Compliance Bricks and Mortar – John McCain Edition

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


Standardizing IRR Calculations and Related Disclosures – The SEC Continues to Focus on Private Equity Practice by Vivek Pingili, Esq.

In recent years the SEC has closely examined private equity fund performance and reporting during routine exams. The importance of this topic came to the forefront in December 2016 when the SEC subpoenaed Apollo Global Management, LLC (“Apollo”) for additional information on Apollo’s IRR calculation methodologies.[1] This SEC enquiry has caused a number of private equity firms to review their IRR calculations and disclosures. [More…]


SEC’s Reg Flex Agenda: Where Did Those Dodd-Frank Rules Go? by Broc Romanek in The CorporateCounsel.net

Normally – as I have blogged many times (here’s one) – the SEC’s Reg Flex Agendas tend to be “aspirational.” But perhaps this time is different.

As part of a federal agency-wide reveal of the new Administration’s plans for rulemaking, the SEC posted the latest version of its Reg Flex Agenda last week. This agency coordination is the Administration’s “unified agency regulatory agenda.”

This Reg Flex Agenda is notable for what it omits – get a load of what’s not on the list: …. [More…]


Cheating the Algorithm: The New “Pump and Dump” Fraud by John C. Coffee, Jr. in the CLS Blue Sky Blog

Today, an analogous new technological development is inviting new forms of fraud. The new development is algorithmic trading (which by some estimates now accounts for 30 percent of stock trading[1]). Computers are programmed to trade in a micro-second once they detect certain triggering quantitative data. Obviously, this is how high frequency traders have come to dominate the market.

But can the computer be duped? The answer is: definitely and sometimes easily. A pending SEC litigation shows how the contemporary financial world in its hunt for quantitative “Big Data” exposes itself to fraudsters. In SEC. v. Lidingo Holdings, LLC,[2] a pending action in the Southern District of New York, the defendant described itself as a “social media consultant,” but the SEC characterized it instead as a “stock promotion firm” that received high fees for commissioning and posting articles (and even tweets) about its clients written by a variety of ghost writers whom the firm commissioned and paid.  [More…]


Are We in a Compliance Arms Race? by Azish Filabi in Compliance & Enforcement

Over the past few decades, while companies have invested in building and expanding their compliance programs, researchers, practitioners and employees in some companies attest to a lack of corresponding reduction in misbehavior.[1]   Some even believe that the compliance programs may be a cause of increasing misbehavior.  This begs the question: Are we in a compliance arms race?  Mind Gym, Inc., a behavioral science oriented training firm has coined this term to refer to the cycle of increasing investment in compliance programs, which increases the demand for competent professionals, and the cost of doing business, while the levels of misbehavior remain unchanged, thus spurring calls for additional internal compliance controls.[2] [More…]


On Pan-Mass Challenge weekend, August 4 – 6, I will saddle up to ride with 6,200 other cyclists to raise money for life-saving cancer research and treatment at Dana-Farber Cancer Institute. 100% of your donation will go to cancer research and treatment at Dana-Farber Cancer Institute through its Jimmy Fund. I have made a personal commitment to raise $8000.00. I hope, that as a reader of Compliance Building, you will support my fundraising effort. You can donate through any of the following links:

Thank you,
Doug