Category: Publish to KM Space

Snow Shoveling and Compliance

snow and compliance

A winter storm has been hitting big chunks of the United States over the last few days. For me, in Boston, it’s just a small accumulation. That’s enough to cause a nuisance and snarl the morning commute.

For me, one test of compliance is snow shoveling. Did my neighbors shovel their sidewalks so people can pass safely?

I live in a neighborhood where there are lots of walkers. The elementary school is just down the street and most kids walk to school. Many people in the neighborhood walk to the nearby bus stops and train station for their commute into Boston. Property owners should clear their sidewalks. It’s the right thing to do.

Of course, being in the suburbs many people just drive everywhere. They think the strip of concrete between their house and the street is merely a place to put the barrels on trash-day. That potentially endangers pedestrians who may be forced into the street or may slip and fall on the uncleared sidewalk.

My town has contemplated enactment of shoveling ordinance, making it an offense if your sidewalk is not shoveled within 24 hours after the end of the storm. The ordinance would turn an ethics issue into a compliance issue.

What do you shovel first, your driveway or your sidewalk? What’s more important to you? To your neighbors?

Shutdown

Sorry folks. The federal government is closed. The moose out front should’ve told you.

park's closed

Not exactly.

The Securities and Exchange Commission is still open and operational. The SEC’s current operational plan in the event of an SEC shutdown is available here (pdf). It’s not clear from reading this what will be operational and what is discontinued.

That’s in part because the SEC has a carryover balance that will allow it become fully operational for a few weeks. But at some point, if Congress can’t find it’s way out the paper bag it’s in, operations will start being shutdown.

Other parts of the government are shutting down. I expect it will be a bit easier commute into the District this morning. They will pass the Tea party Republicans holding their breath and not willing to pass a funding bill unless the Affordable Care Act is defunded or delayed.

Unfortunately, even if a funding bill is passed, we may see this battle again when the debt ceiling needs to be raised in a few weeks.

September 11

"Tribute in Light" from the US Air Force
“Tribute in Light” from the US Air Force

The September 11 attacks resulted in the deaths of 2,996 people, including the 19 hijackers and 2,977 victims. The victims included 246 on the four planes, 2,606 in New York City in the World Trade Center towers and on the ground, and 125 at the Pentagon. Nearly all of the victims were civilians. 55 military personnel were among those killed at the Pentagon. One was an employee of my company.

Make a few minutes today to remember those lost directly, and as a result of the subsequent actions. Thousands more Americans were killed in Afghanistan to attack the perpetrators of this criminal act.

Make a few more minutes to think about how our country has eroded some of it’s citizens’ civil liberties as a response to the threats, real or perceived, that may come. The NSA spying scandal, the TSA procedures at the airport, the militarization of our police forces, any many other negatives have spilled into America culture as a result of those September 11 attacks.

The Dog Days of Summer and Compliance

Dog Days of Summer and Compliance

The phrase “dog days” refers to the sultry days of summer, the months of July and August in the Norther Hemisphere. The Romans referred to the dog days as diēs caniculārēs. The Dog Days were the days when the star Sirius rose just before or at the same time as sunrise. They considered Sirius to be the “Dog Star” because it is the brightest star in the constellation Canis Major (Large Dog).

Like many things Roman, the term “Dog Days” was adopted from its earlier use by the Greeks. It may even be traced back to the ancient Egyptian astronomer-priests who noted that Sirius rose with the Sun just prior to the annual flooding of the Nile.

The lazy days of summer can be great days to sit back and relax with a cold glass of iced teas to cool you down. With fewer people in the office, you may have some free time to catch up on lagging projects. or you may have some free time to spend out of the office.

For me it’s a bit of both. But currently, I’m looking forward to some vacation days coming up. That means things will likely be quiet on Compliance Building until September.

Compliance and Breaking Bad

compliance and breaking badI was up last night hooked into latest episode of Breaking Bad. Besides it being a great show, it highlights a focus of compliance. How do you prevent your employees from going bad?

For those of you who haven’t seen the show, Walter White, a mild-mannered high school chemistry teacher helps ends meet by making drugs. As the story progresses and Walter makes a series of bad choices, he transforms into the murderous drug lord Heisenberg.

Perhaps the evil has always been inside Walter. Perhaps it was a mid-life crisis gone horrible wrong. Perhaps it was pure greed.

Walter’s first choice was clearly across the line when he met with his former student to cook his first batch of crystal meth. As he escapes each increasingly threat to his life and his livelihood he moves progressively further from Walter to Heisenberg. The success of each bad act leads to more bad acts.

One goal of company’s compliance program is discourage an employee from going bad. And to the extent an employee goes bad, to promptly catch them to prevent further bad acts.

Should I Ask for Your Help?

blawg 100

The ABA Journal is working on their annual Blawg 100 list. They think it’s a good idea to smash law blog into blawg.

Visit the Blawg 100 Amici nomination page and fill in a few boxes. Due date is August 9.

The reason for this story is whether to put Compliance Building forward as a nominee.

