Compliance Building

LegallyMinded – The ABA Tries to Get Social

The American Bar Association launched LegallyMinded, a social networking site targeted at lawyers, paralegals, law librarians, law students and anyone else in the legal market. Being a student of social networks for lawyers, I thought I would sign up.

I encountered my first problem when they asked me to have a username rather than my real name. The statement was to use your real name. But they do not allow spaces in the username.Someone else had already grabbed the “dougcornelius” username. I am stuck with dougcornelius1.

The next problem was the lengthy six step sign-up process. No other site makes you add so much information. I singed in with my ABA identification so I would expect they would carry over my ABA information. I was wrong.

The next challenge was trying to connect with people. They offer an interactive map showing people with similar interests closer to you. It seemed to make little sense to me. Right next to me was someone who runs a small rural practice. Not me.

The site shows people with their username instead of their real names so it is hard to figure out who is who. My first search was to find out who joined as dougcornelius. No luck in being able to search the site for people by name. Of course their real name is hidden anyhow.

I moved on to the group function. There were two dozen in place, none of which held much interest for me. Five were focused on law students or law schools and three were focused on geography. So I set up a group for compliance since I noted Bruce Carton from Securities Docket and Compliance Week was on the site. I could not find a way to invite him to the group.

They have a blog feature so I tried that out. I copied in some posts from my Compliance Space blog to try out that feature. The publishing and editing of the blog platform is really poor.

The ABA Journal published a piece in the December 2008 issue: The ABA Gets Social.

“We set out to do something different,” says Fred Faulkner, the ABA’s manager of interactive services in Chicago. “We looked at a lot of the professional and social networks, and the gap we found was that there truly wasn’t a good site that was a cross between professional and personal networking.”

“We’re filling that gap by offering the best features of sites like LinkedIn and Facebook and adding a bunch of content from the ABA and other high-quality content sources.”

I think they missed the mark with LegallyMinded.

Bob Ambrogi is trying to test it out, but he can’t even log in: ABA Launches (Buggy) Networking Site.

Originally published on KM Space.

Things You Should Never Put in an E-Mail

Molly McDonough of the ABA Journal puts together a list of things you should never put in an email, borrowing from Roger Matus‘ 10 Things Never To Put In Email:

“I could get into trouble for telling you this, but…”
“Delete this email immediately.”
“I really shouldn’t put this in writing.”
“Don’t tell So-and-So.” Or, “Don’t send this to So-and-So.”
“She/He/They will never find out.”
“We’re going to do this differently than normal.”
“I don’t think I am supposed to know this, but…”
“I don’t want to discuss this in e-mail. Please give me a call.”
“Don’t ask. You don’t want to know.”
“Is this actually legal?”

If you find yourself typing one of these phrases, perhaps you should delete the entire email. These are catchphrases often used by e-discovery professional to find smoking gun emails.

What are WIFs?

My notes from the EthicsPoint webinar on intake models and the value of web intake forms. The presenter was Erin Watkinson a business solutions consultant at EthicsPoint.

A custom web intake form is a replacement for paper based forms. You can use the web to report on issues.

Reporting should encourage employees to first go to a supervisor and not go anonymously right away.

A custom WIF is a case intake mechanism for non-licensed users. Its a custom report form that you can brand and format as needed or desired. The WIF can eliminate the re-keying of data. The form dumps the information into a central database. in a WIF you can have explanatory text, images, fields and/or links to other documentation. The WIF is mapped to fields in the EthicsPoint Event Manager. You can create custom print forms to match the look and feel of the WIF. All of the data elements are available for reporting and analytics. There is also branching logic available depending on how questions are answered.

Erin then showed an example of an HR Management report. This highlighted the branching features. Another demo was the Hospira HR system. They used the system for people to ask questions. The system tracks the questions and the answers given.

Investigating Suspected Financial Accounting Irregularities

I watched the webinar from EthicsPoint and Kroll on Investigating Suspected Financial Accounting Irregularities. Jed Davis is the Managing Director in the Business Intelligence and Investigations Division of Kroll and Dave Hess is the Managing Director of the Forensic Accounting and Litigation Consulting Division of Kroll.

