Month: November 2009

New Workplace Posters – EEO is the Law

EEO Law

Starting November 21, 2009, you need a new workplace poster: EEO is the Law.pdf-icon

There are two new federal workplace laws the Genetic Information Non-Discrimination Act and the ADA Amendments Act. Federal law requires all employers covered by the federal anti-discrimination laws (those with 15 or more employees) to post multilingual notices describing the federal laws against job discrimination.

If you want a fresh poster you can use print out and use the “EEO is the Law“pdf-icon poster. If you already have a EEO poster, you can just add the “EEO is the Law” Poster Supplement.pdf-icon

References:

Federal Regulators Issue Final Model Privacy Notice Form

Eight federal regulatory agencies today released the final model privacy notice form. It’s supposed to make it easier for consumers to understand how financial institutions collect and share information about consumers. Under the Gramm-Leach-Bliley Act, institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices. The two model form issued today can be used by financial institutions to comply with these requirements. One form allows consumers to opt out of sharing of personal information. The other form has no opt-out.

Back in April, the Securities and Exchange Commission reopened the period for public comment because they tested the model notices and found weaknesses with the current form.

The final model privacy form was developed jointly by the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission. There is also a joint release of the rule that goes along with the Final Model Privacy Form under the Gramm-Leach-Bliley Act

References:

Fund Registration Act Will Cost the SEC $140 Million

CBO Congressional budget office

The Congressional Budge Office released a cost estimate of H.R. 3818, the Private Fund Investment Advisers Registration Act of 2009. Obviously, there will be an additional cost to fund managers that need to register with the SEC and operate under the SEC rules and oversight. There is also a real cost to the SEC (and therefore the taxpayers) for supervision of the newly regulated fund advisers.

The CBO estimates that the SEC will need an additional $140 million over the 2010-2014 period to implement the provisions of H.R. 3818. That means 150 employees new SEC employees by fiscal year 2011 to write regulations and undertake the additional examination and enforcement activities required by the bill. That’s about a 4 percent increase over the SEC’s 2009 staffing levels. The $140 million is to cover the cost of salaries and benefits, overhead, preparation of reports, and upgrades to information technology systems for the new employees.

The CBO report estimates that H.R. 3818 would result in 1,300 new registrations. That excludes venture capital funds which are exempted under this bill, but does include private equity firms that are exempted under the Senate version of the Private Fund Investment Advisers Registration Act. Doing the math, that results in $108,000 in additional costs for each new fund manager that registers.

On the manager side, the CBO estimates that it will only cost $30,000 for each fund manager to comply with Private Fund Investment Advisers Registration Act of 2009.

References:

New Anti-Bribery Compendium

trace-compendium-logo

Trace International has launched an online, fully-searchable database containing summaries and analyses of international anti-bribery enforcement actions and investigations in the U.S. and throughout the world. The Trace Compendium summaries are searchable by name or by numerous other criteria, including year, substantive criteria, enforcement authority, and enforcement result.

Want the actions involving officials in Thailand?
You can see the actions involving Thailand Officials.

Want the actions from the Tokyo District Public Prosecutors Office?
You can find the actions from the Tokyo District Public Prosecutors Office.

Want all the cases involving property development?
You can search for the cases involving property development.

It’s a fantastic resource if you are looking at bribery and corruption cases.

References:

  • The Trace Compendium
  • Trace Launches Anti-Bribery Compendium from the Wrage Blog

Criticism and Praise

drunkards walk

Do criticism and praise work to affect performance?

Leonard Mlodinow briefly addressed this topic in The Drunkard’s Walk: How Randomness Rules Our Lives. He explores the studies of Daniel Kahneman who was lecturing the Israeli air force flight instructors on behavior modification. Kahneman was trying to make the point that rewarding positive behavior works, but punishing mistakes does not.

One of the students called him out. He had praised people warmly for beautifully executed maneuvers and the next time they do worse. He screamed at people for badly executed maneuvers and they improve the next time. The other flight instructors agreed. But Kahneman’s research demonstrated that rewards worked better than punishment.

