Month: November 2009

Compliance Bits and Pieces for Nov. 6

The FCPA’s Imperialist Myth from The FCPA Blog

Why aren’t law professors training their students on the issue?  The answer, says Elizabeth Spahn, is tied up with false notions in the West about legal imperialism. Elizabeth Spahn’s article, “International Bribery: The Moral Imperialism Critiques,” 18 Minn. J. Int’l L. 155 (2009).

Conducting Ethical Corporate Investigations by Jaclyn Jaeger for Compliance Week

The ACC presented a panel discussion on internal investigations during its annual conference in Boston last week, and posed the following hypothetical: One of the company’s office managers has received an anonymous e-mail, where the writer claims to have compromised the salary and bonus information of several executives. The writer also claims to have stolen proprietary software from the company, whose customers are mostly manufacturers, and plans to give it to a competitor.

You, the general counsel, must investigate. How do you proceed?

ACC: The Use of Lawful and Ethical Strategies (Oct. 20, 2009)pdf-icon

Octopussy and the Golden Goose by Bruce Carton for Enforcement Action

If you are in an insider trading ring and your ring-buddies are using a “nickname” of any kind for you or others involved, it is all but certain that the nickname is going to be prominently mentioned when the SEC issues its press release about the case.

Google’s New Privacy Dashboard

google Dashboard

Have you ever wondered what data is stored with your Google Account?

Over the past 11 years, Google has focused on building innovative products for our users. Today, with hundreds of millions of people using those products around the world, we are very aware of the trust that you have placed in us, and our responsibility to protect your privacy and data.

…

In an effort to provide you with greater transparency and control over their own data, we’ve built the Google Dashboard. Designed to be simple and useful, the Dashboard summarizes data for each product that you use (when signed in to your account) and provides you direct links to control your personal settings. Today, the Dashboard covers more than 20 products and services, including Gmail, Calendar, Docs, Web History, Orkut, YouTube, Picasa, Talk, Reader, Alerts, Latitude and many more. The scale and level of detail of the Dashboard is unprecedented, and we’re delighted to be the first Internet company to offer this — and we hope it will become the standard. Watch this quick video to learn more and then try it out for yourself at www.google.com/dashboard.

I think it’s great that Google makes available all this privacy data in a single place.

You might be surprised how much Google knows in case you’ve already forgotten a service or two you’ve signed up with. Keep a close eye for the items on the page with this little blue icon meaning “this bit is public”. At the bottom of the page, Google disclaims that 16 additional products are not yet available in this dashboard.

Massachusetts Amends Its Strict Data Privacy Law (Yet, Again)

Massachusetts-State-House

Massachusetts has revised its data privacy regulations one more time. The revised regulations are less demanding that the original version released over a year ago. But this law is the strictest in the country and will be the de facto law of the land for many companies.

Office of Consumer Affairs and Business Regulation released a press release announcing that revised regulations have been filed with the Secretary of State and published on the OCABR website.

Fortunately, Gabriel M. Helmer of Foley Hoag’s Security & Privacy practice produced a redline showing the changes.

There are very few changes to the regulations that were released in August:

  • The Massachusetts Data Privacy regulations apply to anyone who “stores” personal information, in addition to those who receive, maintain, process, or otherwise have access to personal information.
  • Service Providers include anyone who “stores” personal information through their provision of services to anyone is subject to the regulations, in addition to those who receive, maintain, process, or otherwise are permitted access to personal information.
  • The U.S. Postal Service is no longer expressly excluded from the definition of “Service Providers.”
  • Service Provider agreements entered into before March 1, 2010 do not have to be amended to comply with these regulations until March 1, 2012.

The effective date is still March 1, 2010.

The regulations apply to personal information of Massachusetts residents. The reach of the regulations is not limited to businesses in Massachusetts.

References:

Will the Supreme Court Affect Mutual Fund Fees?

supreme court

On Monday, the Supreme Court heard the arguments on a case involving mutual fund fees. The case is trying to reconcile the standard for when mutual fund fees are too high.

Under §36(b) of the Investment Company Act of 1940 the “the investment adviser of a registered investment company shall be deemed to have a fiduciary duty with respect to the receipt of compensation for services, or of payments of a material nature, paid by such registered investment company.”

The traditional standard was that a breach of fiduciary duty occurs when the adviser charges a fee that is “so disproportionately large” or “excessive” that it “bears no reasonable relationship to the services rendered and could not have been the product of arm’s-length bargaining.” Gartenberg v. Merrill Lynch, 694 F.2d 923 (2nd Cir. 1982)

The Jones v. Harris case starts with the claim that the fees are excessive because they far exceed those charged to independent clients. Like many investment advisers, Harris charges less for institutional clients that invest in funds similar to its Oakmark funds. The plaintiffs take the position that a fiduciary should not charge a different price to its controlled clients than it does to its independent clients.