Dave emphasized the need to have a plan in place to deal with an investigation.

In Planning the investigation:

Establish an independent team with required expertise:
Identify and preserve relevant documents and evidence
Determine the scope and timing of investigation
Develop work plan and approach
Establish internal communication protocol

Some key objectives and considerations are:

to ensure and maintain rigor and credibility of investigation
to work with outside counsel to establish and maintain procedures to protect attorney‐client privilege
communicate with the investigating parties and stakeholders.
Establish procedures to avoid “scope creep”
Determine if alleged misconduct was an isolated act or a systemic problem
Establish verifiable chronology of policies, decision‐making and actions in issue
Identify internal control deficiencies and make recommendations for improvements
Report investigation results to stakeholders

Presentation slides for Investigating Suspected Financial Accounting Irregularities.(.pdf)

Computer Illiteracy Is No Defense For Spoilation

You can’t put your hands in the area and say you do not know anything about computers. The Oklahoma Supreme Court recently issued an opinion that a litigant was subject to sanctions: Barnett v. Simmons, 2008 OK 100, 11/10/2008).

The court looked to the standard for sanction in Oklahoma and found no requirement of willfullness. Nor did the federal rule 37(b)(2) require willfullness. The rules merely provide for sanctions if a party has “failed to obey” an order of the court. Willfullness just goes to the severity of sanctions.

For records keeping, you need comply with standards regardless of your individual capability.

Open Letter to CEOs of SEC-Registered Firms

sec-seal The SEC’s Office of Compliance Inspections and Examinations has published an letter to CEOs of SEC Registered Firms about the importance of compliance programs during this time of “financial and market turmoil.”

December 2, 2008

Dear CEO of SEC-Registered Firm:

During this time of financial and market turmoil, the Office of Compliance Inspections and Examinations of the Securities and Exchange Commission reminds leaders of SEC-registered firms, including broker-dealers, investment advisers, investment companies and transfer agents, of the critical role played by your firm’s compliance programs in helping to meet your obligations under the securities laws. Your firm’s compliance function is critical to assure that your operations comply with the law and rules for industry participation and to ensure that the interests of your customers, clients and shareholders are protected. Moreover, compliance is a vital control function that helps to protect the firm from conduct that could negatively impact the firm’s business and its reputation.

While many firms are considering reductions and cost-cutting measures, we remind you of your firm’s legal obligation to maintain an adequate compliance program reasonably designed to achieve compliance with the law. As SEC Chairman Cox noted recently, “[E]xperience has taught us again and again that giving short shrift to regulatory compliance subjects a company’s investors, employees, management, directors, and every other stakeholder to unacceptable risks….[C]ompliance programs have made huge strides in recent years in becoming more formalized and more robust…. Now more than ever, companies need to take a long-term view on compliance and realize that their fiduciary responsibility requires a constant commitment to investors. That means sustaining their support for compliance during this market turmoil, and beyond it as well.” http://www.sec.gov/news/speech/2008/spch111308cc.htm

Firms must be vigilant and proactive in preventing, detecting and correcting problems that could occur. Firms should pay attention to ensuring that their interactions with investors meet high standards, that sales and trading practices are appropriate, that financial, valuation and risk controls are followed, and that all disclosure obligations are met — as well as meeting all other obligations in conformity with the securities laws.

By fulfilling their obligations, regulated firms in the financial services industry can help to restore and bolster public confidence in the fairness and integrity of our markets and market participants. Providing adequate resources to compliance programs and functions and ensuring that CCOs and compliance personnel are integrated into the activities of the firm are essential to that process.

Thank you for your focus on this important matter.

Very truly yours,

Lori A. Richards
Director

http://www.sec.gov/about/offices/ocie/ceoletter.htm

Core Initial Request for Information from Investment Advisers

sec-seal The SEC’s Office of Compliance Inspections and Examinations has published its Core Initial Request for Information for Investment Adviser Examinations.