So what was going on?

Regression toward the mean. In a random series of events, an extraordinary event is most likely to followed by an ordinary one. Due purely to chance, it’s hard to have two extraordinary events in a row.

The fighter pilots have a certain level of ability. An extraordinarily good performance is most likely to be followed by an ordinary performance. So the praise would seem to fail to maintain the extraordinarily good performance. Similarly, an extremely bad performance is most likely to be followed by an ordinary performance, which in this case would be better than the bad performance. So the screaming criticism would seem to cause an improvement in performance.

So it appears that the criticism does some good and the praise does no good. What is really happening is a misconception of uncertainty and probabilities. The connection between actions and results is not as direct as we might think.

In compliance, we eschew lots of data. It’s good to step back every now and then to think about the implications of the data and the underlying assumptions.

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:

It’s Tough Being Green… And Charged With Fraud

mantria

Mantria Corporation is a “diversified and progressive business enterprise that seeks out emerging sectors with a passionate focus on sustainability and the commercialization of socially responsible products and services.” At least that’s what their website says.

The SEC says: “In reality, the only green these promoters seemed interested in was investors’ money.”

According to the latest SEC press release, green is the new fraud. The feds charged Wayde and Donna McKelvy and Mantria Corporation with defrauding investors to invest in green initiatives like a supposed “carbon negative” housing community in rural Tennessee and a “biochar” charcoal substitute made from organic waste.

The SEC alleges that the “green” representations were laced with bogus claims, and investors were falsely promised enormous returns on their investments ranging from 17 percent to “hundreds of percent” annually. In fact, Mantria’s environmental initiatives have not generated any significant cash, and any returns paid to investors have been funded almost exclusively from other investors’ contributions.

The SEC also charged Troy Wragg and Amanda Knorr along with a related company called Speed of Wealth. According to the website: “Speed of Wealth and Mantria have joined forces once again to save the environment while helping middle America secure its financial future!”

For me, I scratch my head wondering why they have all the symbols for a half dozen Chamber of Commerce sites on their webpage. I found it really odd that these included the American Chamber of Commerce in Shanghai and the London Chamber of Commerce and Industry.

I suppose slapping some labels on the webpage is supposed to add some credibility. Of those sites, only the Sequatchie County-Dunlap Chamber of Commerce lists them as members.

Mantria also state that they are an “Accredited Business” with the Better Business Bureau. It says so on their home page. When I searched the Better Business Bureau site (DC Eastern PA) for Mantria it still had them listed as an accredited business and gives them a rating of “A-. ” BB Accreditation only means that Mantria hass made a commitment to make a good faith effort to resolve any consumer complaints and paid a fee for accreditation, review and monitoring.

I also checked out the Speed of Wealth on the Denver Better Business Bureau. They have them listed as an “Accredited Business” with a rating of “A.”

Of course, none of the SEC claims have yet been proven. I wonder the Better Business Bureau monitors SEC claims?

SEC Press Release: SEC Charges Promoters of “Green” Investments With Operating $30 Million Ponzi Scheme Based in Denver Area

Is PCAOB Constitutional?

vanderbilt law review

Now that Jones v. Harris has been argued, we have to sit and wait for the decision. But there is another compliance case coming up for argument in front of the Supreme Court: Free Enterprise Fund v. PCAOB.

The PCAOB case is much sexier than the Jones case since it involves the president’s constitutional powers of appointment and the separation of powers under the Constitution. (At least as far as compliance is sexy.)

The November 2009 edition of the Vanderbilt Law Review has a quartet of articles that focus on the PCAOB case and the underlying constitutional issues:

Congress created the Public Company Accounting Oversight Board PCAOB under the umbrella of the Securities and Exchange Commission. If PCAOB is a government agency and its members are officers, then the appointment of the PCAOB is very odd. The President can appoint the SEC Commissioners, but only remove them “for cause.” Then in turn the SEC Commissioners appoint the PCAOB members.

