agenda established by Buttondown’s compliance officer, working with the dealership’s corporate lawyer.
A perusal of the minutes shows that, each quarter, the board hears a report from the compliance officer about any new state or federal compliance requirements imposed on the dealership during the period, customer compliance complaints and the resolution of those complaints, and any required review, updating and auditing of the dealership’s compliance management system (CMS), including its Red Flags, safeguarding and disposal policies.
Early in the five-year period, the minutes reflect the board’s appointment of the dealership’s Red Flags and privacy officer, and show a directive by the board to that officer to develop and maintain a CMS consisting of all compliance programs required by federal and state law, along with an undertaking by the board to adequately fund that effort. Each quarterly record contains a description of any unresolved action items that become part of the next quarterly meeting’s agenda.
Higher Standards
How do you suppose the regulator examining these records will react to them? If there’s an enforcement action underway and there is any room for the regulator to cut the dealer some slack, how much more leeway will Buttondown have because its records reflect a culture of compliance that is driven by attention from its top management?
Further, how successful will Sharp be in arguing that, despite the scarcity of any records to back up its claim, it takes care of its customers and really, really tries hard to comply with all those burdensome rules and regulations?
Now, go pull your dealership’s corporate records off the shelf and take a close look at them. Do they resemble Sharp’s, or are they more on the order of Buttondown’s? If it’s the former, it might be time to start working on the paper tracks of your corporation.
By Thomas B. Hudson Of Counsel, Hudson Cook, LLP