Compliance Bricks and Mortar for January 4

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These are some of the compliance related stories that caught my attention during this first week of 2013 and last week of 2012.

Khuzami Posts Blog Comment Defending SEC’s Record, Policies by Bruce Carton in Compliance Week

In a December 27 post, Johnson wrote that as Robert Khuzami will reportedly soon step down as Director of Enforcement at the SEC, “the Obama administration should press for the appointment of Neil Barofsky, former special inspector general for the Troubled Asset Relief Program, to this position.” …

A day later, on Friday, December 28 at 5:55 pm, someone identified as “Robert Khuzami” fired back in the comments section of the blog post. (Although it is, of course, true that “On the Internet, nobody knows you’re a dog,” in this case an SEC spokesman confirmed to me that the comment was from Khuzami himself).

DOJ and SEC make Risk Assessment the Key to Compliance Effectiveness
by Jim Bowers in Corporate Compliance Insights

Effective compliance programs are grounded on a company’s periodic assessment of risks. This premise underpins the compliance standards delineated in the Federal Sentencing Guidelines, the recent DOJ/SEC guidance and other federal regulatory guidelines. A compliance risk assessment provides an early warning process for detecting compliance threats, thereby enabling a company to address compliance problems before they become violations of law. The risk assessment process identifies and assesses compliance risks, evaluates controls put in place to mitigate those risks, and monitors the effectiveness of controls on an ongoing basis.

SEC Report Reviews Work of Enforcement Division by Thomas O. Gorman in SEC Actions

The SEC’s 2012 Agency Financial Report details its performance over the last government fiscal year which ended September 30, 2012. Two sections are devoted to the enforcement program, one which is an overview of the Division’s work and an Appendix which provides additional detail.

In discussing the work of the Enforcement Division the Report emphasizes what it calls the “full spectrum” of the program, referring to the different areas in which actions were brought in compiling a near record setting number of cases filed. Last year the Division brought 734 actions, second only to the record 735 initiated the prior year. Collectively, the actions resulted in about $3.1 billion in orders for disgorgement, penalties and other relief. The Division also made its “first whistleblower payout to an individual who provided high-quality significant information that helped stop a multi-million dollar fraud.” The Division clearly expects more from this program in the future.

Top Ten D&O Stories of 2012 by Kevin LaCroix in The D&O Diary

The year just finished included dramatic and important developments involving elections, tragedies and natural disasters. While there was nothing in the world of directors’ and officers’ liability to match this drama, it was nevertheless an eventful year in the world of D&O, with many significant developments. By way of review of the year’s events, here is The D&O Diary’s list of the Top Ten D&O stories of 2012….

Corp Fin’s New Position on Use of “Vote All of Board’s Recommendation” Button by Broc Romanek in TheCorporateCounsel.Net

Recently, Broadridge sent this letter to companies explaining a big change going forward over how voting choices will be displayed. Here is an excerpt from the letter:

Broadridge, transfer agents and other service providers in the proxy distribution industry were recently informed of a new interpretive position being taken by the staff of the SEC that will affect the 2013 proxy season. Under that position, Broadridge and other service providers can no longer present shareholders with a “Vote with the Board’s Recommendations” button when soliciting proxies or voting instructions online, over the telephone, or through Broadridge’s unique mobile voting platform, unless they are also presented with a “Vote Against the Board’s Recommendations” button.

Former SEC Chair Pitt Says Two No-Action Letters Block SEC Review of Outsourcing Voting to Proxy Advisory Firms in Jim Hamilton’s World of Securities Regulation

In remarks at a Chamber of Commerce seminar on the role of proxy advisory firms, former SEC Chair Harvey Pitt said that, while the outsourcing of shareholder voting authority to proxy advisory firms is a breach of an existing fiduciary obligation, the chances of  SEC enforcement actions in this area are slim to none. This is because of two SEC no-action letters issued in 2004, Egan-Jones Proxy Services and Institutional Shareholder Services, which effectively encouraged  the outsourcing of voting authority to proxy advisory firms.

Keyword: Seizure by Scott Greenfield in Simple Justice

Tim Hamilton, artist of the Eisner-nominated adaptation of Ray Bradbury’s Fahrenheit 451, had his advance payment for the upcoming graphic novel ARMY OF GOD, a non-fiction telling of Joseph Kony’s activities in the Congo, seized by the OFAC under suspicion that the money was being laundering for a terrorist organization… The federal banking authority, which monitors every wire, foreign and domestic, apparently seized the funds due to the title of the book, ARMY OF GOD, which threw up a red flag.

Corporate Compliance in 2013: All About Seeing the Data by Matt Kelly in Compliance Week

In one form or another, I hear this complaint regularly: that compliance departments cannot achieve the visibility into corporate operations that they need if they’re to do their jobs effectively. Once upon a time, when we were still mired in a more paper-centric world, the complaint was that other business departments never took compliance seriously. Now (mostly) everyone does, but in the data-centric world, nobody really knows the full scope of what’s going on at the business anyway.
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