The parties argued their positions Monday in front of the Supreme Court. I was not there, but I thought I could collect some coverage and Tuesday Morning Quaterbacking of the arguments.

According to the coverage, neither party supported Chief Judge Easterbrook’s ruling in the Seventh Circuit. He had found that the marketplace may be trusted to curb excessive fees and that mutual fund investors unhappy with the fees they are charged could withdraw their money and invest it elsewhere.

The mutual fund side argued for the Gartenberg standard: Fees must be “within the range of what would have been negotiated at arm’s length in the light of all of the surrounding circumstances.”

The plaintiff side argued:

“It surely cannot be the case that where you are dealing with a fiduciary duty — which is a higher standard recognized in the law — that you can charge twice as much as what you are obtaining at arm’s length for services that you are providing.”

William Birdthistle thinks:

“If, as some of today’s questions seem to indicate, the eventual decision from the Court in Jones v. Harris will read like Gartenberg with just one additional factor included in an already long and nebulous evaluation, we might have to wait for the next wave of litigation in trial courts to see whether the new Jones standard makes any practical difference on fees. If, on the other hand, the justices highlight and strongly emphasize the institutional/individual fee comparison in an opinion that reads like Posner’s dissent or Ameriprise v. Gallus, the pressure upon the industry to lower fees could be more acute and immediate.”

Anna Christensen thinks:

There did not seem to be five votes for adopting the Seventh Circuit’s market-based approach. The Court may reject that standard and decide little else, perhaps adopting the basic Gartenberg test with some degree of explication, and sending the case back to the court of appeals for application of the test. On the other hand, the Court may decide that as the argument in this case demonstrates, the terms of Gartenberg test do not provide significant guidance on how to identify an unfairly large fee, and use the facts of this case to provide an object lesson to lower courts.

It sounds like the Supreme Court is unlikely to come out with a ruling that dramatically affects the industry. Inevitably, it will require additional work for compliance.

References:

The One Year Club: Five Things Companies Learn After a Year of Enterprise 2.0 Adoption

enterpise 2.0

I’m attending the Enterprise 2.0 Conference in San Francisco. I’m sharing my notes from this session. At the outset, organizations are often eager and excited about the benefits they anticipate from cultivating adoption and use of social and collaborative tools. But talk to those same organizations six months or one year after they’ve started, and you’ll hear a different story. Some organizations have experienced measurable success, others are struggling with a range of adoption and use issues, but all will tell you to watch out for several factors they didn’t anticipate.

  • Stewart Mader, Founder and Senior Consultant, Future Changes
  • Thomas Vander Wal, Principal & Senior Consultant, InfoCloud Solutions (speaking, just briefly, from a remote, undisclosed location.)

The issue of lack of capacity is re-thinking how you use the space. He used some urban design analogies, including community adoption and reliability. (Stewart’s wife is a landscape architect.)

Stewart advocates focusing on solving small day-to-day issues instead of trying to change the enterprise. Changing the enterprise is scary to most people. Mass collaboration is not the right way to go. (Wikipedia is a bad model for Enterprise 2.0.) Smaller groups of people who trust each other works better for collaboration.

Collective, community, collaborative, sharing listening and holding onto are each different activities. Different Enterprise 2.0 tools are better at some of these activities and not so good at others.

When focusing on the group, you need to know what type of interaction they need.

Never underestimate how busy people are and how easily they may dismiss a new tool.

Another myth is the 1-9-90 rule (1% create most of the content, 9% do some, and 90% are passive.). Its true for the internet, but not true inside the enterprise. (I also found this to be true. There is much more contribution when focused on a group.) Tools focused at the enterprise as whole, as opposed to working groups, will have fewer contributors. The tools will not have a hockey stick adoption curve that you see on the web. You will see steps of adoption inside the enterprise. You may see spikes of activity, especially after a presentation their use. But that use is merely exploratory.

Rules are for impatient people. See what works and adapt to the use. A pilot is the stepping stone to demonstrate utility and value. Case studies are nice, but internal use stories are much better. Adoption happens at the lunch table. Hearing it helped solve a problem for a person they know is the best sale tool.

Enterprise 2.0 tools are like swiss army knives. They do lots of things. You need to find the best uses. Give people permission and encouragement to find the best uses.

A wholesale replacement can often been seen as being out in left field. People do not like big changes. People have an easier time adopting tools that ease an obvious pain point. You need to fix a problem. The problem is a need. Focus on day-to-day problems.

Tools are the foundation. You need them. But you need to know how to use them.

