Doug Cornelius on compliance for private equity real estate
Today is International Data Privacy Day.
Massachusetts Recognizes Data Privacy Day 2010 and touts the the new data security regulations.
Disney has enlisted Phineas and Ferb to help guide your kids through cyberspace and teach them about the rules of the road on the internet.
Google published their guiding privacy principles and published a video discussing them:
Data Privacy Day is an annual international celebration to raise awareness and generate discussion about information privacy. Last year, both the U.S. Senate and House of Representatives recognized January 28th, 2009 as National Data Privacy Day.
Intel, Microsoft, Google, AT&T, LexisNexis and The Privacy Projects are sponsoring Data Privacy Day efforts, with assistance from Intuit and Oracle.
Even if you are not responsible for privacy at the office, you are responsible for your kids. The Data Privacy Day 2010 has some great resources for Teens, Young Adults, and Parents & Kids. Take a look at the FTC’s You Are Here to see some of the problems faced by kids online. Make sure to Visit the Security Plaza to learn about protecting your privacy (online and off).
You are responsible for your own online activity. In looking at a recent data breach, “123456”, “12345”, “123456789” and password were the most common passwords. Even Twitter banned these passwords, along with 366 other obvious passwords.
A list of 32 million passwords that an unknown hacker stole last month from RockYou, a company that makes software for users of social networking sites, provided a treasure trove of information for security analysis. About 20 percent of people on the RockYou list picked from the same, relatively small pool of 5,000 passwords. Hackers could easily break into many accounts just by trying the most common passwords.
Security experts advise that a password should consist of letters, numbers and even punctuation symbols. They should be changed regularly and you should not use the same password for all your online services.
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For you economics geeks, how about a rap duel between John Maynard Keynes and F. A. Hayek?
In Fear the Boom and Bust, John Maynard Keynes and F. A. Hayek, two of the great economists of the 20th century, come back to life to attend an economics conference on the economic crisis. Before the conference begins, and at the insistence of Lord Keynes, they go out for a night on the town and sing about why there’s a “boom and bust” cycle in modern economies and good reason to fear it.
It may be one the most bizarre things you see today.
If you liked the video, it can get more bizarre. There is Planet Money podcast that is just as strange, involving “a cable tv producer from New Jersey, a podcasting libertarian economist, an international pop superstar and the two dead economists who brought them all together.”
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Undercover agents, wire taps and search warrants. For a criminal case it sounds like your typical organized crime investigation. You would expect the indictment to have charges for drug dealing, racketeering, murder or something similar.
But last week we heard that these were the techniques used to catch the 22 people indicted for violations of the Foreign Corrupt Practices Act. An undercover FCPA sting?
The FBI and DOJ are now using blue collar investigation tools for white collar crimes. As Scott Greenfield points out, in prison all collars are striped.
These white collar defendants used email and left a nice paper trail for undercover feds to put together their indictments. One defendant even ran the issue past his compliance department, but ignored their advice. These defendants made it easy.
A smart drug dealer will wonder if the person on the other side of the deal is a cop. Now white collar criminals need to start having the same concerns. After all, briefcases are great for holding recording equipment.
Securities firms and brokers have been looking for guidance on how they can use social networking sites. Actually most industries have been trying to figure out what they can and cannot do with these sites. The difference is that the FINRA limitations on communicating with the public make it very difficult to use the sites in compliance with the FINRA rules.
Yesterday, FINRA released Regulatory Notice 10-06
that “clarifies the responsibilities of firms to supervise the use of social networking sites to ensure that recommendations are suitable and their customers are not misled. The Notice also addresses the recordkeeping and other responsibilities of firms.”
The primary goal of FINRA is to protect investors. So this notice does not open the floodgates for using social network sites. They note that they are not even certain that adequate technology currently exists to meet the requirements in the notice. I’m sure vendors will take notice.
“The goal of this Notice is to ensure that—as the use of socialmedia sites increases over time—investors are protected from false or misleading claims and representations, and firms are able to effectively and appropriately supervise their associated persons’ participation in these sites.”
In developing the Regulatory Notice, FINRA worked with its Social Networking Task Force composed of compliance and other representatives of 14 firms.
The notice does not change FINRA policies or their positions. But there are some useful clarifications. If you have used a blog, FaceBook, Twitter, or LinkedIn, the clarifications are fairly obvious. For example, a blog can be an advertisement or an interactive electronic forum. It just depends on whether you allow comments or interactivity.
FINRA has scheduled a webinar to address Regulatory Notice 10-06: Compliance Considerations for Social Networking Sites
Orignally, I heard some hints that there may be some new policies announced as part of FINRA’s March 17 webinar: Implementing Compliance Practices for Social Media. But now that description has been changed to mere address implementation of Regulatory Notice 10-06.
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Dow Jones and Ethisphere Institute are teaming up to present the 2010 Global Ethics Summit on February 23-24, 2010 at the Grand Hyatt New York City.
I will be attending, thanks to an offer from the event’s organizers. If you are interested in attending I can offer you a 15% discount on regular conference fees, available by registering online (http://www.globalethicssummit.com/register) with the code “GES10P”.
They just added two new keynote speakers:
They will be joining the other previously announced speakers:
I also need to disclose that they gave me a pass to attend as a media sponsor of the event. You can see Compliance Building listed as a media sponsor. In exchange, I’m writing a few blog posts leading up to the summit and will be live-blogging from it.
