Category: Compliance Bricks and Mortar

Compliance Bits and Pieces for December 4

Here are some compliance related news stories from the past week that caught my eye.

SEC Steps up Insider-Trading Probes by Kara Scannell and Jenny Strasburg for the Wall Street Journal

The Securities and Exchange Commission has sent at least three dozen subpoenas to hedge funds and brokerages within the past month in an expanding sweep of potential insider-trading violations, according to people familiar with the matter. At least some of the inquiries are focused on potential information leaks around health-care mergers of the past three years,

FINRA Fines Terra Nova Financial $400,000; Firm Made Over $1 Million in Improper Soft Dollar Payments

Terra Nova was also charged with failing to properly supervise its soft dollar program, failing to implement adequate supervisory procedures and failing to retain its business-related electronic instant messages. Terra Nova also failed to timely respond to FINRA’s requests for productions of various documents, including emails and instant messages, thus delaying FINRA’s investigation.

Ethics Bubble from Bill Piwonka on Integrity at Work

Just spent some time reviewing the Ethics Resource Center‘s 2009 National Business Ethics Survey . There’s some very interesting data in the report – some of which seems contradictory, which means I’m going to be spending more time this weekend digging into the details.

When Social Media Meld by Ron Friedmann on Strategic Legal Technology

Today, document assembly company Exari wrote the blog post The insidious nature of the billable hour. It discusses why the billable hour is a barrier to building document assembly tools. Central to its point is a Twitter conversation among Mary Abraham, Jeff Brandt, Doug Cornelius, and me [links are to Twitter]. This spurs some observations.

K-State Business Ethics Expert Offers Advice on Buying Your Boss a Holiday Gift

Diane Swanson is a professor of management and heads the Ethics Education Initiative at K-State. She said the office culture can determine whether employees should even get the boss a gift at all. If it’s tradition, breaking from it could be awkward. She said it’s up to the boss to indicate whether there is the expectation of a gift.

Dilbert on the importance of a C-level title

Dilbert.com

Engage with Grace

With the Thanksgiving holiday this weekend, I’m turning the blog over to public service.

Some conversations are easier than others.

Last Thanksgiving weekend, many bloggers participated in the first documented “blog rally” to promote Engage With Grace – a movement aimed at having all of us understand and communicate our end-of-life wishes.

It was a great success last year, with over 100 bloggers participating and spreading the word. Plus, it was timed to coincide with a weekend when most of us are with the very people with whom we should be having these tough conversations – our closest friends and family.

The original mission – to get more and more people talking about their end of life wishes – hasn’t changed.

A bit of levity.

At the heart of Engage With Grace are five questions designed to get the conversation started. I’ve included them at the end of this post.  They’re not easy questions to answer, but they are important.

To help ease us into these tough questions, and in the spirit of the season, I’m going to start with five parallel questions that are easy to answer:

The Easy Questions:

engage with grace 1

Silly? Maybe. But it underscores how having a template like this – just five questions in plain, simple language – can deflate some of the complexity, formality, and even misnomers that have sometimes surrounded the end-of-life discussion.

So with that, I’ve included the five questions from Engage With Grace below. Think about them, document them, share them.

The Hard Questions:

engage with grace 2

Over the past year there’s been a lot of discussion around end of life.

One man shared how surprised he was to learn that his wife’s preferences were not what he expected. Befitting this holiday, The One Slide now stands sentry on their fridge.

Wishing you and yours a holiday that’s fulfilling in all the right ways.

Updated links to others in the blog rally:

Compliance Bits and Pieces for Nov. 20

Here are some interesting stories from the past week:

How Presenters Can Deal With A.D.D. Audiences by Charles H. Green for Trust Matters

In other words—the heads-down twittering was definitely multi-tasking, but that doesn’t mean there was no dialogue going on. In fact, there was a ton of dialogue.

More content per minute flowed through that room than if everyone had hung on every word a speaker said. One speaker is limited by the human ability to enunciate sounds rapidly, and—it’s only one speaker. We can all read much faster than someone can talk. Asynchronous one-off communication is bound to be less rich than everyone talking at once; it’s just that it’s harder to focus in the latter case.

The Blind Side – how risk managers are like lineman

The post is a summary of an article written by Beaumont Vance in Risk Management Reports (February 2008) where he drew comparisons between the role of the Left Tackle (described in Michael Lewis’s book The Blind Side) and the future of risk professionals: Protecting your Blind Side.

Be Careful Telling Therapist About Insider Trading by Bruce Carton for Enforcement Action

The U.S. Senate takes an extreme interest in potential insider trading by the hedge fund you worked for and, as part of nine federal investigations into the matter, obtains the psychologist’s deposition testimony and makes sure it goes to federal prosecutors and the SEC.

The First CMBS Eligbile for TALF

DDR-Developers Diversified Realty Corp.

Developers Diversified Realty Corp. sold $400 million worth of of debt backed by shopping centers backed by 28 malls in 19 states. The offering is the first to use the Federal Reserve’s Term Asset-Backed Securities Loan Facility since it was opened to the debt in June.

