These are some of the compliance-related stories that recently caught my attention:
Frankenstein, Lance Armstrong and FCPA/Bribery Act Compliance by Tom Fox
So how does Frankenstein relate to compliance and ethics? Exhibit A for today is my fellow Texan Lance Armstrong. Yesterday, in the FCPA Blog I wrote about Armstrong and ethical values in the context of engaging in conduct which is so unethical, that you would be embarrassed to tell your children about it. Today I want to focus on some other aspects of Armstrong. Should he be analogized to Dr. Frankenstein, the Monster, or perhaps both?
Schapiro SEC Reign Nears End With Rescue Mission Not Done by Joshua Gallu and Robert Schmidt in Bloomberg
It’s not surprising that Schapiro’s frustrations boiled over that August evening. She has told friends that the late nights and almost constant policy battles have left her exhausted and eager to depart after the November election. Admirers and critics agree Schapiro rescued the agency from the threat of extinction when she was appointed by President Barack Obama four years ago. Still, she hasn’t fulfilled her mission — to overcome the SEC’s image as a failed watchdog by punishing those who steered the financial system toward disaster and by proving regulators can head off future breakdowns.
At an Investment Adviser Association (IAA) 2012 Compliance Workshop in Boston yesterday, IAA legal staff, law firm attorneys and Securities Exchange Commission (SEC) staff, including a regional representative from the SEC’s Office of Compliance Inspections and Examinations, discussed current developments in SEC exams, including current inspection priorities and issues for advisers to consider. As noted by each speaker from the SEC, their statements are their own views and not necessarily those of the SEC.
This post provides highlights of the discussions about 2012 SEC examinations, the new SEC “presence” examinations for newly-registered investment advisers and the anticipated focus of SEC investment adviser examinations in 2013.
Caution Advised for Newly Registered Advisers a client alert from Pepper Hamilton LLP
In addition, the SEC examination staff has indicated that meeting with the firm’s “leadership” during an examination is likely to be of special importance. The SEC examination staff views effective risk governance as including the following three essential lines of defense, which are in turn supported by senior management and the board of directors or the principal owners of the firm:
(1) The business is the first line of defense responsible for taking, managing and supervising risk effectively and in accordance with laws, regulations and the risk appetite set by the board and senior management of the whole organization.
(2) Key support functions, such as compliance and ethics or risk management, are the second line of defense. They need to have adequate resources, independence, standing and authority to implement effective programs and objectively monitor and escalate risk issues.
(3) Internal audit is the third line of defense and is responsible for providing independent verification and assurance that controls are in place and operating effectively.
FDIC Insurance End May Spark Money-Market Turbulence, Pimco Says by Liz Capo McCormick in Bloomberg
A potential flood of cash into the U.S. money markets if unlimited Federal Deposit Insurance Corp. coverage is allowed to lapse in December is creating investor concern and may lower short-term interest rates, according Pacific Investment Management Co. An emergency 2008 government provision providing unlimited insurance on certain bank accounts during the U.S. financial crisis to help prevent sudden withdrawals will expire at the end of the year unless Congress extends it. There is about $1.4 trillion sitting in banks’ non-interest-bearing transactions accounts holding more than $250,000, the previous insurance ceiling, which would become uninsured in January if Congress doesn’t act, FDIC data show.