These are some of the compliance-related stories that recently caught my attention.
The Cost to Retail Investors and Public Markets of “Harmonizing” Securities Offering Exemptions
By Erik F. Gerding
The CLS Blue Sky Blog
Investing in private securities would pose considerable additional risks for retail investors, relative to investing in public securities, and existing research suggests that these additional risks would not be sufficiently offset by higher expected returns. In fact, if retail investors are given more direct access to the private markets, they are likely to earn lower risk-adjusted returns overall than they do in the public markets, for several reasons: …
http://clsbluesky.law.columbia.edu/2019/10/01/the-cost-to-retail-investors-and-public-markets-of-harmonizing-securities-offering-exemptions/
ANALYSIS: Lack of Removal Power Could Threaten SEC ALJ Regime
by Peter Rasmussen
Bloomberg Law
Are the job security provisions enjoyed by SEC administrative law judges unconstitutional? The Supreme Court majority kicked that question down the line in its 2018 Lucia v. SEC decision. The Fifth Circuit may just have picked it up, as a three-judge panel enjoined an administrative rehearing of a pre-Lucia accounting violations case against Michelle Cochran. It is too early in the process to read too much into a preliminary injunction, but the Fifth Circuit’s action does indicate that Lucia has not yet been laid to rest.
https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-lack-of-removal-power-could-threaten-sec-alj-regime
Some Places Are Much More Unequal than Others
by Jaison R. Abel and Richard Deitz
Liberty Street Economics
Economic inequality in the United States is much more pronounced in some parts of the country than others. In this post, we examine the geography of wage inequality, drawing on our recent Economic Policy Review article. We find that the most unequal places tend to be large urban areas with strong economies where wage growth has been particularly strong for those at the top of the wage distribution. The least unequal places, on the other hand, tend to have relatively sluggish economies that deliver slower wage growth for high, middle, and lower wage earners alike. Many of the least unequal places are concentrated in the Rust Belt. These differences in the degree of wage inequality are tied to powerful economic forces arising from technological change and globalization, which have pushed up wages strongly for high-skilled workers in locations that have become the most unequal. Yet those same forces have kept wage growth compressed within a fairly narrow range for workers in places that are the least unequal.
https://libertystreeteconomics.newyorkfed.org/2019/10/some-places-are-much-more-unequal-than-others.html
Attorney General Barr Speaks at SEC’s Criminal Coordination Conference
I’ll begin with our coordination to punish wrongdoers and to protect investors. As I have mentioned, the white-collar crime, financial fraud, and corruption cases that our agencies handle are some of the most complex and difficult cases to uncover, investigate, and prosecute. Together, however, through information sharing and open dialogue, we are able to overcome those challenges.
http://clsbluesky.law.columbia.edu/2019/10/07/attorney-general-barr-speaks-at-secs-criminal-coordination-conference/
Compliance and Careers Amid Corporate Upheaval
by Matt Kelly
Radical Compliance
This week I was in Denver attending the Converge 2019 conference hosted by Convercent, and as one might expect, lots of the sessions there focused on how to apply technology to compliance programs.
http://www.radicalcompliance.com/2019/10/04/compliance-careers-amid-corporate-upheaval/
For my money, however, the most interesting session explored something quite different: how compliance officers can navigate their careers amid upheaval at your company — a merger, breakup, restructuring, or some other ordeal that leaves everyone on edge. Including you.
A new (and more transparent) way to calculate SEC whistleblower awards
by Amanda M. Rose
The FCPA Blog
How should SEC whistleblower awards be calculated? In a working paper, I address this timely question.
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My analysis suggests that the controversial proposed amendments are warranted, but incomplete. For reasons that I explain, a hybrid percentage-dollar approach that ties a whistleblower award to the value of the punishment imposed on the wrongdoer, while also taking into account the costs a whistleblower anticipated incurring by coming forward, makes sound policy sense.
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A full copy of my paper can be downloaded here.
https://www.fcpablog.com/blog/2019/10/9/a-new-and-more-transparent-way-to-calculate-sec-whistleblowe.html