of company practices may be resolved on more favorable terms if a monitor is appointed, directors should play an active role in helping the government identify and select the monitor. The Department of Justice (DOJ) recently issued guidelines on the selection and use of monitors in non-prosecution and deferred prosecution agreements that allow companies to have a significant role in the selection of their monitor. The DOJ policy directs the government to confer in advance with the corporation to identify the qualifications, expertise, and skills the monitor should have, and companies are permitted to propose a slate of candidates or to select among candidates identified by the government.

What qualities should directors look...