Investors can take out loans from the TALF to purchase the AAA portion of the bond sale, enabling them to boost returns with borrowed cash. TALF was started in March to revive the market for asset backed securities.

The $323.5 million AAA-rated portion of the DDR offering was priced to yield 140 basis points more than benchmark swap rates. Investor demand allowed the company to reduce the spread from as much as 175 basis points.

References:

Compliance Bits and Pieces for Nov. 13

Here are some stories that caught my eye over the past week:

A Morgan Stanley star falls in China By George Chen and Steve Eder for Reuters

His downfall, however, was just as precipitous. Morgan Stanley fired Peterson in December amid suspicions that he had violated the U.S. Foreign Corrupt Practices Act, a law meant to crack down on bribes being paid to public officials overseas.

Morgan Stanley, which voluntarily reported the case to the U.S. authorities, declined to comment on its specifics.

After a nine-month internal investigation, the bank has turned its findings over to the U.S. Department of Justice and U.S. Securities and Exchange Commission, which have opened their own probes, according to an investor letter obtained by Reuters.

Pin the Credit on Someone Else by Charles H. Green for Trust Matters

A willingness to pin the credit on another is a deceptively simple way to achieve several goals. First—as Rebecca’s example perfectly shows—it can often get things done faster, breaking a logjam by bringing in a third party or an appeal to authority.

Second, it signals a willingness to subordinate your own ego—something as valuable as it is rare in consultative and sales and support people. The client picks up that signal very clearly.

Third, it signals something to the credited party too. It says you recognize and value them, and that you’re willing to do them a favor. And favors invite reciprocal favors.

Fourth, that whole favor-giving thing requires a time perspective longer than the transaction at hand. By showing you’re willing to play that game, you suggest a plethora of ways to work together going forward. You can collaborate.

Just because … inspiration can come from my 4th grader by Heather Milligan of The Legal Watercooler

1. Differentiate yourself without tearing down your opponent.

2. Be friendly. People like to hire and work with people who are friendly. Yes, there is always a need for the bull-dog litigator, but be the guy or gal that your client would enjoy having a beer with, taking in a game, or hanging out until 3:00 a.m. in trial preparation.

…

EPA: Video Takedown order was about ethics, not content by Darren Goode for Congress Daily

The Environmental Protection Agency’s top lawyer says the agency is not censoring two of its California-based attorneys who posted a YouTube video criticizing the Obama administration’s backing of a House-passed climate bill. But the two attorneys were asked to either take down the video or edit out references to their work with EPA because they violated government ethics standards.

Exploring the Ethics of Swine Flu by Lauren Bloom

The answer may be for employers to stop expecting workers to come in when they’re seriously ill with a contagious disease. Unfortunately, the American work ethic (a marvelous thing in many respects) is so strong that any employee who misses more than a day or two risks being permanently branded as a slacker. That attitude needs to change. If diseases like swine flu can’t be prevented, then workers shouldn’t be punished for coming down with them.

Why Insider Trading Is Hard to Define, Prove and Prevent from Knowledge@Wharton

Generally, insider trading means profiting on “material, non-public information.” It can be committed by an insider, such as a company executive, or an outsider who gets information from an insider. Merely obtaining inside information is not illegal. A journalist, for example, can use inside sources to glean earnings data before it is disclosed and legally use it for a story. But the reporter would be breaking the law if he used that knowledge to buy the firm’s stock before an announcement drove the price up.

Salute a Veteran

Veterans-Day-2009

U.S. President Woodrow Wilson first proclaimed an Armistice Day for November 11, 1919.

“To us in America, the reflections of Armistice Day will be filled with solemn pride in the heroism of those who died in the country’s service and with gratitude for the victory, both because of the thing from which it has freed us and because of the opportunity it has given America to show her sympathy with peace and justice in the councils of the nations…”

The United States Congress passed a resolution seven years later on June 4, 1926, requesting the President issue another proclamation to observe November 11 with appropriate ceremonies. An Act approved May 13, 1938, made the 11th of November in each year a legal holiday:

“a day to be dedicated to the cause of world peace and to be thereafter celebrated and known as ‘Armistice Day’.”

Congress amended this act on November 8, 1954, replacing “Armistice” with Veterans, and it has been known as Veterans Day since.

My thoughts go out to Marine Corps Corporal Jason Cohen

Copyright and Compliance

strange maps

I am a big fan of maps. I work for a real estate company, so that should not be surprising. Pictures can usually put information into better context than mere words.

Frank Jacobs, just published a book: Strange Maps: An Atlas of Cartographic Curiosities.

In an interview with Annika Mengisen on the Freakonomics blog, Mr. Jacobs pointed out an interesting compliance technique to deal with copyright and piracy.

When asked about any strange facts about maps that most people might not know?, he replied:

“I don’t know how obscure this fact is, but the London A-Z contains a fictional street on each of its pages, in order to catch out copycats.”

