There could be a lot more information
about your company in the public
domain — readily accessible to your competitors — than you may think. How
your competitors might try to analyze this
information in order to predict your next
move is of obvious concern. There are many
ways that business secrets and strategy can
be leaked, sometimes in inadvertent ways.
It’s important your employees — everyone
from the receptionists to your salespeople
to top management — are instructed about
when, how and what they can and cannot
discuss with company outsiders.
“When you have a strategic game plan,
timing is critical,” says Harry Cendrowski,
CPA/ABV, CFE, CVA, CFD, CFFA, the president of Cendrowski Corporate Advisors
LLC. “You don’t want your competitors
knowing what you are planning or it will
leave the door open for the ‘me too’ factor.
That is why it’s important that everyone in
your organization is on the same page.”
If your competition makes an announcement of an initiative which is similar to
yours both in substance and in timing, the
result will be that you will lose any opportunity you once had at being unique in having a distinguished plan or strategy.
Smart Business asked Cendrowski about
some not-so-commonly thought of places
where clues about a company’s strategy
might be found and how companies can
more closely guard their business secrets.
How much information about a company’s
activities can actually be obtained through
public records?
There is a wealth of information in the
public domain. Experienced information
gatherers know where and how to obtain it
quickly. Some Web sites offer information
for free; others provide it at varying degrees
of cost. Good business intelligence is available at public sites such as the U.S.
Securities and Exchange Commission Web
site, www.sec.gov.
Lawsuits also offer a plethora of information about corporations, individuals, fraud
schemes, etc. Public access to the U.S.
Court Records in real time can be found at:
http://pacer.psc.uscourts.gov. This is an
electronic public access service that allows the public to obtain case and docket information from Federal Appellate, District, and
Bankruptcy courts. The information available for a nominal fee consists of case related information such as cause of action,
nature of suit, dollar amount, Appellate
court opinions, Judgments, or case status as
well as imaged copies of documents. In
addition, comprehensive fraud resources
can be found at www.fbi.gov as well as
www.ic3.gov/crimeschemes.aspx. Both of
these Web sites are funded and supported
by the FBI. Information that is technically
unpublished and not readily available on the
Internet [e.g., civil filings, hearings, certain
documents] can still be found at the local
level in various databases that are connected to the Internet. Those adept at data mining can easily retrieve this information.
What other sources could reveal information
indicating a company’s strategic direction?
In general, organizations leave information as they go about their business.
Companies reveal information in their marketing materials, on their Web sites, at
trade shows, while interviewing job candidates, while exploring opportunities to
form joint ventures, etc. Another example
is the company directory, which might list key employees with their job titles, locations, which can provide clues about what
the company is doing overseas. Information is also present in publications, such
as the Encyclopedia of Associations,
National Organizations of the U.S., and
Regional, State, and Local Organizations,
and is available through providers of market intelligence, such as Standard & Poor’s.
Activities with industry associations, suppliers, vendors, customers, etc. can also
provide clues into a company’s direction,
so employees should be cautious about
what they do and say while participating in
such activities.
How can companies avoid inadvertently disclosing too much?
Continually monitor the way your
employees communicate information
about your company’s trade secrets and
initiatives. Monitor the information that
makes its way to your Web site and to
other places on the Internet, as well. Even
if your competitors don’t have the specific
details about an initiative, just knowing
that something is about to happen can hurt
the long-term success of your strategic
plan. If you are a private company exploring a possible merger or sale with another
private company, make sure the documents are not made public. If the company
is public, work to control the timing of the
disclosure. Timing is critical in regard to
products and services. Disclosure by a
party — even if it says there is a nondisclo-sure or confidentiality agreement — still
indicates that something is going on.
Develop a standard, pat response that
everyone in the company should be
instructed to use. Communicate on a regular basis with your employees. This not
only assures everyone is on the same page,
but it also serves as a mechanism whereby
employees will more readily alert you to
efforts that a competitor may use to obtain
your company’s secret information.
HARRY CENDROWSKI, CPA/ABV, CFE, CVA, CFD, CFFA, is
president of Cendrowski Corporate Advisors LLC, Bloomfield
Hills, Mich. Reach him at (248) 540-5760 or [email protected] or
the company’s Web site at www.frauddeterrence.com.