These are some of the compliance related stories that caught my attention this week.
The Looming SEC IEO Fintech Smackdown
by John Reed Stark
Not to be confused with initial coin offerings (or “ICOs”), an IEO is a crypto-financing model offered and administrated via a cryptocurrency trading platform on behalf of a company (typically some form of start-up) that seeks to raise funds with its newly issued cryptocurrency digital tokens. Each IEO negotiates its unique terms, deals, and conditions with the various cryptocurrency trading platforms.
https://www.linkedin.com/pulse/looming-sec-ieo-fintech-smackdown-john-reed-stark/
Some Securities Fraudsters Escape Paying SEC Fines
by Dave Michaels
Wall Street Journal
The Securities and Exchange Commission over the five fiscal years that ended in September 2018 took in 55% of the $20 billion in enforcement fines set through settlements of court judgments according to agency statistics. During the prior five years, from 2009 through 2013, the SEC collected on 60% of the $14.6 billion.
https://www.wsj.com/articles/some-securities-fraudsters-escape-paying-sec-fines-11558344601?shareToken=stcd26267268cf44699be99d966e93fc32
Ethics Bots and Other Ways to Move Your Code of Business Conduct Beyond Puffery
by Michael Blanding
Working Knowledge
When health insurer Cigna Corp. appeared in front of a judge for allegedly misleading shareholders on Medicare regulations this spring, plaintiffs thought they had a strong case. After all, Cigna had published its own document titled “Code of Ethics and Principles of Conduct” that specifically required employees to uphold all regulations and “act with integrity in all that we do.”
https://hbswk.hbs.edu/item/ethics-bots-and-other-ways-to-move-your-code-of-business-conduct-beyond-puffery?cid=wk-rss
When the panel of three judges took a look at the argument, however, they threw it out of court as irrelevant. “We think the statements in Cigna’s Code of Ethics are a textbook example of ‘puffery,’” the judges wrote. “They are too general to cause a reasonable investor to rely upon them.”
Three Compliance Lessons from Preet Bahara
by Tom Fox
FCPA Compliance & Ethics
Preet Bharara gave the morning keynote at the second day of Compliance Week 2019. It was interesting because rather than a speech he did so with a one-hour Q&A format with Allen & Overy partner Gene Ingoglia facilitating the session through the role of the questioner. The questions were built around Bharara’s recently released book Doing Justice: A Prosecutor’s Thoughts on Crime, Punishment, and the Rule of Law.
http://fcpacompliancereport.com/2019/05/three-compliance-lessons-preet-bharara/
Recruiting and Retaining Compliance Staff is Key Risk for Banks, Regulator Says
by Kristin Broughton
Wall Street Journal
Criminals laundering money through the financial system have long been one of the top risks facing the banking industry. Building a solid defense against such intrusions is becoming another, a U.S. financial regulator said Monday.
https://www.wsj.com/articles/recruiting-and-retaining-compliance-staff-is-key-risk-for-banks-regulator-says-11558395878?shareToken=sta0ad1cfbeeec4a5594014a9356f51c3f
U.S. banks are having a hard time recruiting and retaining compliance professionals, particularly those who specialize in financial crimes, the Office of the Comptroller of the Currency said in a semiannual report on the risks facing lenders.
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