Category: Compliance Bricks and Mortar

Here are some interesting stories from the past week:

The Difference Between Wrong and Illegal by Charles H. Green

Do you know the difference between a wrong action and an illegal action? If you don’t, you are not alone. But neither are you to be trusted.

Ghostblogging will be the death of social media in the law by Kevin O’Keefe in Real Lawyers Have Blogs

We’re just scratching the surface of what social media can do for lawyers and law firms. But rather than learn how to harness this powerful relationship building tool, one with its roots in traditional client development, I’m finding some lawyers and law firms would rather pay to have someone else participate in social media for them.

Advisors Allowed to Get Social by Mark Astarita in onWall Street

As social media sites have become more popular with the general public, advisors have been drawn to them. But firms have generally banned their use because of advertising restrictions, and the lack of clear guidance from the regulators as to their use. That partially changed in January, with FINRA’s release of Regulatory Notice 10-06-Guidance on Blogs and Social Networking Web Sites. The notice dealt with five main areas.

Cahill taps firms tied to state pension investor By Aaron Lester, Michele Richinick, and Walter V. Robinson in the Boston Globe

Cahill, in an interview, expressed no qualms about receiving campaign contributions from companies that have or want business from the [Massachusetts] treasurer’s office and the five agencies he oversees, including the pension board. In fact, he acknowledged that he and his campaign aides routinely seek contributions from such companies.

Judge Uncorks True Feelings About Compliance Monitors by Matt Kelley in Compliance Week

Most events in federal court are terribly dull, the carefully scripted culmination of legal briefs fired back and forth among various parties for years. But once in a great while, a judge goes a little nuts—as happened last week with the new hero of compliance officers everywhere, District Court Judge Ellen Segal Huvelle.

Here are some compliance related stories from the past week:

Securities Docket Radio: Available Free on iTunes

Securities Docket Radio is now available as a free download on iTunes! To listen to or download the debut program featuring Bruce Carton’s interview with Sanjay Wadhwa, Deputy Chief of the SEC’s new Market Abuse Unit, please click on the iTunes link below.

Schapiro Details How The SEC Would Spend 2011 Budget by Melissa Klein Aguilar in Compliance Week’s The Filing Cabinet

SEC Chairman Mary Schapiro took to the Hill this week to provide lawmakers with details on how the agency would use the President’s budget request of $1.258 billion for fiscal 2011. If enacted, the 12 percent increase over the agency’s FY 2010 funding level would allow the SEC to hire an additional 374 professionals, bringing its total staff to just over 4,200.

Dear Moody’s Corp: Type this fast 3 times by Dominic Jones in IR Web Report

Moody’s Corporation (NYSE:MCO) is one company that is in the process of sending such a notice to its registered shareholders … Now remember that people are getting this on paper and they have to manually key in that long URL –http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=26180

Compliance Book of the Month: Money for Nothing by Matt Kelly in Compliance Week

The book Money for Nothing can be summed up in one sentence: The boards running corporations in America today are ineffective. But while that sentence may be accurate, it is not news to corporate compliance and governance officers, so those of you looking for a more substantive analysis or solutions to the governance problems you face might want to read elsewhere.

No, We Don’t Need to Suspend the FCPA In Haiti or Any Other Country! by the FCPA Professor

A topic in the blogosphere this week has been whether the FCPA needs to be suspended so that more U.S. companies will invest in Haiti. The spark igniting this discussion was an opinion piece on Monday by Wall Street Journal editorial board member Mary Anastasia O’Grady titled “Democrats and Haiti Telecom” (see here).

Turning Down The Information Firehose–ABA Article in Law Practice by David Hobbie in Caselines

Much of my work focuses on how attorneys can do a better job handling information….Research for the article was itself an interesting experiment in personal knowledge management. The most valuable resources were probably KM Lawyer Mary Abraham’s post “Managing the Firehose“, “PKM Professional” Harold Jarche’s posts on Sense-Making with Personal Knowledge Management, Patty Anklam on PKM as the “Third KM,” and the collection of resources compiled by a number of people on delicious at http://delicious.com/popular/pkm.

Here are some compliance stories from the past week that I found interesting:

Shadowing a Swindler by Richard Tofel

His review of the Harry Markopolos book: No One Would Listen

[N]early all the whistleblowers she had met shared two qualities. First, they were onto something—that is, there was at least some truth to what they were saying. Second, they were “a little bit nuts.” … None of this behavior makes Mr. Markopolos’s case against Mr. Madoff any less convincing. Nor does it excuse the SEC. But it does provide a fuller picture of the author than the cardboard cut-out of the lonely hero we’ve been hearing about for the past 15 months. With his book, Mr. Markopolos sheds more light than he intends on just why no one would listen.

