These are some of the compliance-related stories that recently caught my attention.
The Troika Laundromat
The Organized Crime and Corruption Reporting Project
Laundromats are complex systems for moving money that allow corrupt politicians, organized crime figures, and wealthy business people to secretly invest their ill-gotten millions, launder money, evade taxes, and fulfill other goals.
https://www.occrp.org/en/troikalaundromat/
OCCRP has previously exposed three such schemes: The Proxy Platform, the Russian Laundromat, and the Azerbaijani Laundromat.
Now, OCCRP and its reporting partners reveal a unique new Laundromat, created by a prestigious financial institution. This time, the work shows not only its beneficiaries but also exposes its mastermind and operator — Troika Dialog, once Russia’s largest private investment bank.
Will Congress Expand the Insider Trading Prohibition?
by Peter J. Henning
DealBook
A common complaint about insider trading law is that there is no statute that expressly sets forth the requirements to prove insider trading. That can make it difficult to determine whether a violation has occurred.
https://www.nytimes.com/2019/05/24/business/dealbook/insider-trading-act.html
The House Financial Services Committee is seeking to remedy that. It recently passed a bill that would — for the first time — set forth what is required to prove insider trading.
DC Circuit Opinion Reaffirms Fiduciary and Disclosure Obligations of Advisers While Rejecting SEC Finding of “Willful” Violations
By Joshua M. Newville, Samuel J. Waldon, Anthony Drenzek and Ariella Muller
The DC Circuit recently released an opinion addressing the SEC’s administrative findings against registered investment adviser The Robare Group (TRG) for failure to disclose alleged conflicts of interest. Although the court affirmed the SEC’s finding of a violation of Section 206(2) of the Advisers Act, it held that Commission could not find willful violations under Section 207 based on the same negligent conduct.
https://www.privateequitylitigation.com/2019/05/dc-circuit-opinion-reaffirms-fiduciary-and-disclosure-obligations-of-advisers-while-rejecting-sec-finding-of-willful-violations/
Crypto Assets and Insider Trading Law’s Domain
by Andrew Verstein
Harvard Law School Forum on Corporate Governance and Financial Regulation
Insider trading doctrine clearly applies to most familiar crypto assets and their traders. The legal requisites for insider trading regulation—jurisdiction, material non-public information, breach of duty—are frequently conjoined. The most obvious examples of this concern misappropriation by employeesof crypto asset trading venues about the venue’s plans to support a crypto asset; allegations of this sort of insider trading have already ended up in federal court. But there are many more examples, such as misappropriation by government officials and members of mining pools. Ultimately the question is not whether insider trading law applies to crypto assets; it is whether we want it to.
https://corpgov.law.harvard.edu/2019/05/29/crypto-assets-and-insider-trading-laws-domain/
Interesting Action From OFAC
by Matt Kelly
Radical Compliance
Compliance officers might want to take a close look at the wrist-slap that State Street Corp. received from the Office of Foreign Assets Control on Tuesday, for violations of sanctions against Iran. It’s a small but telling example of how a robust compliance program brings benefits, OFAC or otherwise.
http://www.radicalcompliance.com/2019/05/28/interesting-action-from-ofac/
OFAC did cite State Street for violating Iran sanctions, because the bank acted as custodian for a customer’s retirement plan and processed $11,365 worth of pension payments to the customer, a U.S. citizen, while he was residing in Iran in the mid-2010s.
https://profile.pmc.org/DC0176