本文作者爱丽诺•布洛斯罕为董事会咨询公司价值联盟与公司治理联盟（The Value Alliance and Corporate Governance Alliance）首席执行官。
Hold executives accountable
Another critical area to examine is whether the board truly holds the CEO and senior executives accountable and, if so, how it does this, including its oversight and use of promotions, compensation and dismissals.
Citigroup's proxy describes the use of certain risk factors as a "threshold or 'gating' factor" in determining compensation.
Thresholds are used in compensation programs as hurdles that must be met before an employee is eligible for a bonus. (Countrywide Mortgage had a similar compensation approach, which failed to prevent risky behavior there.)
Citi's proxy filing does not clarify whether communication with clients is used in performance evaluations and bonus determinations at the bank. Top executives who are responsible for the organization's culture should know that their bonuses are at stake.
"Common purpose, responsible finance, ingenuity and leadership" are four key principles that Citi cites in its proxy as the basis of its strategy. Perhaps ethics or integrity should be their fifth.
Steer clear of lip service
BP and Enron had excellent codes of conduct. The same goes for Citi. Its code outlines employees' responsibilities to clients. So why has this been insufficient?
A review of Citi's governance should include whether the board has made sure that top management understands that these words are not lip service and that there is zero tolerance for unreliable or misleading disclosures to clients.
Further, even if there is a sound work culture, there's always the possibility that an employee will go rogue. Citi should examine whether there are enough internal checks and balances in the way it communicates with clients to stamp out questionable behavior.
Leave room for the whistleblower
The board should also review the way it monitors and handles whistleblower complaints. Based on the board's actions, do employees believe it is their obligation to report instances of unfair disclosure to clients and do they feel they will be supported and rewarded (rather than punished) for coming forward?
Keep an eye out for warning signs
The reforms at the bank should include processes for the board and top management to receive early warnings and take remedial actions sooner. For example, how does the board monitor the culture and concerns of its staff -- does the board review anonymous surveys?
The SEC should address what kind of regulatory oversight it will establish to review Citi's processes until the fixes at the company have been made.
While the question Judge Rakoff poses is simple, the answers must be robust. Exam time comes on November 9: will the SEC be prepared?
Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance, a board advisory firm.