The authors used a little counter-intelligence to ferret out content thieves.

References:

Compliance Bits and Pieces for Nov. 6

The FCPA’s Imperialist Myth from The FCPA Blog

Why aren’t law professors training their students on the issue?  The answer, says Elizabeth Spahn, is tied up with false notions in the West about legal imperialism. Elizabeth Spahn’s article, “International Bribery: The Moral Imperialism Critiques,” 18 Minn. J. Int’l L. 155 (2009).

Conducting Ethical Corporate Investigations by Jaclyn Jaeger for Compliance Week

The ACC presented a panel discussion on internal investigations during its annual conference in Boston last week, and posed the following hypothetical: One of the company’s office managers has received an anonymous e-mail, where the writer claims to have compromised the salary and bonus information of several executives. The writer also claims to have stolen proprietary software from the company, whose customers are mostly manufacturers, and plans to give it to a competitor.

You, the general counsel, must investigate. How do you proceed?

ACC: The Use of Lawful and Ethical Strategies (Oct. 20, 2009)pdf-icon

Octopussy and the Golden Goose by Bruce Carton for Enforcement Action

If you are in an insider trading ring and your ring-buddies are using a “nickname” of any kind for you or others involved, it is all but certain that the nickname is going to be prominently mentioned when the SEC issues its press release about the case.

Compliance Bits and Pieces

Here are some interesting compliance stories that have not made their into their own posts:

Canada’s Commitment to Combating the Corruption of Foreign Public Officials: Watching Bill C-31 from the Wrageblog

Bill C-31, An Act to amend the Criminal Code, the Corruption of Foreign Public Officials Act and the Identification of Criminals Act, was introduced to Parliament on May 15, 2009. The timing of the bill’s first reading was clearly tied to the June 2009 release of Transparency International’s Progress Report on the Enforcement of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. The TI Report criticized Canada, calling Canada a laggard, and listing it as one of 21 countries making little or no effort to enforce its anti-corruption laws.

The FCPA’s Murky Knowledge Element by Mike Koehler for the FCPA Professor

In a superb new piece titled, “The ‘Knowledge’ Requirement of the FCPA Anti-Bribery Provisions: Effectuating Or Frustrating Congressional Intent?,” – Kenneth Winer and Gregory Husisian of Foley & Lardner (the “Authors”) conclude that “[t]he DOJ and SEC … now interpret the knowledge requirement so broadly that they have effectively eviscerated the 1988 statutory changes thereby raising an important question: Are the DOJ and SEC frustrating the intent of Congress by ignoring the reason that Congress amended the FCPA?” (see here).

Changes to Cayman AML Guidance Notes from Compliance Avenue

According to recent changes to the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (the “Guidance Notes”), offshore funds registered in the Cayman Islands and regulated by the Cayman Islands Monetary Authority (“CIMA”) should designate and appoint a compliance officer (“Compliance Officer”) at the management level, who: . . .

How BAE Got Caught by Richard Cassin for the FCPA Blog

Investigative reporters may be disappearing from newsrooms everywhere, but they still have an important role to play in holding institutions and people accountable for overseas bribery. Rob Evans of the U.K. Guardian contributed an essay to TI’s Global Corruption Report 2009 here. It’s about how he and David Leigh broke the BAE story.

ERISA Bonding Requirements for Hedge Fund Managers by The Hedge Fund Lawyer

Hedge fund managers who manages hedge funds which exceed the 25% ERISA threshold will need to purchase a fidelity bond.  The questions and answers below on the ERISA fidelity bonding requirements were prepared by the Department of Labor which is the governmental agency which is in charge of enforcing the ERISA laws and regulations.

The Time I was Written Up for Blogging by New CommBiz

About a year and a half ago I was written up for blogging. It was kind of a weird moment and I’ve never really talked about it much. It wasn’t that big of a deal but I thought I’d share how it happened and what I learned from it.

Here’s what I did wrong:

  • Technically I responded to a “press inquiry” (nothing freaks out PR people more than employees talking to the press)
  • I talked about the layoffs and certain financial aspects of the company during the “quiet period”

More than 100 Banks Have Failed in 2009

FDICBank closures are usually symptomatic of the economy. Last Thursday, the number of banks subject to FDIC closure stood at 99. Since FDIC take-overs are usually Friday afternoon, the question was “Would the FDIC would reach one hundred this weekend?”

They smashed through the century mark, closing seven banks over the weekend:

This rate of closure is bad, but not the worst.

The most failures occurred in 1989 when 534 banks and savings and loans were closed, which is an average of more than 10 per week. Although there were twice as many insured institutions in 1989: 16,574 in 1898 versus about 8,200 today.

The last time more than 100 FDIC-insured institutions were closed was in 1992, when 181 failed. The first time more than 100 FDIC-insured institutions failed in a year was 1982, when 119 were closed. From 1984 through 1992, more than 100 institutions were closed each year.

This is a lit more interesting when you look at it visually: (from Calculated Risk)

FDICFailures

References: