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.

How is it Goldman felt it necessary to warn shareholders that enforcement actions can have a negative impact upon the company’s business in the abstract, but apparently felt no need to reveal the material fact that it had been formally alerted by the SEC to an investigation?

In the greatest financial meltdown since the 1930s, few industry giants seemed as favored as Goldman Sachs.   At a time when others where failing from a combination of folly and misjudgment, Goldman seemed to be imbued with superhuman qualities, including the ability to leap over the tallest obstacles and dodge bullets that were taking out one icon after another.  Goldman, to many, and especially to itself, was Superman.  But even the Man of Steel has his foil, and if the civil charges brought by the SEC are proven, kryptonite for this Wall Street marvel came in the form of a 27-year-old French-born employee and a bizarre mortgage investment fund called Abacus 2007 – ACI that was designed to fail.

The complaint asserts, among other matters, that Goldman failed to make full disclosure about the intent of the fund and how it was designed.  In the best case, the truth about the charges will eventually be determined.  On the other hand, perhaps there will be one of those vague and disappointing resolutions for which the SEC has become famous, as discussed here,  whereby the defendant company’s shareholders pay a pile of money as a penalty for what management did (but for which it does not admit wrongdoing) along with some tinkering on the corporate governance side to make it look like more was done.

But right now, another, and less disputable, fact should be raising questions.  Goldman failed to disclose that it was being investigated by the SEC for possible civil fraud charges, which it was formally made aware of in July of last year when it received the Commission’s “Wells” notice.  Goldman knew that would likely be material information shareholders would want to know, because the company said as much to investors just last month.

In its 2010 10K  statement published in March, Goldman noted that among the potentially adverse impacts upon its business, “investigation by regulators” was a material factor.  The company went on to say:

Penalties and fines sought by regulatory authorities have increased substantially over the last several years, and certain regulators have been more likely in recent years to commence enforcement actions…  Adverse publicity, governmental scrutiny and legal and enforcement proceedings can also have a negative impact on our reputation and on the morale and performance of our employees, which could adversely affect our businesses and results of operations.

How is it Goldman felt it necessary to warn its shareholders that such investigations and enforcement actions can have a negative impact upon the company’s business in the abstract, but apparently felt no need to reveal the material fact (as Goldman itself had defined it) that it had been formally alerted by the SEC to an investigation?   Goldman’s CEO, Lloyd Blankfein, would have been aware of the SEC investigation during his appearance before the Financial Crisis Inquiry Commission in January.  Was the Angelides Commission?   Should it have been?  Answers are needed if the panel and its mission are to maintain any credibility.

Perhaps this is another telling sign that Goldman is really mortal after all and that its attempted leaps into the air can bring about the same unintended consequences that they do for anyone else.  At the very least, it raises the question about what more Goldman knows that it is not telling the investing public at the very time when confidence in its reputation requires full disclosure.