OECD Guidance On Internal Controls, Ethics and Compliance by Melissa Klein Aguilar in Compliance Week‘s The Filing Cabinet

The OECD Working Group on Bribery has issued “Good Practice Guidance on Internal Controls, Ethics and Compliance,” which calls for companies in the 38 countries that are party to the OECD Anti-Bribery Convention to put in place strict internal controls and establish ethics and compliance programs as part of a strategy to combat bribery in international business deals.

Blagojevich Speaks on Ethics (And I Would Listen) by Chris MacDonald on The Business Ethics Blog

Of course, when you’re listening to someone who is accused of, or who has admitted to, significant wrongdoing, there’s no guarantee you’re hearing the truth. Some of them may be inveterate liars; others may be lying to polish their own image. So, naturally, you should take what they say with a grain of salt. But to think that there’s nothing to learn from them is a mistake.

To Improve Performance, Audit Your Employees’ Emails by Michael Schrage

Because the rhythm and rhetoric of effective email exchange is a critical success factor in business performance, mismanagement of email may in fact be a symptom of other weaknesses in your organization.

The Rise of  Client Collaboration by Jordan Furlong

Welcome to the world of client collaboration, where buyers of legal services share information with each other and where lawyers are often not needed on the voyage. The internet has enabled people with legal questions and problems to speak with and learn from each other on a massive scale, far beyond what was possible in the days before email and social networks. As a result, they are turning less frequently to their lawyers and more frequently to each other to acquire the legal information they need.

SIGTARP Quarterly Report to Congress

As important as assessing the effectiveness of TARP programs is, in the final analysis, TARP can truly only be a success if TARP is both managed well and its positive effects are enduring. The substantial costs of TARP — in money, moral hazard effects on the market, and Government credibility — will have been for naught if we do nothing to correct the fundamental problems in our financial system and end up in a similar or even greater crisis in two, or five, or ten years’ time. It is hard to see how any of the fundamental problems in the system have been addressed to date.

FCPA Enforcement in 2010: Prepare for Blastoff by Bruce Carton in Securities Docket

When Assistant Attorney General Lanny Breuer was recently asked to comment on enforcement of the Foreign Corrupt Practices Act in 2009, he minced no words: “One can say without exaggeration that this past year was probably the most dynamic single year in the more than 30 years since the FCPA was enacted.”

Here are some compliance related stories from the past week:

Setting Off Alarm Bells at Work by Steven D. Levitt on Freakonomics

Apparently, the use of such internet sites [Facebook]  is not tolerated by CPS and rather than block those websites altogether, accessing them causes this ear-piercing noise to go off that sounds something like a fire-department wagon passing directly by you.

…

The firm gives the workers an incomplete list of which sites are banned.  Thus, the worker can never be quite sure when they go to a site that should be banned (but may or may not actually be alarmed due to the difficulty of identifying and banning every naughty site), if they will trigger the alarm.

CNBC Video: Madoff Whistleblower Speaks from Securities Docket

CNBC’s Mary Thompson’s interview with Harry Markopolos, the Madoff whistleblower who is now promoting a book on how he he tried to warn the SEC and others about Madoff’s Ponzi scheme.

The Depressing Tone of Bank of America by Matt Kelly of Compliance Week

Sometimes corporate leaders step up and do the simple, ethical thing, and their tone at the top is a harmonized chorus delightful to hear. Sometimes they do the wrong thing, and their tone is more like a tribal screech of self-interest.

Internal Review of a Proposed Foreign Business Partner by Thomas Fox

A Foreign Business Partner Review Committee should be established which is tasked with reviewing all the investigative due diligence and the Business Unit’s case for partnering with the person or entity. The next area of review should of the proposed Foreign Business Partner’s ethics and compliance program. Such a program should have, at a minimum, the following elements of a Foreign Corrupt Practices Act (FCPA)-style compliance program in place.

To Be or Not to Be Honest with the SEC by Suzanne Barlyn in the WSJ’s Financial Advisor

Weighing the risks and rewards of voluntarily reporting compliance lapses to the Securities and Exchange Commission is a tricky issue for investment advisers. Gene Gohlke, associate director of the SEC’s Office of Compliance Inspections and Examinations, recently tried to ease advisers’ concerns about self-reporting violations that their compliance programs catch, such as certain trading errors.

Here are some interesting compliance related stories from the past week:

List of Troubled Banks at 16-Year Peak, F.D.I.C. Says by Eric Dash in the New York Times

After weathering the nation’s worst run of bank failures in nearly two decades, the Federal Deposit Insurance Corporation announced Tuesday that it had added 450 institutions to its list of challenged lenders in 2009 and warned that the industry was likely to remain under stress.