In my hasty post on last week’s FCPA sting operation my focus was on the aggressive use of an undercover operation to catch violations of the Foreign Corrupt Practices Act. That was big news. It’s the first time that’s happened. The indictments did not disclose the companies involved.
It’s now clear that this sting operation was much bigger deal. The Department of Justice went after an entire industry. Richard Cassin dug around and found that those arrested came from dozens of different companies. Small companies, big companies, private companies, public companies.
Twenty-one of the arrests happened at the Shooting, Hunting, Outdoor Trade Show and Conference (SHOT Show), “the largest and most comprehensive trade show for all professionals involved with the shooting sports and hunting industries.” The SHOT show attracts tens of thousands of people from across the US and the world, with 1,800 exhibitors covering 700,000 square feet.
The sting was clearly a statement that the Department of Justice is not going to take an excuse that “everyone else is doing it.”
It does not matter if greasing palms happens to be a common way to transact commerce in the industry. They are willing to take on an entire industry. They are willing to use undercover operations. They are willing to make a big splash at a big media event.
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Some interesting stories from the past week:
Investor Relations Website Best Practices from the Q4 Blog
On January 14, Catherine Crofton, Q4’s VP Sales & Marketing hosted an IR Website Best Practices webinar. Her presentation focused on how to build investor confidence through effective online communications. The presentation includes a lot of great examples of companies using best practices and how they can be applied to your own IR website.
Lawyers, Anthropologists, and Revolutionaries by Paul Lippe
But now as the changes wrought by technology become ever more pervasive, and as they coincide with the most significant challenge to US global leadership in a Century – the rise of China – we need to think about the anthropology of technology at a societal level, and look at how well core institutions are adapting.
‘Perp Walks’ Undermine Presumption of Innocence by Howard W. Goldstein of Fried, Frank, Harris, Shriver & Jacobson LLP in the New York Law Journal
But the Puritan practice of shaming and today’s perp walks are different in one critical respect. The shamed Puritans had already been convicted; today’s perp walkers have only been arrested and are theoretically cloaked with the presumption of innocence.
Lessons From FCPAscam by Richard Cassin in The FCPA Blog
That’s a Smith and Wesson and you’ve had your six.
~ James Bond to an out-of-ammo assailant in “Dr. No”
Our six shots. Here’s an early look at what the case means: …
Insider Trading … in Mutual Fund Shares? by Bruce Carton for Compliance Week’s Enforcement Action
Today, though, the SEC filed a settled enforcement action charging Charles J. Marquardt with insider trading in the shares of the Evergreen Ultra Short Opportunities Fund (the “Ultra Fund”), a mutual fund that invested primarily in mortgage-backed securities.
A Rare Moment Of Reflection: I Am Privileged To Be A Lawyer by Brian Tannebaum in My Law License
I’m in my 15th year of practice. I’ve walked into courtrooms hundreds of times. I remember thinking after I was admitted to the Bar how great it was that I could “talk in court.” I remember telling people how cool it was that the Florida Supreme Court gave me a license to go into court and represent people. I still think that, but I say it much less.
President Barack Obama proposed new rules designed to restrict the size and activities of the U.S.’s biggest banks. The text of his proposal has not been released yet. All we have is the video, embedded below.
The White House wants commercial banks that take deposits from customers to be barred from proprietary trading, owning hedge funds or owning private equity firms. It sounds like Goldman Sachs and Morgan Lewis would give back their back charters. (Of course, they only grabbed those charters in order to get the liquidity from the TARP.)
The White House also wants new limits on the size and concentration of financial institutions. He mentioned the existing cap on customer deposits and seems to want to reduce that cap. I think Bank of America is the only bank that is currently close to that cap.
In the end this is just proposed legislation from the White House. They would still need to convince Senator Dodd to revise his proposed legislation and get the votes to pass it in the Senate, reconcile it with the House bill and get it passed by the full Congress.
The “drunkard’s walk” refers to the Brownian motion, the seemingly random movement of particles suspended in a fluid. The original thought was that you might be able to calculate the movement by measuring and calculating the interaction. It proved impossible. There are too many factors and too many interactions.
Small changes in a system can dramatically affect the outcome. This is the butterfly effect. The origin cam from a meteorologist who was using a computer model to rerun a weather prediction and one of the numbers he used was shortened from six decimal points to three decimal points. The result was a completely different weather scenario. It’s not that a butterfly can cause the problem. It’s that a seemingly inconsequential random event can lead to a big change in an outcome.
Leonard Mlodinow addressed this topic in The Drunkard’s Walk: How Randomness Rules Our Lives
We poorly understand the effect of randomness.
He explores his concepts using the backdrop of Pearl Harbor. In hindsight there were many signs pointing to the eventual attack. “In any complex string of events in which each event unfolds with some element of uncertainty, there is a fundamental asymmetry between past and future.” It’s nearly impossible to predict before the fact, but relatively easy to understand afterward. We have seen the same 20/20 hindsight with the 9/11 attacks.
That’s why it is easy to explain why the weather happened three days ago, but have trouble getting the weather forecast right three days into the future.
Mlodinow never mentions it, but for me the next step is the theory of the Black Swan. How do you end up with high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations?
Combining the Black Swan with the Drunkard’s Walk and the Butterfly Effect, you see that a combination of small events can lead to an over-sized outcome. We get used to being able to calculate and measure so many things. There will always be factors that we miss, or overweight or underweight.
Not to be depressing. The Drunkard’s Walk
The Drunkard’s Walk