Stewart ended with his analogy to dog “messaging.” See more: What Can Location-based Social Networks Learn From Dogs? Stewart seems to learn a lot about messaging from his dog.

Straight from the Horses’ Mouths

enterpise 2.0

I’m attending the Enterprise 2.0 Conference in San Francisco. I’m sharing my notes from this session. The 2.0 Adoption Council presents the market’s first in-depth research on a representative sample of early adopters in large organizations. This session will cut to the chase on issues that have plagued pundits and vendors alike.

Dan and Carl conducted a survey of large companies that have been adopting Enterprise 2.0 tools. The companies all had over 10,000 employees. None have deployed to 100% of employees. But of course many, many companies do not even have email deployed to 100% of their employees. Most shop floor employees do not have email.

Resistance is real. Most of the resistance comes from users. In the survey 49% encountered IT resistance and 64% experienced management resistance, but 72% experienced resistance from users. Of those 38% overcame IT resistance, 40% overcame and only 32% overcame user resistance. So the user resistance was the strongest and harder to overcome.

Looking at management issues, the biggest issue is measuring ROI: 69% experienced issues with ROI, but only 12% overcame it.

The biggest issues with IT was the immaturity of the technology. 54% experienced resistance from IT, but only 17% overcame this resistance.

Lessons learned:

  • Enterprise 2.0 isn’t free
  • Driving adoption isn’t magic, it requires
    • resources
    • time
    • focus
    • money

The ROI is there. It’s just hard to measure.

Analysts on SharePoint 2010

enterpise 2.0

I’m attending the Enterprise 2.0 Conference in San Francisco. I’m sharing my notes from this session.

  • e2 Moderator – Irwin Lazar, Vice President, Communications Research, Nemertes Research
  • Christian Finn, Director of SharePoint Product Management, Microsoft
  • Mike Gotta, Principal Analyst, Burton Group
  • Rob Koplowitz, Principal Analyst, Forrester Research

SharePoint is a platform. The move from the 2003 version to the 2007 solidified the treatment as a platform. It is also getting better integrated with the rest of the Microsoft development framework.

SharePoint does require a big overall strategy. It’s not a lightweight deployment. But the deployment of lots of grass-roots deployments of Enterprise 2.0 tools causes lots of governance, privacy and control issues. SharePoint helped manage those issues. But the 2007 was flawed and caused its own sets of problems.

SharePoint 2010 requires top-level decisions and policies before the grass-roots content creation can begin. It’s tough to start small. Maybe the cloud version/SaaS model is better. It’s more agile.

Christian, after sitting quietly, pointed out that software is both a platform and an application. People to be able to use it right out of the box. He admits that SharePoint will not move as fast, but that means the platform is more stable. They are open as a platform, welcoming third-party add-ons to bring additional functionality.

The panelists agreed that SharePoint did a great job of focusing on things like records management. But SharePoint, with its 3 to 4 year development cycle, will always be behind the market. Christian points out that 3 years it the typical adoption cycle for software.

The Social, Mobile Web: Business Productivity in an Era of Twitter, Facebook, and Unified Communications

I’m attending the Enterprise 2.0 Conference in San Francisco. I’m sharing my notes from this session. Clara Shih,founder and CEO of Hearsay Labs, which develops web applications to track brand engagement and accelerate sales on Facebook and Twitter. She is also the author of The Facebook Era: Tapping Online Social Networks to Build Better Products, Reach New Audiences, and Sell More Stuff.

Facebook is CRM, its the way to manage your contacts and stay in touch. She makes the argument that email is dead.

(I think this is a losing argument. You will lose just about everyone if you make this statement. So what if college students are not using email. They are not working inside a business organization.)

Companies are investing more time and money on social media as part of their marketing strategy.

She put forth that Facebook is the template for online identity. It has become socially acceptable to share photos, interests and demographic information. You can get to know people more quickly.  Now you also have the layering in the real-time identity.

The transaction costs of communication are being reduced. Email was cheaper than phone calls. Facebook and Twitter allow you to reach an even broader audience even cheaper. Especially, keeping in touch with weak ties.

She showed the tool she made called Faceconnector (originally called FaceForce) that pulled Facebook information into Salesforce. Essentially enhancing that CRM system.

Is Enterprise 2.0 a Crock?

enterpise 2.0

I’m attending the Enterprise 2.0 Conference in San Francisco. I’m sharing my notes from this session.