Rakoff Backs BofA Accord, Unhappily By DAN FITZPATRICK, KARA SCANNELL And CHAD BRAY in the Wall Street Journal

A federal judge harshly criticized but approved a $150 million settlement Monday between Bank of America Corp. and the Securities & Exchange Commission, resolving claims the bank should have disclosed billions in losses at Merrill Lynch & Co. before it was acquired by the bank. U.S. District Judge Jed S. Rakoff said the fine was “paltry” when considering the Merrill merger “could have been a bank-destroying disaster if the U.S. taxpayer had not saved the day.”

SEC Announces Efforts to Educate Investors About Participating in Corporate Elections – SEC Press Release

The series of measures include amending the SEC’s e-proxy rules, issuing an Investor Alert, and creating new Internet resources that explain the proxy voting process in plain language.

Supreme Court Sets Oral Argument in Quon v. Arch Wireless for April 19, 2010 in the Hunton & Williams Privacy & Information Security Law Blog

The U.S. Supreme Court has set oral argument for April 19, 2010, to review the Ninth Circuit’s 2008 decision on employee privacy in Quon v. Arch Wireless Operating Co. Although Quon concerns the scope of privacy rights afforded to public employees under the Fourth Amendment, the case also has forced private employers to renew their focus on ensuring robust and consistent enforcement of employee monitoring policies. Unlike government employers, private employers are not subject to the Fourth Amendment’s prohibition against unreasonable searches and seizures; instead, they must comply with federal wiretap statutes and state law.

The All-In-One FCPA Enforcement List from the FCPA Blog

This is really it. A snapshot of (we think) all FCPA-related ongoing prosecutions, pending sentencings, extraditions, at-large fugitives, and appeals.

How To Write a Code of Ethics by Josh Spiro in Inc.

A code of ethics can help a business determine its priorities and values. It can also help you down the line if one of your employees or vendors drags you into legal trouble.

Here are some interesting compliance related stories from the past two weeks. (I reserved last week for my blogoversary.)

Details Emerge on SEC Office of Market Intelligence by Bruce Carton in Compliance Week

One of the first tools that the Securities Exchange Commission launched after it ushered itself into the Internet era in the mid-1990s was the “Enforcement Complaint Center,” a fancy name for an e-mail box at the SEC where the public could send tips. The Enforcement Complaint Center initially received only about 20 complaints per day, but that number snowballed through the years. Today it’s not uncommon for the ECC to receive up to 1,000 e-mail tips per day.

Morningstar acquires footnoted!

For the past 6 1/2 years, we’ve written frequently about various mergers and acquisitions. Today, we have some M&A news of our own: Morningstar (MORN) has acquired footnoted.org. You can download the official press release here, but I wanted to personally share with you why I’m so excited about this deal and why I think Morningstar, which is already well known for its independent research, is the perfect partner to help me continue growing footnoted.

Blizzard Ethics and Parking Space Etiquette by Jack Marshall of Ethics Alarms

The Great Blizzard of 2010 inspired The Washington Post to publish a piece about snow ethics, focusing especially on this touchy question: Is it ethical to park in a space shoveled out by someone else? The problem with the article is that it doesn’t ask the ethically crucial second question: Is it ethical for someone to hold one of the rare cleared parking spaces on the street open, when other motorists desperately need a place to park?

Corporate Backlash to Social Media by Gil Yehuda

A recent post titled “Company Forces Employee to Delete LinkedIn Profile” reminded me of the reality of the corporate mindset.  The post describes the reaction to the news that employees in this one firm can no longer have a private LinkedIn profile as a result of how the company interpreted the FINRA guidelines.

Financially Justifying Ethics: A Faustian Bargain? by Charles Green in Trusted Matters

Many readers are familiar with Goethe’s Faust in which the protagonist sells his soul to the devil in return for having his way here on earth. Those who are not familiar with it will find the same theme echoed in Robert Johnson’s Crossroads song, in which the singer sells his soul to the devil in return for fame as a bluesman. . . . But never mind. What I want to talk about is the justification of ethical corporate behavior by referring to its profitability. It is, I suggest, a slippery slope.

Calpers names firms not responding on placement agents in The Washington Post

Calpers, the biggest U.S. public pension fund, released late on Wednesday a list of 11 firms with which it has invested that did not reply to its request for information on their use of placement agents, who are at the center of a probe of New York’s pension fund.

Here are some interesting stories from the past week:

Can your Broker be your Facebook Friend? by Gil Yehuda on Gil Yehuda’s Enterprise 2.0 Blog

Can brokers set up blogs? What about the comments that people post to their blogs? Can brokers give financial advice on discussion forums? What if a broker sets up a forum where all their misleading advertising gets magically erased whenever a regulator visits the site? Sure, when you think of all the bad things that could happen, you may be glad this industry is regulated (of course those who got swindled wish the enforcement would be more effective).

