These are some of the compliance-related stories that have caught my attention.
Investment Funds – Year-end Compendium of Our 2019 Client Updates
Sidley Austin
As the developments affecting the investment management industry continue to unfold, we have once again prepared our semiannual compendium of relevant Sidley Updates for our investment fund and adviser clients and friends. The compendium includes a summary of each Sidley Update year-to-date, in reverse chronological order, along with a link to its full text. We have included all of the updates, making the compendium repetitive in instances where we revisited a topic to report on emerging information and breaking news in the industry.
https://www.sidley.com/en/insights/newsupdates/2020/01/year-end-compendium-2019
Samsung Signs on the Compliance Line
Matt Kelly
Radical Compliance
Quite the compliance moment was witnessed in Korea this week, when the executive team at Samsung Electronics made a public display of signing a pledge to obey anti-corruption laws and build a new culture of compliance at the firm. The firm’s top three executives — president Kim Hyun-seok, vice chairman Kim Ki-nam, and mobile communications head Koh Dong-jin — signed the pledge at a publicity event at Samsung headquarters on Monday. Like, in front of the cameras. With reporters around and publicity photos issued.
http://www.radicalcompliance.com/2020/01/14/samsung-signs-compliance-line-pledge/
The Astros Cheating Scandal and Compliance
Tom Fox
FCPA Compliance & Ethics
Over the next few blogs, I will be exploring the MLB Report in detail, how it demonstrates that culture must be on the forefront of every Chief Compliance Officer (CCO) and corporation, what it means for the compliance community and how the MLB Report informs enforcement of anti-corruption laws such as the Foreign Corrupt Practices Act (FCPA).
Part 1 – The Cheating Scheme
Part 2 – Hinch and Luhnow
Private equity firms fear a Democrat topping Trump in 2020
Dan Primack
Axios
What’s happening: The result is that private equity investors are talking about clearing the portfolio decks this year, locking in profits under the current taxation scheme.
The big picture: This is different than the decades-long debate over carried interest, which was about if PE investment profits should be taxed as capital gains or as ordinary income. If you no longer have a difference between the two rates, it no longer matters how carried interest is classified.
https://www.axios.com/private-equity-fears-democrats-2020-presidential-election-79b046d3-78a7-44ed-ade6-be93d02528cb.html?
Into the Mainstream: ESG at the Tipping Point
Rakhi Kumar, Nathalie Wallace, and Carlo Funk
Harvard Law School Forum on Corporate Governance
In 2017, we conducted a major global survey to give deeper insight into the increasingly important Environmental, Social and Governance (ESG) market. Performing for the Future revealed a picture of ESG investment driven by performance beliefs, coupled with challenges and evolving pathways to adoption. …
Our latest research uncovers the views of more than 300 institutional investors and world-leading institutions, revealing what is driving organizations to adopt ESG, how this is influencing adoption, and the barriers that must be overcome to deliver the best outcomes.
https://corpgov.law.harvard.edu/2020/01/13/into-the-mainstream-esg-at-the-tipping-point/
Compliance Alert: Expensive watches raise red flags
Harry Cassin
The FCPA Blog
One luxury item is showing up more often in alleged graft-related asset seizures: wrist watches, especially the high-end variety with eye-watering price tags. In November 2018, Venezuela’s former national treasurer Alejandro Andrade was sentenced in the United States to ten years in prison for his role in a plot to launder $1 billion in bribes. He also forfeited $1 billion in personal assets, including bank accounts, aircraft, real estate, vehicles, horses, and watches. Andrade used watches to pay some of the bribes.
https://fcpablog.com/2020/01/08/compliance-alert-expensive-watches-raise-red-flags/
Marginalization of counsel … and compliance officers
Jeff Kaplan
Conflict of Interest Blog
Years ago, a firm I knew moved its chief compliance officer from a relatively nice office to a decidedly not nice one. The move was intended to send a message and it was received that way. I noted at the time that this would not end well for the firm. Sadly, I turned out to be right. In a recent post on the Harvard Corporate Governance Blog, “Bernie Ebbers and Board Oversight of the Office of Legal Affairs,” Michael W. Peregrine, McDermott Will & Emery LLP revisits the once-famous World Com accounting fraud scandal from the early 2000s and particularly the aspect of it that entailed the CEO (Ebbers) marginalizing corporate counsel. The details of this matter are less important (to me) than are the author’s very useful recommendations for mitigating this sort of risk.
http://conflictofinterestblog.com/2020/01/marginalization-of-counsel-and-compliance-officers.html
OCIE’s 2020 Exam Priorities — Key Takeaways for Private Fund Managers
Proskauer
Last week, the SEC’s Office of Compliance Inspections and Examinations released its 2020 Exam Priorities with a number of areas of interest to private fund managers. OCIE reported that it examined 15% of registered investment advisers (RIAs) during fiscal year 2019, down from approximately 17% of RIAs during FY 2018 but consistent with FY 2017’s 15% coverage rate. The four-week government shutdown in January 2019 reduced exam activity last year, but we expect the numbers to trend upward in 2020.
https://www.proskauer.com/alert/ocies-2020-exam-priorities-key-takeaways-for-private-fund-managers