These are some of the compliance-related stories that recently caught my attention.
‘I had a moral duty’: whistleblowers on why they spoke up by Teri Pengilley, Christopher Thomond , Murdo MacLeod, Sarah Lee and words by Caitlin Disken in The Guardian
To mark the 25th anniversary of the whistleblowing charity Protect (formerly known as Public Concern at Work) – we focus on 12 people who have taken great personal risk to expose everything from warmongers to tax dodgers and sexual and physical abuse. [More…]
Manhattan USAO Charges Former Accounting Professor with Fraud by T. Gorman in SEC Actions
When making investments many think seeing is believing. That often means asking for the key documents and carefully examining them. If it is in the documents then it must be true. If the papers are furnished by a reputable professional such as a former professor who is an accountant at a known firm, the belief can be bolstered. Thus the investors in an intellectual property firm obtained and reviewed the key documents. They invested millions of dollars. The documents were fraudulent. Their funds were misappropriated. U.S. v. Henning (S.D.N.Y. Oct. 9, 2018). [More…]
Insider Trading Laws Haven’t Kept Up With the Crooks opinion in the New York Times by Preet Bharara and Robert J. Jackson Jr.
Insider trading cases are of special significance. They are a manifestation of America’s basic bargain: that the well-connected should not have unfair advantages over the everyday citizen. When regulators and prosecutors make a commitment to punish insider trading, it sends a message that you don’t need special access to make an honest buck. Fighting insider trading is a refusal to accept a rigged system. [More…]
Insider Trading and the Myth of Market Confidence by John P. Anderson in CLS Blue Sky Blog
There are, however, at least two reasons for questioning the validity of the link between market-confidence and the regulation of insider trading. First, insofar as it relies on a socio-psychological claim—that most investors believe insider trading is economically harmful or morally wrong—it is subject to the problem of false consciousness (i.e., the psychological claim could be true though the shared belief is demonstrably false).
Second, even if the problem of false consciousness is set aside, the market-confidence argument’s empirical claim (that a shared public perception that insider trading is prevalent will send most market participants to the sidelines) must be proven; it cannot be simply assumed. Empirical evidence for the market-confidence claim is, however, notoriously weak. And still more concerning, it is difficult to imagine what strong empirical evidence for the claim would even look like. [More…]
Ten Questions the SEC Probably Has for Google by John Reed Stark
Google also mentioned that up to 500,000 Google+ users potentially had their personal data exposed. In addition, Google reported that up to 438 applications may have used the defective Google+ API, which makes estimations of impacted individuals difficult to ascertain. …
What a mess. Let the onslaught of scrutiny begin, which in my opinion will undoubtedly include an investigation by the U.S. Securities and Exchange Commission (SEC), the federal regulator tasked with policing the disclosures to shareholders by public companies like Google. [More…]
Dear Intermediaries: Don’t manufacture your own red flags by Bill Steinman in the FCPA Blog
I see it time and time again — third parties that would otherwise pass muster under a client’s due diligence process create their own red flags.
They push back on a local registration requirement. They ask that payments be rendered from an offshore account. They fail to disclose adverse media that actually has a reasonable explanation. The diligence process then grinds to a halt as the client scrutinizes the issue. [More…]