FINRA Guidance on Social Media podcast (mp3) from Compliance Week

Compliance Week editor Matt Kelly talks with Eden Rohrer of the law firm Haynes Boone about new guidance from FINRA on social media usage among financial-sector workers. (Time: 9 min.; file size: 4.2 Mb)

The DOJ: Bringing Bribe-Takers to Justice? in the Wrage Blog

Anne Richardson of TRACE was present at ACI’s FCPA Bootcamp in Houston last week and provides this report on a possible new development in anti-bribery enforcement: “In the conference’s opening panel on January 26, 2010, Stacey Luck, Senior Trial Attorney in the Fraud Section, explained how the recent DOJ/FBI sting operation involving 22 executives from military and law enforcement equipment companies demonstrates several recent FCPA enforcement trends: (i) the focus on individuals, (ii) the use of traditional law enforcement tactics, (iii) the emphasis on industry-wide investigations, and (iv) greater international cooperation among enforcement authorities.

SEC Enforcement in 2009: A Year of Changes, with More This Year by Eduardo Gallardo, Gibson, Dunn & Crutcher LLP in The Harvard Law School Forum on Corporate Governance and Financial Regulation

In this review of enforcement in 2009, we focus on the significant enforcement developments of the second half of the year, as well as notable cases and important trends revealed by annual enforcement statistics, both those disclosed by the SEC, as well as those that result from our own analysis. We also look ahead to the significant developments to anticipate this year.

CFTC: Billy Ray and Winthrop Were Not Insider Traders by Bruce Carton in Compliance Week‘s Enforcement Action.

Earlier this week, Commodity Futures Trading Commission Chairman Gary Gensler clarified that no matter what you might have assumed back in 1983, Billy Ray Valentine (Eddie Murphy) and Louis Winthorpe III (Dan Aykroyd) did not commit insider trading when they made millions trading on orange juice futures in the movie Trading Places.

Under Proposed Budget, SEC Could Get $1.258B, Add Staff by Melissa Klein Aguilar in Compliance Week‘s The Filing Cabinet

The President’s budget request of $1.258 billion for the Securities and Exchange Commission for fiscal 2011 would increase the commission’s coffers by roughly $139 million, or 12 percent over its fiscal 2010 funding level, and would enable the agency to add about 380 staff positions.

Social Media and the Workplace: What Every Employer Should Know by Nixon Peabody

Employers must fully consider the use and misuse of social media at each stage of employment, craft appropriate policies and procedures consistent with their industry and firm culture, and apply such policies in a consistent and non-discriminatory way.

Here are some interesting stories from the past week:

French Supreme Court Limits the Scope of the Whistleblowing Process by Cecile Martin in the Privacy law Blog

For the first time the French Supreme Court addressed the issue of the validity of a Code of conducts that had been implemented by a listed company (Dassault Systèmes, a French Software company) in order to comply with the Sarbanes Oxley act. By its decision, The French Supreme Court, overruled the decision of the Court of Appeal, which had declared the whistleblowing system implemented by the Code of Conduct of Dassault Systèmes compliant with the French data protection authority (CNIL) and therefore legal.

America Bowl

There is only one football game left: Super Bowl XLIV. Coincidentally, our 44th president is also in office. This will never happen again. In celebration of this coincidence, Don Steinberg is matching the president to the corresponding Super Bowl to decide which is better.

Questions Arise on Timely Ethics Disclosures by Melissa Klein Aguilar in Compliance Week (sub required.)

Almost a decade after Enron’s implosion, some public companies appear to be dodging required ethics disclosures intended to prevent the sort of insider dealings that helped bring down the legendary energy company, according to a new academic analysis.

Three Little Words by Andrea Howe in Trust Matters

Here are three phrases, each three words long, that are an essential part of any Trusted Advisor toolkit:

• “That makes sense.”
• “Tell me more.”
• “I don’t know.”

NERA Releases Annual Canadian Securities Class Action Study by Kevin LaCroix in The D&O Diary

On January 27, 2010, NERA Economic Consulting released its updated annual review of Canadian securities class litigation entitled “Trends in Canadian Securities Class Actions: 2009 Update” (here). The report presents an interesting study of the evolution of class action litigation in a jurisdiction outside the U.S.

Greek Minister of Defense Regulates Contacts with Defense Companies – The Wrage Blog

The Greek Minister of Defense has taken steps to increase transparency in its dealings with defense contractors. This summary is provided by Takis Kakouris of TRACE partner firm Zepos & Yannopoulos.