Compliance Bits and Pieces for May 27

Here are some compliance-related stories that recently caught my eye:

Gold is Not an Investment by Carl Richards in the NY’s Bucks

Gold is not an investment. It’s a speculation. Investments are made by evaluating underlying value. Speculative bets are made by looking at the price of something and simply hoping the price goes up. Investing is about value; gambling is about price. Gold has no real underlying value. I know there is a market for it. I know it is real, just like real estate was real in 2007.

Historical Echoes: Communication before the Blog… in the Liberty Street Economics blog of the Federal Reserve Bank of New York

Over the years, the Federal Reserve System has used many methods to communicate about the role it plays in support of stable prices, full employment, and financial stability. Current communication tools include the new press conferences by the Chairman, speeches by Bank presidents, public websites, economic education programs, local outreach efforts, publications, and blogs like this one.

Ninety years ago, however, the options were more limited. The Fed was still new and the nation’s economy was plagued by a growing number of bank failures. The five posters below (from the mid-1920s), with their images of strength and stability, were part of a larger series designed for display at member banks. They were likely intended to inform the public about the Federal Reserve System and foster confidence in its member banks.

Hedge Funds and Advertising: “No advertising” rules more confusing than ever by Judy Gross in Hedge Rows

In the category of “Laws that Haven’t Caught Up with the 21st Century”, the internet aspects of the rules that prohibit hedge fund advisers from “advertising” may come in first place. The SEC rules only allow hedge funds to be offered on a “private placement” basis. This means no general solicitations are allowed. While this is understandable in regard to some venues (think giant billboard in Times Square), when it comes to the internet, these rules may leave you scratching your head.

Failing to Clarify: The Courts Try to Define “Foreign Official” in FCPA Cases by Michael Volkov in the FCPA Compliance and Ethics Blog

In three separate cases, Lindsey Manufacturing, O’Shea and Carson, defendants filed motions to dismiss challenging the DOJ’s interpretation of “foreign official” under the FCPA. Two of these cases have now been resolved and the Justice Department’s position has been upheld. While doing so, the courts have launched separate fact-specific tests to “guide” actors in resolving how the law applies to state-owned enterprises.

The SEC Proposes Rules for Disqualification of Felons and Other Bad Actors from Rule 506 Offerings in 100 F Street

Section 926 requires the adoption of rules disqualifying an offering from reliance on Rule 506 of Regulation D when certain felons or other “bad actors” are involved in the offering. Rule 506 is by far the most widely claimed exemption under Regulation D. For the 12 month period ended September 30, 2010 the Commission received 17,292 initial filings for offerings under Regulation D, of those 16,027 claimed a Rule 506 exemption.


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