The initial phase of an examination includes a review of the firm’s business and investment activities, its organizational affiliations and its corresponding compliance policies and procedures. The staff will request information and documents and speak with the firm’s employees to ensure an understanding of the firm’s business and investment activities and the operation of its compliance program. Using the information obtained, the staff will assess whether the firm’s compliance policies and procedures appear to effectively address the firm’s compliance risks. This work includes testing the firm’s compliance program in particular areas.

The following points provide an overview of the core information the staff requests:

Certain general information to provide an understanding of the firm’s business and investment activities, including organizational charts, demographic and other data regarding advisory clients, and a record of all trades placed for its clients (trade blotter).

Information about the compliance risks that the firm has identified (e.g., an inventory of compliance risks) and the written policies and procedures the firm has established and implemented to address each of those risks to provide an understanding of the firm’s compliance risks and corresponding controls.

Documents relating to the results of and output from the various transactional (quality control) and period (forensic) testing conducted to provide an understanding of how effectively a firm has implemented its compliance policies and procedures. This includes the results of any compliance reviews, quality control analyses, surveillance, forensic or transactional tests the firm has used to determine if activities have been performed as expected and to identify activities or transactions that have fallen short of or breached related policies and procedures.

Information regarding the results of any tests and follow-up actions taken by the firm to address shortfalls or breaches revealed by such tests to provide an understanding of steps taken by the firm to address the results of compliance reviews, quality control, forensic or transactional tests conducted. This information might include, for example, warnings to or disciplinary action of employees, changes in policies or procedures, redress to affected clients, or other measures.

Information to perform testing for compliance in various areas.

http://www.sec.gov/info/cco/requestlistcore1108.htm

Public Hearing on Massachusetts Data Privacy Regulations

The Massachusetts Office of Consumer Affairs and Business has published a Notice of Public Hearing on 201 CMR 17.00, Standards for the Protection of Personal Information of Residents of the Commonwealth. (.pdf)

The hearing is on Friday, January 16, 2009 at 2:00 pm in Room No. 5-6, Second Floor of the Transportation Building, 10 Park Plaza, Boston.

LegallyMinded – The ABA Tries To Get Social

They have a blog feature so I tried that out. I copied in some posts from my Compliance Space blog to try out that feature. The publishing and editing of the blog platform is really poor.

The ABA Journal published a piece in the December 2008 issue: The ABA Gets Social.

“We set out to do something different,” says Fred Faulkner, the ABA’s manager of interactive services in Chicago. “We looked at a lot of the professional and social networks, and the gap we found was that there truly wasn’t a good site that was a cross between professional and personal networking.”“We’re filling that gap by offering the best features of sites like LinkedIn and Facebook and adding a bunch of content from the ABA and other high-quality content sources.”

I think they missed the mark with LegallyMinded.

Bob Ambrogi is trying to test it out, but he can’t even log in: ABA Launches (Buggy) Networking Site.

Originally posted in KM Space, my old blog on knowledge management, enterprise 2.0, and social networking for lawyers.

Is CalPERS a Sovereign Wealth Fund?

Ashby H. B. Monk wrote Is CalPERS a Sovereign Wealth Fund? (He ends up saying no.)

Sovereign Wealth Funds have come under increased scrutiny with countries concerned that an investment by a SWF could be used as a political tool and not a mere investment. The underlying concern is that many of the SWFs come from countries that at times are hostile to the United States and often lack a substantive rule of law. Ashby notes that there is some confusion as to what constitutes a sovereign wealth fund.

While all seem to agree that the China Investment Corporation and the Abu Dhabi Investment Authority are SWFs, there is a lively debate as to whether public pension funds, such as the California Public Employees Retirement System (CalPERS), are also SWFs. While CalPERS itself is adamant that it is not, others disagree. The stakes are high for a fund like CalPERS, as the SWF label could come with a high cost.

Ashby starts with several of the SWF definitions and creates this definition:

SWFs are government-owned and controlled (directly or indirectly) investment funds that have no outside liabilities or beneficiaries (beyond the government or the citizenry in abstract) and that invest their assets, either in the short or long term, according to the interests and objectives of the sponsoring government.

Based on this definition, Ashby concludes that CalPERS is not a SWF.

Ashby H. B. Monk is a Research Fellow at the Center for Retirement Research at Boston College (CRR) and the University of Oxford.