Compliance Bricks and Mortar for January 25

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These are some of the compliance related stories that recently caught my attention.

The SEC at a Crossroads: Can Things Be Turned Around? by Broc Romanek in the CLS Blue Sky Blog

Over the past fifteen years, the SEC’s reputation has been routinely sullied – in the press, by the Courts and certainly in the halls of Congress. Although the mud slung at the SEC has intensified since the 2008 financial crisis and revelations of the Bernie Madoff Ponzi scheme, the Commission’s problems began well before then.  Particularly, the Enron and World.com scandals forced editors to move journalists into the financial realm where bashing the SEC became good copy. More and more, the SEC has been losing major decisions in the Courts.  Professor John Coffee of Columbia Law School recently indicated that “the SEC’s batting average is close to ‘zero for 2008’ in the few cases that it has taken to trial stemming from th[e] financial crisis.”   And the SEC’s major case losing streak extends well before the 2008 crisis. In addition, recently departed SEC Chairman Mary Schapiro was asked by Congress to testify at what is likely a record rate for a SEC official. Those hearings almost never went well for poor Mary.

Chesapeake Lighthouses and Lighting the Way for Compliance by Tom Fox

I thought about the story of these lighthouses and how they literally lit the way for sailors for over 200 years when I read an article in the Q2 issue of Ethisphere Magazine, entitled “Imagination Working with Integrity: How General Electric Creates a Global Culture of Ethics”, by Michael Price. Price discusses how General Electric (GE) has made “ethics and compliance a benchmark of its operations around the world, and is, in many ways the gold standard that other companies look to when it comes to modeling global compliance and ethics programs.”

SEC Faces A Swarm Of Legal Issues In Considering The Investor Advisory Committee’s Recommendations Concerning General Solicitation by Keith Paul Bishop in California Corporate and Securities Law

The SEC’s Investor Advisory Committee held another meeting last week with Elisse B. Walter making her first public appearance as SEC Chairman.  She and Commissioner Luis A. Aguilar had many kind words for the Committee’s recommendations with respect to lifting the ban on general solicitations in Rule 506 offerings.  The insouciance of their remarks, however, was in sharp contrast with the missed deadlines and many legal issues swirling around the Committee and its recommendations.

Final FATCA Regulations Released in Compliance Avenue

While the Final Regulations will be effective when published in the Federal Register (expected to occur on January 28, 2013), the timelines for the various due diligence, reporting and withholding provisions incorporate the delayed deadlines set out in IRS Announcement 2012-42 and are being phased in to allow firms to develop the necessary systems and procedures and to align them with any intergovernmental agreements.  For example, withholding agents, which may be U.S. or non-U.S. entities, will not be required to implement U.S. account verification procedures prior to January 1, 2014, and the deadline for foreign financial institutions (“FFIs”), generally including offshore investment vehicles, to file any required FATCA reports for fiscal years 2013 and 2014 will be March 31, 2015.

The Danger of a “Paper” Compliance Program by Michael Volkov in Corruption, Crime & Compliance

The FCPA Guidance contains many important compliance reminders which should be incorporated into every anti-corruption compliance program. Perhaps the most important observation included in the FCPA Guidance was the statement that:

DOJ and SEC have often encountered companies with compliance programs that are strong on paper but that nevertheless have significant FCPA violations because management has failed to effectively implement the program even in the face of obvious signs of corruption.

DOJ/SEC’s observation should be taken seriously. Every company should ask itself this basic question: Have we “effectively” implemented our compliance program?

Science Ruining Everything Since 1543
Science: Ruining Everything Since 1543

Saturday Morning Breakfast Cereal is a daily-updated comic strip that’s a GeekDad favorite. The author, Zach Weiner, announced a new collection of his science related comics are being published in a single book: Science: Ruining Everything Since 1543. He’s creating this book as a Kickstarter project. Give him money now, and you get the book when he’s done. Plus there’s more great stuff if you want to open your wallet a bit wider.

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