Year: 2009

Recommended Annual Review for Hedge Funds and Other Private Fund Managers

bingham_logoBingham McCutchen has put together a Recommended Annual Review for Hedge Funds and Other Private Fund Managers.

Bingham put together a laundry list of regulations, policies and filings that you should review on at least an annual basis:

  • Compliance Policies and Procedures
  • Form ADV Part 1 and Form ADV Part II
  • Form SH
  • Anti-Fraud Rule Adopted by the SEC for Naked Short Sales
  • Blue Sky Filings and Amendments to Form D
  • Form 13F
  • Schedule 13D/13G
  • Forms 3, 4 and 5
  • Audited Financial Statements
  • Offering Document Updates
  • Ongoing ERISA Compliance
  • Section 457A
  • Section 409A
  • CFTC Requirements
  • Liability Insurance
  • Employee Training
  • Privacy Policy

Disclosure: The Wife is an attorney at Bingham.

Decoding the Science of Compliance — Are you Ready for 201 CMR 17.00?

Compliance Week broadcast a webcast on the new Massachusetts data privacy regulations: Decoding the Science of Compliance — Are you Ready for 201 CMR 17.00? (and sponsored by Iron Mountain).

Garry Watzke, Esq., Senior Vice President Legal & Business Development at Iron Mountain, Inc. started with the basics which I have noted in several other places:

John Jamison, Vice President Consulting Services at Iron Mountain, Inc. moved on to implementation challenges. He points out that this is not a pure IT project. There is no single tool that provides coverage across the multiple platforms in most businesses. There is IT, but there is also a business-wide program that needs to be in place and maintained.

Garry points out that you need to maintain employee compliance and have a way to detect and prevent system failures.

See also these prior posts:

Trading in Distressed Debt

Richard G. Mason, Steven A. Cohen, Ian Boczko, Sarah A. Lewis, and David Gruenstein of Wachtell, Lipton, Rosen & Katz, have prepared a memorandum concerning the possession and use of information when buying and selling distressed debt (an abridged version of which was published in The New York Law Journal): Trading in Distressed Debtpdf_logo .

  • Although bonds are generally considered securities, interests in bank debt are typically not considered securities. (see Banco Espanol de Credito v. Security Pacific National Bank, 973 F.2d 51, 55–56 (2d Cir. 1992). There is not universal agreement on this position.
  • Knowledge of bank debt can lead to insider trading in other securities.

Insider Trading by Congress

Apparently members of Congress and their staff can make trades using non-public information obtained through their official positions.

House Rules Committee Chairwoman Louise M. Slaughter, D-N.Y., and Brian Baird , D-Wash., are sponsoring what they call the Stop Trading on Congressional Knowledge Act (HR 682) that would prohibit Members of Congress and their staffers from using nonpublic information obtained through their official positions to benefit themselves financially.

In a statement, the two said the legislation  is more important now, given the amount of money Congress has authorized to help right the economy under the financial services bailout program.

See also:

U.S. Senate Hears About Madoff

On Tuesday, the U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing on the background and implications of the Madoff scandal: Madoff Investment Securities Fraud: Regulatory and Oversight Concerns and the Need for Reform.

Video Archive

Member Statements

Witness Testimony

International Data Privacy Day

data-privacy-day09-logo-web-resJanuary 28, 2009 is International Data Privacy Day. [Intel’s Collection of data privacy materials]. The United States, Canada, and 27 European countries will celebrate Data Privacy Day together for the second time. One of the primary goals of Data Privacy Day 2009 is to promote privacy awareness and education among teens across the United States. Data Privacy Day also serves the important purpose of furthering international collaboration and cooperation around privacy issues.

What can you do?:

  • Show a recent theater movie that addresses the issue of privacy, such as “The Net,” “Swordfish,” or any of a large number of others, then afterward discuss the privacy and information security issues from within the movie and how they relate to your employees’ lives and/or work.
  • Make a podcast available to your personnel that discusses privacy in general, or a specific privacy issue.
  • Have a contest for your employees that incorporates privacy. For example give an award/prize to the person who can identify the most significant employee privacy concern within your organization
  • Hold a “Privacy Jeopardy” event on 1/28 during lunchtime, perhaps right outside your cafeteria, and give small prizes or recognitions to the people who correctly answer a privacy related question.
  • Distribute some privacy related articles, or make them available on your information security and privacy intranet sites.

New I-9

Starting February 2, 2009 there is a new I-9 (.pdf) for new employees.

What’s new?:

  • All documents presented during the verification process must be unexpired.
  • Two new documents have been added that establish both identity and employment authorization
  • Three documents were removed from the list of acceptable documents

The Department of Homeland Security U.S. Citizens and Immigration Services has published a Questions and Answers about the New I-9 (.pdf)
Thanks to Mark Spring of the California Labor & Employment Law Blog for pointing this out: New I-9 Form Effective Next Month.

Encouraging Courage on the Job

G. Jeffrey MacDonald takes a look at whistleblower policies in business for the Christian Science Monitor:When courage is encouraged on the job: How workplaces can motivate employees to take a stand when trouble brews.

In business, the difference between a fixable mistake and an irreparable disaster sometimes hinges on whether employees dare to take a stand before habits of wrongdoing become ingrained.

In Whistle-blowing in Organizations Marcia P. Miceli, Terry Morehead Dworkin, and Janet Pollex Near looks at organizational behavior.They found that it is more important to empower your current workers to report wrong-doing than to hire heroes. They found that employees were more likely to become whistle-blowers when they knew where to go with allegations, knew their colleagues would support them and the would not have to confront their supervisor face-to-face.

According to Dr. Near: “they blow the whistle if: the wrongdoing they have observed is serious; they feel that telling somebody about it will actually make a difference, and they feel they’re going to get some support in the organization for doing that.”

Conversely, the enemy of workplace courage is the intense pressure to deliver short-term results. Business put workers in a workplace situation where they need to choose between doing what’s right and protecting their career when they focus on short-term results.

Tips for Getting Your GRC Program Running Quickly

ca_logoMike Hoefgen of CA put together some Tips for Getting Your GRC Program Running Quickly. Even if you do not put your compliance program into the GRC archetype there are some useful thoughts.

  1. It is not a project. GRC / compliance is an on-going business process. I encountered this when I was in knowledge management. Some saw it as a project with an end-date and a segmented group. To be successful with compliance you need to be embedded in the business processes.
  2. Cross-functional team. Compliance is a business challenge, not a discrete process. You need input, but-in and support from across the organization.
  3. Don’t boil the ocean. It is easy to get caught up in trying to solve all the problems at once. Start with something that can deliver some provable success. This builds credibility.
  4. Need for speed. You want to be able to show that credibility and success in the short term. If it takes you 2 years to show success, you will be forgotten and the business processes will have moved on without you.