These are some of the compliance-related stories that recently caught my attention.
Madoff: Don’t let Wall Street scam you, like I did By Sital S. Patel in MarketWatch
After all those years of racing to remain a step ahead of the authorities, Madoff has a few ideas about how the market can be made more fair for retail investors. Among them: The Securities and Exchange Commission should be beefed up, hedge funds need to be registered and brokerages should have independent custodians.
The Separation of Investments and Management by John Morley in the CLS Blue Sky BLog
Every type of enterprise that we commonly think of as an investment fund—including hedge funds, private equity funds, venture capital funds, mutual funds and closed-end funds—adopts a pattern of organization that I call the “separation of investments and management.” These enterprises place their securities, currency and other investment assets and liabilities into one entity (a “fund”) with one set of owners, and their managers, workers, office space and other operational assets and liabilities into a different entity (a “management company” or “adviser”) with a different set of owners. Investment enterprises also radically limit fund investors’ control. A typical hedge fund, for example, cannot fire and replace its management company or its employees—not even by unanimous vote of the fund’s board and equity holders.
National Financial Capability Study from the FINRA Investor Education Foundation
The 2012 National Financial Capability Study (NFCS) presents new survey findings that underscore the need to ensure all Americans have access to the education, resources and tools they need to manage their money with confidence. This second iteration of the study builds on the findings and benchmarks established in 2009 and adds to the growing conversation about how individuals can best manage and make decisions about their financial resources.
Sen. Warren Asks SEC for Any Research on Benefits of ‘No Admission’ Settlements by Bruce Carton in Compliance Week
At the hearing, new SEC Chair Elisse Walter began to testify about how the SEC “look[s] at the distinction between what we could get if we go to trial, and what we could get if we don’t,” but she was shut down by Sen. Warren who apparently did not want to get sidetracked. In a letter (via World of Securities Regulation) dated May 14, 2013, however, Sen. Warren asked White, as well as the heads of the Federal Reserve and the DOJ, to provide more information on this point. Reiterating her concern that a regulator that is unwilling to actually take large financial institutions to trial has far less leverage in settlement negotiations, Warren asked White, Ben Bernanke and Eric Holder to answer the following question:
Have you conducted any internal research or analysis on trade-offs to the public between settling an enforcement action without admission of guilt and going forward with litigation as necessary to obtain such admission and, if so, can you provide that analysis to my office?
Codes of Conduct: what are they good for? by Catherine Choe in FCPA Compliance and Ethics Blog
I had an interesting and frustrating conversation with a relative about the work that I do, which includes working with companies on refreshing their Codes of Business Conduct. Despite working at a large, publicly traded, multinational corporation, I had to describe the Code twice before he recalled having certified reading the one at his company. It got me thinking about why we have Codes and whether they’re doing an adequate job serving their purposes.
When a CCO becomes a Whistleblower (It Usually Ends in Tears) by Donna Boehme in the Whistleblowers Protection Blog
This story is about Paul Moore, the former chief risk and compliance officer for HBOS, fired in 2004 for his warnings to the bank’s C-Suite and Board of its excessive risk taking culture. Paul says the release of the Parliamentary report, plainly called “An Accident Waiting to Happen,” was like the “parting of the Red Sea” for him. Paul is Exhibit A for why former federal prosecutor Michael Volkov called the CCOs the “Person of the Year” in 2011 and has described this difficult role as the “unsung hero” of the corporate landscape