These are some of the compliance-related stories that recently caught my attention.
Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat
The SEC’s mission is to: (1) protect investors; (2) maintain fair, orderly, and efficient markets; and (3) facilitate capital formation. The SEC oversees over 27,000 market participants, including investment advisers, mutual funds and exchange traded funds, broker-dealers, national securities exchanges, credit rating agencies, clearing agencies, the Public Company Accounting Oversight Board (PCAOB), the Financial Industry Regulatory Authority (FINRA), the Municipal Securities Rulemaking Board (MSRB), and the Financial Accounting Standards Board (FASB). The SEC also oversees over $97 trillion in securities trading annually and reviews the disclosures of approximately 4,400 exchange-listed public companies with an approximate aggregate market capitalization of $34 trillion.
- Background Memo from House Staff
- The Honorable Jay Clayton Testimony
- The Honorable Robert J. Jackson Jr Testimony
- The Honorable Hester M. Peirce Testimony
- The Honorable Elad L. Roisman Testimony
- The Honorable Allison Herren Lee Testimony
- Video of the Hearing
Inside Airbnb, Employees Eager for Big Payouts Pushed It to Go Public
by Erin Griffith
New York Times
On behalf of more than a dozen employees, they pleaded to be able to sell their Airbnb stock options. Because Airbnb is privately held, its shares cannot be easily traded or cashed in. So the employees also asked that the company go public, a move that would let them freely sell their shares, said five people who saw or were briefed on the document and were not authorized to speak publicly.
https://www.nytimes.com/2019/09/20/technology/airbnb-employees-ipo-payouts.html#click=https://t.co/ymuwKpmf4l
Ten reasons why compliance fails
by Andrew Hayward and Tony Osborn
The FCPA Blog
This is despite the increasing ethical demands stakeholders are making of business, the exposing power of social media, the proliferating requirements of compliance laws and regulations, and the burgeoning numbers of policies, procedures and compliance officers which have been put in place in response.
https://www.fcpablog.com/blog/2019/9/20/ten-reasons-why-compliance-fails.html
So what’s going on? Why isn’t compliance working? Here are ten reasons why it can fail:
In the Decade Since Madoff, Ponzi Schemers Try New Tactics
by Angela Wang
New York Times
The S.E.C. brought 50 percent more Ponzi prosecutions in the decade after Mr. Madoff’s arrest than in the 10 years before, according to a New York Times analysis of the agency’s enforcement announcements.
https://www.nytimes.com/2019/09/22/business/ponzi-scheme-bernie-madoff.html
Whether the increase is the result of enhanced enforcement or a proliferation of scammers, records show that Ponzi victims lost $31 billion in the decade beginning 2009, more than three times the amount lost in non-Madoff schemes in the previous decade. (The figures are not adjusted for inflation.)
Veil-Piercing Risks for Private Equity Managers Highlighted in Recent Court Decision
By Joshua M. Newville and Alexandra V. Bargoot
A recent case in a North Dakota district court is a reminder to private equity funds and managers that, under certain conditions, they may be held responsible for actions of a fund’s portfolio companies. Courts allow plaintiffs to pierce the corporate veil as a check against improper abuse of the corporate form. When one corporate entity is under such extensive control by another that the first is merely an alter ego of the second, a court may permit a plaintiff to reach through the corporate structure to gain recovery. This is particularly true if the first entity is undercapitalized.
https://www.privateequitylitigation.com/2019/09/veil-piercing-in-private-equity-risks-for-funds-and-managers/
Minimum Wage Impacts along the New York-Pennsylvania Border
by Jason Bram, Fatih Karahan, and Brendan Moore
Liberty Street Economics
While New York began raising its minimum wage from $7.25 per hour in 2014, neighboring Pennsylvania has left its minimum wage unchanged at the federal floor. Minimum-wage variation between contiguous states has allowed researchers to evaluate the respective impacts on employment and average earnings. In this post, we gauge the effect of New York’s recent minimum-wage hikes by comparing low-wage sectors in counties along the New York-Pennsylvania border.
https://libertystreeteconomics.newyorkfed.org/2019/09/minimum-wage-impacts-along-the-new-york-pennsylvania-border.html