The issues arises from the Appointments Clause of the U.S. Constitution U.S. CONST. Art. I, § 2, cl. 2;:

[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

Are the PCAOB‟s Members “principal officers” of the United States, whose appointment must, be made by presidential nomination and Senate approval? Even if they are “inferior officers” of the United States, does PCAOB violate the Constitution‟s arrangement for the appointment and removal of such officers because they are put entirely in the hands of the SEC, an independent regulatory commission, beyond the effective reach of presidential oversight?

There are lots of interesting issues discussed in these articles and lots of interesting things the Supreme Court could do in its opinion for the PCAOB case. It could have broader implications to other government commissions, accountants and compliance professionals.

PBWorks and Real Time Collaboration

PBworks_LogoPBWorks has announced a “Real-time Collaboration Update”  which brings integrated Instant Messaging collaboration, Live Notifications (activity streams), Live Editing (rather than standard wiki asynchronous editing) and integrated Voice Collaboration with on-demand voice conferencing.

This is a big step up. Instead of being a  mere wiki, the platform now offers different ways to collaborate, but still captures the information in the platform. I assume that is one of the reasons they changed their name from PB Wiki to PB Works.

PB Wiki was the first wiki I ever used. A group used it to plan an international meeting of law firm knowledge management leaders. Now I regularly use the PB Works tools as part of GeekDad information management process.

While I was at the Enterprise 2.0 Conference in San Francisco, I spent a few minutes with a bunch of people from PB Works: Jim Groff, the CEO;  Chris Yeh, Vice President, Marketing ; Glen Hoffman, Sales Engineer; Greg lelli, Legal Sales Specialist; and Kristine Molnar, Community Evangelist.

One of the drawbacks of a wiki was the check-in/check-out process. Only one person could edit a wiki page at a time. Google Docs (and to a lesser extent Google Wave) showed us that you can have multiple people editing at the same time and speed up the collaboration process even more.

The PB Works team gave me a demo of the new tools and it was pretty cool. If you are editing a page and realize that you need input of other team members, you can summon them to the page using IM Collaboration, start a Live Editing session, and use Voice Collaboration to initiate an instant conference call. You can do this all in a fraction of the time it would take to set up a web conference, the call line, and communicate the details to everyone.

Since PBworks hosts the  information, you can be up and running in a few minutes.

The SEC is Going After the Geeks

sec-seal

First, Bernie the boss turned himself in, saying he did it all by himself. Nobody believed that, including the SEC. So the SEC went after Madoff’s right-hand man, DiPascali, and Madoff’s accountant, Friehling. Now the SEC is going after the geeks.

The Securities and Exchange Commission charged two computer programmers for their role in helping Bernie Madoff cover up the fraud at Bernard L. Madoff Investment Securities LLC for more than 15 years. The SEC alleges that Jerome O’Hara of Malverne, N.Y., and George Perez of East Brunswick, N.J., provided the technical support necessary to produce false documents and trading records, and took hush money to help keep the scheme going.

“Without the help of O’Hara and Perez, the Madoff fraud would not have been possible.They used their special computer skills to create sophisticated, credible and entirely phony trading records that were critical to the success of Madoff’s scheme for so many years.”

O’Hara and Perez wrote programs that generated many thousands of pages of fake trade blotters, stock records, Depository Trust Corporation (DTC) reports and other phantom books and records to substantiate nonexistent trading. Bernie used a separate computer internally known as “House 17” to process advisory account data. The SEC alleges that O’Hara and Perez knew that the House 17 computer was missing a host of functioning programs necessary for actual securities trading and reporting. According to the SEC’s complaint, they recognized that the trades being entered into House 17 and the account statements and trade confirmations being sent to investors did not reflect actual trades.

According to the complaint, the two geeks tried to escape from Bernie’s clutches. Apparently a salary increase of 25% and a $60,000 bonus was enough to buy their silence.

References: