Category: Off Topic

Back to Compliance

After two weeks out of the office, I’m back to compliance. It’s not that compliance stops if it’s embedded in firm culture and operations. It also means that the work does not stop while you’re out of the office.

I enjoyed two weeks in the midwest and mountains. It included a trip to Yellowstone. I have this picture of a charging bison as proof.

Post-Labor Day means the official end of summer. Employees are back from summer vacations and kids are back in school. Meeting minutes need to be compiled, reports need to be completed, training needs to start up again.

It’s good to take time off to recharge and refocus on the tasks as hand.

But the tasks pile up while you’re on vacation. Tasks are piled up on my desk. I assume that at least a few of you are also dealing with a big pile of work to be done.

Eclipse Watching

In case you unaware, the sun is being blotting out by the moon across all of the United States today. I happen to have traveled to my in-laws who live right in the path of totality.

I think this astronomical phenomenon is far more interesting than any compliance story I could read or write about.

My one compliance tip is to not look directly at the sun, except during the brief total phase of a solar eclipse if you are in the path of totality.

The only safe way to look directly at the uneclipsed or partially eclipsed sun is through special-purpose solar filters or eclipse glasses. These eclipse glasses or handheld solar viewers should be labeled as being compliant with the ISO 12312-2 international safety standard.

Happy Patriots’ Day

And the shot heard ’round the world
Was the start of the Revolution.
The Minute Men were ready, on the move.
Take your powder, and take your gun.
Report to General Washington.

– Schoolhouse Rock!

Patriots’ Day is a celebration of the anniversary of the Battles of Lexington and Concord, the first battles of the Revolutionary War. (With the success of the New England Patriots over the last 15 years, some may confuse this holiday as a celebration of football.) The battle recreations on the field in Lexington Green are very different than the battles on the field at Gillette Stadium.

Patriots’ Day is a celebration of Paul Revere and William Dawes.  They mounted their horses and spread the warning: “The British are coming!” (You don’t know about Hawes because Longfellow didn’t write a poem about him.) Those rides started out with the “one if by land, two if by sea” signal from the Old North Church.

Patriots’ Day is a celebration of the Boston Marathon. Runners start their 26.2 mile journey in Hopkinton, up Heartbreak Hill by my house and into Copley Square

Patriots’ Day is a celebration of baseball, with an early Red Sox home game ending in time for baseball fans to turn into marathon fans as the runners pass near Fenway Park.

Patriots’ Day  is a celebration of being out of the office. It’s a Massachusetts holiday. Since Maine was once part of Massachusetts, it’s also a holiday in Maine. (Although Maine switches the possessive to Patriot’s Day.)

So I’m out of the office today and for the rest of the week on vacation.

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Compliance Failure at the Oscars

PwC had a public failure last night, in the worst possible way, during the Oscars telecast. After running nearly 45 minutes over schedule, the final remaining award was for best picture. Warren Beatty and Faye Dunaway were on stage with a red envelope. The duo was presenting the best picture award in celebration of the 50th anniversary of Bonnie and Clyde. 

Mr. Beatty looked confused, perhaps trying to be funny. He passed the envelope to Ms. Dunaway who quickly looked at the movie title on the card and blurted out “La La Land”. She failed to note the mistake that had confused Mr. Beatty.

As Beatty explained onstage:

“I opened the envelope and it said, “Emma Stone, ‘La La Land.’ That’s why I took such a long look at Faye and at you ― I wasn’t trying to be funny.”

The producers and cast of La La Land took the stage and began giving speeches. They managed to get through their speeches before a stage hand jumped into the fray and started looking at envelopes.

PwC has handled the balloting process at the Academy Awards for over 80 years. The failure came in the last step in the process: handing the correct envelope to the correct presenter for the correct award.

It seems clear that Mr. Beatty had the wrong envelope. He realized he had the wrong message inside the envelope. Re-watching the video, he looks into the envelope a second time realizing the card says Emma Stone for LaLa Land. He turned to Ms. Dunaway apparently looking for help, but she plunged ahead.

He didn’t know where to turn to when he had a problem.

PwC failed to monitor delivery of the envelope and failed to put a stop before things went too far. I’m sure critics of audit firms will be able to draw many parallels.

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Comeback

It’s tough thinking about compliance this morning after staying up to watch the greatest comeback in Super Bowl history by one of the greatest quarterbacks, orchestrated by one of the greatest coaches.

I reflect back humbly. I grew up with the red-uniformed Patsies. I remember the 1 and 2 win seasons. I remember the years of not being able to beat Miami in Miami.

At halftime of this game, I remembered the Patriots’ first Super Bowl when the team was steamrolled by the great ’85 Bears in what, at the time, was the most lopsided loss in Super Bowl history.

I remember the Patriots with one foot out the door to St. Louis and again with an aborted move to Hartford.

I know that the painting in Tom Brady’s attic will not hold back time forever, that Belichick will retire someday, and that Mr. Kraft will pass on the team to someone else to run. This dynasty will come to end some day.

But not today.

I’ll leave with a picture of my good friend holding the Lombardi Trophy last night.

What Now? Trump Presidency and Compliance

While votes are still being counted, it’s clear that the Clinton Firewall in Michigan and Wisconsin did not hold. Get used to saying “President Trump.” The other story is that Republicans held the Senate, leaving Congress in the hands of the Mitch McConnell and Paul Ryan. That means some aspect of the Republican platform will start going through the legislative system in January. What will that mean for compliance?

trumpland

The Clinton loss was a compliance failure. Clinton failed to implement policies and procedures to address the conflict of interests between the Clinton Foundation and her role in government. There was the appearance of charitable donations being made to influence government action. (If not actual influence-peddling.) Anyone familiar with the FCPA would know that charitable donations to influence government action in a foreign country will put you in the crosshairs of enforcement for an FCPA violation.

Clinton had a cybersecurity failure, or at least the appearance of a failure. Her emails ended up on the computer of an accused pedophile.

As a result, America elected Mr. Trump.

He has clearly stated policies on isolationism, pulling away from free trade and limiting immigration. That was the bedrock of his campaign. America has its version of Brexit.

Mr. Trump has not been clear on what his plan is for domestic policy. That seems to be a more generic Republican agenda. We need to look more toward Mr. Ryan’s plans and Mr. McConnell’s plans.

Expect de-regulation. All three have made calls for repeal of Dodd-Frank. I don’t expect it will be a simple repeal. I think compliance professional can expect a wholesale reversal in some areas. Many of us will be tearing up policies and procedures and starting over.

For private funds, there have been several bills in the House to remove or lessen the registration requirements. Those died in the Senate. It’s not clear if they died because Senate leaders did not like the changes or didn’t want to bother with the legislative effort knowing they would be vetoed by the President.

I expect Mary Jo White will step down as Chair of the Securities and Exchange Commission. That will leave three vacancies to be filled by the new President. There is a chance that the current candidates are approved during the lame duck session. I would not take that bet. I’m skeptical that Mr. McConnell will let Obama implement anything during the lame duck session.

January will be busy in Congress as the old bills are dusted off and run through committee to get on the floor of the House. New bills will come together quickly. Compliance professionals will need to pay close attention. Change is coming.