There is no substitute for a culture of integrity in organizations. Compliance alone with the law is not enough. History shows that those who make a practice of skating close to the edge always wind up going over the line. A higher bar of ethics performance is necessary. That bar needs to be set and monitored in the boardroom.  ~J. Richard Finlay writing in The Globe and Mail.

Sound governance is not some abstract ideal or utopian pipe dream. Nor does it occur by accident or through sudden outbreaks of altruism. It happens when leaders lead with integrity, when directors actually direct and when stakeholders demand the highest level of ethics and accountability.  ~ J. Richard Finlay in testimony before the Standing Committee on Banking, Commerce and the Economy, Senate of Canada.

The Finlay Centre for Corporate & Public Governance is the longest continuously cited voice on modern governance standards. Our work over the course of four decades helped to build the new paradigm of ethics and accountability by which many corporations and public institutions are judged today.

The Finlay Centre was founded by J. Richard Finlay, one of the world’s most prescient voices for sound boardroom practices, sanity in CEO pay and the ethical responsibilities of trusted leaders. He coined the term stakeholder capitalism in the 1980s.

We pioneered the attributes of environmental responsibility, social purposefulness and successful governance decades before the arrival of ESG. Today we are trying to rebuild the trust that many dubious ESG practices have shattered. 


We were the first to predict seismic boardroom flashpoints and downfalls and played key roles in regulatory milestones and reforms.

We’re working to advance the agenda of the new boardroom and public institution of today: diversity at the table; ethics that shine through a culture of integrity; the next chapter in stakeholder capitalism; and leadership that stands as an unrelenting champion for all stakeholders.

Our landmark work in creating what we called a culture of integrity and the ethical practices of trusted organizations has been praised, recognized and replicated around the world.


Our rich institutional memory, combined with a record of innovative thinking for tomorrow’s challenges, provide umatached resources to corporate and public sector players.

Trust is the asset that is unseen until it is shattered.  When crisis hits, we know a thing or two about how to rebuild trust— especially in turbulent times.

We’re still one of the world’s most recognized voices on CEO pay and the role of boards as compensation credibility gatekeepers. Somebody has to be.

Bank of America’s settlement shows that it’s  time to look at the way the SEC allows companies just to pay when they break the rules. It is part of the culture that created the financial crisis of recent months.

An interesting development is occurring in a federal courtroom in Manhattan. U.S. District Judge Jed Rakoff is departing from what most judges do when it comes to SEC  settlements:  he is actually asking questions about the deal struck between the SEC and Bank of America.  The case involved the Bank’s failure to disclose material information to shareholders about the Merrill Lynch bonuses and expected losses.  The Bank knew more than it previously admitted, according to the SEC.  For its part, BofA does not admit any wrongdoing, but it will pay the SEC some $33 million to settle the regulator’s charges.  Would that be $33 million in TARP funds, aka public money?

The fact is that Bank of America’s deceit here was a disgrace.  It was very expensive to investors, to taxpayers and to public confidence in the marketplace at a time when it is already in short supply.  The size of the settlement falls insultingly short of the magnitude of the offense.  And how exactly did the SEC conclude that BofA’s investors, whom it contends were misled in the first place and suffered huge losses at the hands of its management, should now have the privilege of paying millions more on top because of management’s deception?

Perhaps these are some of the factors prompting the judge’s heightened scrutiny.  As he told lawyers for both the SEC and BofA:

I would be less than candid if I didn’t express my continued misgivings about this settlement at this stage. When this settlement first came to me, it seemed to me to be lacking, for lack of a better word, in transparency. I did not know much about the facts from the complaint. I did not know much, or really anything, about the basis for the settlement.

The settlement process between the SEC and securities issuers is part of the old way of doing business involving weak oversight and overly permissive regulation that helped to create the recent market debacle.  Far from spurring accountability and transparency, which is generally regarded as a necessary part of financial reform, it allows companies to pay money out of shareholders’ pockets and evade any larger sense of responsibility for what they have done.  In this charade, management knows it can try to get away with as much as possible and, if caught, has only to come up with a few million, which becomes another business expense.  It is an easy way of creating the impression that the SEC is making progress toward reform and enforcement when it is nothing more than a mere slap on the wrist that perpetuates the culture of always skating close to the edge of the law.  That is a culture that needs to change dramatically if the lessons from the market’s meltdown and credit collapse mean anything.

If any greater reminder were needed, another recent SEC settlement involved one of the most storied names in American capitalism: General Electric.  That company paid $50 million to settle an SEC civil suit over alleged improprieties in GE’s accounting.  GE says it did nothing wrong but apparently just had an extra $50 million in shareholder funds kicking around and decided to throw it at the SEC to keep them happy.

One might ask the SEC where the so-called renewed commitment to principles of financial responsibility is in all of this?  The approach to enforcement seen in these examples does a disservice to investors and to taxpayers, both of whom deserve more than what amounts to a pantomime of regulatory gestures and corporate nods. When you have some of America’s most capitalized and prominent institutions falling short and misleading even in the wake of the most costly financial breakdowns in generations, more than just the formalities need to be observed.  Thankfully, there is a judge who appreciates that notion and is, at least for now, standing up for both taxpayers and shareholders when no once else bothered to do so.