Since this is a compliance blog, I of course turn to the rules first:

[P]lease keep these criteria in mind when submitting Blawg 100 amici:

1. We’re primarily interested in blogs in which the author is recognizable as someone working in a legal field or studying law in the vast majority of his or her posts.
2. The blog should be written with an audience of legal professionals or law students in mind.
3. The majority of the blog’s content should be unique to the blog and not cross-posted or cut and pasted from other publications.
4. We are not interested in blogs that more or less exist to promote the author’s products and services.

Let’s start from the bottom. Compliance Building is not a promotional platform. I have no products or services to sell.

Number 3 is not a problem. The content of Compliance Building is unique. It may not be interesting all of the time. It may not appeal to a broad audience. But it’s not just cut and paste from other publications.

Number 2 is a where there is a disconnect. I’m a lawyer, but not all compliance professionals are lawyers. A large portion of the stories include some legal analysis and discussion. The main purpose of Compliance Building is to keep track of all of the things I need to know to be a compliance professional in the real estate private equity industry. That includes lots of statutes and regulations. That includes the learning from enforcement actions brought by the SEC and other regulators. But it also includes non-legal analysis and the business side of compliance.

Number 1 is a similar problem. Am I working in the legal field? A large portion of my current writing is focused on the new and changing legal requirements that have been imposed on real estate private equity fund managers. One of the big challenges is keeping up to date on the regulatory changes. I use Compliance Building to help me keep up to date with those changes. Hopefully, it also helps keep you up to date.

If Compliance Building is useful to you and you think it meets the criteria, then feel free to nominate it. Visit the Blawg 100 Amici nomination page and fill in a fewboxes. Due date is August 9.

I’m working on nominations for a few of my favorite law blogs.

 

Compliance Bricks and Mortar – One Heart Boston Edition

heart boston

One Heart Boston: All proceeds beyond the direct material costs, postage and applicable taxes from the sale of One Heart Boston merchandise will benefit The One Fund Boston, created to raise money to help those families most affected by the tragic events that unfolded during this year’s Boston Marathon.

These are some of the compliance-related stories that recently caught my attention.

Rep. Waters Introduces Investment Adviser Examination Improvement Act

Representative Maxine Waters (D-Cal.), along with Representative John Delaney (D-MD), again introduced legislation that would allow the SEC to charge user fees to fund examinations of investment advisers, the Investment Adviser Examination Improvement Act of 2013.  …  The proposed legislation also has the backing of a number of organizations including NASAA, which issued a supporting statement.  Nevertheless, the likelihood of action in the foreseeable future is remote.

House Panel Examines SEC Failure to Meet JOBS Act Rulemaking Deadline, Comm. Walter Says Accredited Investor Definition Is Outdated in Jim Hamilton’s World of Securities Regulation

At a hearing of the Subcommittee on Oversight and Investigations of the House Financial Services Committee examining the failure of the SEC to meet the statutorily imposed deadline for implementing Title II of the Jumpstart Our Business Startups Act (JOBS) Act, SEC Commissioner Elisse Walter testified that the Commission will move ahead to adopt final regulations implementing Title II as expeditiously as possible. This is a top priority for the SEC, she emphasized. During the hearing, Commissioner Walter said that she favors a revision to the definition of accredited investor to focus more on the amount of money a person already has invested.

Scott London Subverted Sarbanes-Oxley: Big Four Mock Audit Partner Rotation in re: The Auditors

The rest of the column goes on to explain that London seems to have subverted the intent of Sarbanes-Oxley Section 203 that requires lead engagement partner rotation off engagements to promote objectivity, independence and professional skepticism. But he’s not alone. The more I looked into this the more I realized it’s probably pretty common in the firms. After ten plus years of Sarbanes-Oxley, we’ve probably got quite a few of these roll off, roll back on partners out there. An early draft of a paper by four academics, including former PCAOB academic fellow Brian Daughtery, says almost everyone does it.

Financial Analyst Survey: “Chinese Wall? Reg FD? Never Heard of Them…” in The Corporate Counsel .net

Meanwhile, in this survey of hedge fund professionals – commissioned by Labaton Sucharow, HedgeWorld and the Hedge Fund Association – 46% said they believe that their competitors engage in illegal activity, 35% have personally felt pressure to break the rules, and 30% have witnessed misconduct in the workplace. When asked if they would blow the whistle or report the misconduct, 87% of respondents said they would report wrongdoing given the protections and incentives such as those offered by the SEC Whistleblower Program.

A Strange Week

boat

Last week was a difficult week to be away from Boston on vacation. My family is usually out on Patriot’s Day Monday watching the Boston Marathon. We wander down our street and mingle with the other spectators, friends, and neighbors on Commonwealth Avenue at the start of the Newton hills.

Instead we spent the week in Charleston and Washington hearing about the events through the news, Facebook and Twitter. Some it was informative, and some was misinformed.

On sunny post-vacation Monday morning, everything feels the same in a city that felt such tragedy a week ago. That’s good.

I’m sure there are compliance angles about the story. You have to wonder what made the brothers go bad. You have to be concerned about investigation process. You have to be concerned about the abrogation of rights.

But today is really about getting back to normal.