  • e2 Moderator – David Berlind, Chief Content Officer, TechWeb
  • Jamie Pappas, Manager, Social Media Strategy, EMC
  • Bryce Williams, Social Media Consultant, Eli Lilly
  • Megan Murray, Community Manager/Project Coordinator, Booz Allen Hamilton
  • Claire Flanagan, Senior Manager, KM and Enterprise Social Collaboration, CSC
  • Bruce Galinsky, Director IT, Metlife
  • Greg Lowe, Social Media Architect/Program Manager, Alcatel-Lucent

David started off by point out that this session was set up as a response to Dennis Howlett’s Enterprise 2.0 What a Crock. (Although he didn’t mention Dennis by name, merely saying a ZDnet blogger.) The panelists are part of the Enterprise 2.0 Adoption Council.

Workplace Transformation.

The first topic the panel addressed was workplace transformation. Greg pointed out that Alcatel wants to break down organizational silos so that people doing similar things can find each other. He points out that in big organizations have a hard time finding internal expertise.

Claire pointed out that the tools are enabling devices.She points out that the tools are not an incremental change, but a quantum leap. She comes from knowledge management where the concept was to push information into a new silo. These new tools allow knowledge capture as part of the workflow.

Bruce agreed. The tools make sharing easier.  Bruce emphasized the need for speed and innovation in the marketplace. Enterprise 2.0 tools help.

Business Process

Claire points out that the 9-to-5 office has been eroding. People are collaborating around the world, so face to face collaboration is not feasible.

Intellectual Property/Privacy/Governance

You need to focus on the governance and compliance issues. There was some discussion of the benefit of open governance, allowing organization groups to get input from other groups in creating policies.

Companies need to start stop not trusting their employees. The biggest threat is from within. But you need to educate employees. Malicious people will find ways around the lock-down. Email is no more secure than Enterprise 2.0 tools.

Religious Wars (Technology and Generational Bias)

The importance is tools that are easy and intuitive to use. Some companies prefer open source, some prefer Microsoft and others IBM. People want the tools to communicate better to remove information silos.

Bottom-Line Business Benefits

The elusive quest for ROI on technology tools. The panelists agree that this is the biggest challenge. It is hard to show the direct benefits of collaboration. One panelists took the time saved approach to measurement. The tools allowed a project to be done faster. Another did a comparison of the time and money comparison between reply-all emails and a wiki. (Of course, this is soft dollars.)

Then the audience joined in.

One question was how you value the better decision-making that can come from use of Enterprise 2.0 tools. A panelist gave the example of how the company sent an open question on how to save money. They got lots of good feedback and money-saving ideas. The tools allow management to get better feedback and an ability to tap into the conversations happening in the organization.

Claire pointed out the need to find a tool that is “addictive.” Employees will vote with their feet and use what works best for them. Tools need to be easy to use and intuitive. And of course, useful.

My Take

Enterprise 2.0 is still looking for pays to justify itself. People that have used the tools (at least the good tools) do find them addictive. The problem is comparing the tools to email when it comes to ROI. The ROI for email was easy. Email was obviously cheaper and faster than mail or overnight delivery of documents. It was also cheaper than a phone call. The ROI for Enterprise 2.0 tools is much more elusive.

I think Enterprise 2.0 should look to some of the arguments for knowledge management. Sure, knowledge management largely died because the tools and approach were flawed. I find the Enterprise 2.0 approach to be the better approach to knowledge management. You are capturing the intellectual capital of your enterprise as part of their workflow.

Integrating Google Wave into the Enterprise

enterpise 2.0

I’m attending the Enterprise 2.0 Conference in San Francisco. I’m sharing my notes from this session.

  • Andy Fox, Vice President, Engineering, Novell
  • Alexander Dreiling, Program Manager, SAP
  • Gregory D’Alesandre, Product Manager, Google Wave
  • Chad Wathington, VP, Product Development, ThoughtWorks

Greg started off, giving a brief demo of Google Wave and the concept. (I started using Google Wave a few weeks ago, but it has left me a bit confused. You can find me at [email protected].) Most other existing communications tools are a poor substitute for face-to-face communication. But at times, electronic communication can be better if you can get real time communication and enable multiple people contributing and editing at the same time.

They started off with no lock-down because the first thing most deployments do is lock down features and editing rights. He did state that the tool is currently very buggy and still being tested.

Alex came up next to show what SAP built on top of Google Wave for business process management. They built a gadget called Gravity. He has a flow chart, with each action box contributed by different people. He also showed an analysis gadget showing  graphs and charts related to the process.

Chad showed how he integrated his company’s project management tool called Mingle with Google Wave. He showed how you can bring data from Mingle into a Wave. They can also create a new task in Mingle through a Google Wave. Each task in Mingle can show the Google Waves that mention that task.

Andy showed Novell’s Pulse. Novell latched onto the Wave Federation Protocol that allows the serves to interact and allow real-time collaboration across platforms. Andy emphasized the benefits of real-time collaboration.

Greg came back and said that most of Google Wave code will be open-sourced. It’s not clear what the business model will be for Google.