Compliance Bits and Pieces for April 30


I was on vacation last week and apparently missed lots of big news. A volcano kept me from going to Europe, but nothing stopped the SEC from bringing a case against Goldman Sachs. Here are some recent compliance related stories that I found interesting.

The SEC and the Rogue Inspector General by J Robert Brown Jr. in Race to the Bottom

We were dismayed at the leaks that revealed confidential discussions taking place at a closed Commission meeting about the Goldman case. We are equally dismayed at the recent announcement by the SEC’s Inspector General that he intends to look into allegations that the Goldman case was deliberately timed to coincide with financial reform efforts.

Trust Quotes #10: David Gebler by Charles Green in Trust Matters

CHG: What’s the difference between ethics and compliance? And does anyone care about the former?

DG: Compliance is the adherence to prescribed standards of behavior. Compliance training educates people on what behavior is expected of them.

Ethics is the determination of whether people will engage in the desired behavior and what should be done to encourage people to do things they know they should do, but often don’t.

The SEC, The Goldman Case and Critics by Tom Gorman in SEC Actions

Sometimes the SEC is an aggressive market regulator and at other times it appears to be the gang that can not shoot straight. In filing the Goldman case, discussed here, it not only brought the most significant enforcement action in years, but also responded to critics who claim the agency can not take on the Wall Street giants, but only the little guys.

SEC versus Goldman Sachs in Ten Seconds into the Future

It is going to be hard for the SEC to establish that GS defrauded investors by its failure to disclose Paulson’s role and intentions in ABACUS. Why? Paulson wanted to make a bet. A bet is not a sure thing. If Paulson or GS could affect the outcome of the bet then that is another matter.

NYPD to Bicycles: We Got You Now by Scott Greenfield in Simple Justice

In related news, the NYPD determined that the possibility that a pipe bomb could be placed in a bicycle gave rise to the theft of hundreds along Houston Street in Manhattan, in anticipation of President Obama’s trip to Cooper Union last week in honor of Earth Day.

Hedge Fund Industry Will Be Under Close Scrutiny by SEC Division of Enforcement by Frederic D. Firestone and Miachael A. Unger of McDermott, Will & Emery

The hedge fund industry is a top programmatic priority of the U.S. Securities and Exchange Commission (SEC) Division of Enforcement. The Division is currently allocating unprecedented resources to hedge fund issues and investigations. This focus will intensify if hedge fund legislation is passed.

Bourke Appeals Ruling in Most Complex, Convoluted Case in FCPA History by Mike Koehler in Corporate Compliance Insights

An FCPA trial like Bourke’s is rare. An FCPA appeal is even more rare. An FCPA appeal to the influential Second Circuit is even more rare. …This post summarizes the FCPA related issues in Bourke’s brief.

Synthetic CDs, Explained in NPR’s Planet Money

On today’s All Things Considered: A Glossary of Financial Terms, Adam Davidson explains the difference between a mortgage-backed security, a CDO, and a synthetic CDO. Also, why shorts aren’t bad, and what a tranche is.