Positioning yourself for tomorrow’s social media today: Practical approaches for legal professionals

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Join me for a 60-minute Webinar at 11:00 am Eastern time on Wednesday, December 9. It’s free, sponsored by Martindale-Hubbell Connected.

The webinar will give you ‘real world’ examples of social media tools helping legal professionals become more efficient and productive. The panelists will also discuss the future of social media use – will we soon say goodbye to email?

The webinar panel includes a range of legal professionals and social media experts from across the globe:

You can register for the webinar here.

Learn real world examples of how social media tools help legal professionals be more efficient. Explore the future of social media.
Topics:

  • Time management: Finding the time.
  • Personal and professional development: Ways to research, share and learn by collaboration.
  • Future uses by of social media

Compliance Bits and Pieces for Nov. 20

Here are some interesting stories from the past week:

How Presenters Can Deal With A.D.D. Audiences by Charles H. Green for Trust Matters

In other words—the heads-down twittering was definitely multi-tasking, but that doesn’t mean there was no dialogue going on. In fact, there was a ton of dialogue.

More content per minute flowed through that room than if everyone had hung on every word a speaker said. One speaker is limited by the human ability to enunciate sounds rapidly, and—it’s only one speaker. We can all read much faster than someone can talk. Asynchronous one-off communication is bound to be less rich than everyone talking at once; it’s just that it’s harder to focus in the latter case.

The Blind Side – how risk managers are like lineman

The post is a summary of an article written by Beaumont Vance in Risk Management Reports (February 2008) where he drew comparisons between the role of the Left Tackle (described in Michael Lewis’s book The Blind Side) and the future of risk professionals: Protecting your Blind Side.

Be Careful Telling Therapist About Insider Trading by Bruce Carton for Enforcement Action

The U.S. Senate takes an extreme interest in potential insider trading by the hedge fund you worked for and, as part of nine federal investigations into the matter, obtains the psychologist’s deposition testimony and makes sure it goes to federal prosecutors and the SEC.

Review of SEC’s Process for Selecting Adviser Examination Targets

Review of the Commission’s Processes for Selecting Investment Advisers and Investment Companies for Examination

To continue the Madoff dogpile on the SEC, the SEC’s Office of Inspector General released a report criticizing the SEC’s process for selecting investment advisers and investment companies for examination.

Review of the Commission’s Processes for Selecting Investment Advisers and Investment Companies for Examination pdf-icon

As a result of OCIE never having examined Madoff’s investment firm, the Inspector General conducted this review to determine OCIE’s rationale for not performing an examination of Madoff’s investment advisory business. They came up with 11 recommendations:

Recommendation 1:

The Office of Compliance Inspections and Examinations (OCIE) should implement a procedure requiring, as part its process for creating a risk rating for an investment adviser, that OCIE staff perform a search of Commission databases containing information about past examinations, investigations, and filings related to the investment adviser.

Recommendation 2:

The Office of Compliance Inspections and Examinations (OCIE) should change the risk rating of an investment adviser based on pertinent information garnered from all Divisions and Offices of the Commission, including information from OCIE examinations and Enforcement investigations, regardless of whether the information was learned during an examination conducted to look specifically at a firm’s investment advisory business.

Recommendation 3:

The Division of Enforcement and the Office of Compliance Inspections and Examinations should establish and adhere to a joint protocol providing for the sharing of all pertinent information (e.g., securities laws violations, disciplinary history, tips, complaints and referrals) identified during the course of an investigation or examination or otherwise.

Recommendation 4:

The Office of Compliance Inspections and Examinations (OCIE) should establish a procedure to thoroughly evaluate negative information that it receives about an investment adviser and use this information to determine when it is appropriate to conduct a cause examination of an investment adviser. OCIE should ensure its procedure provides for timely opening of a cause examination.

Recommendation 5:

When the Office of Compliance Inspections and Examinations (OCIE) becomes aware of negative information pertaining to an investment adviser, OCIE should examine the investment adviser’s Form ADV filings and document and investigate discrepancies existing between the adviser’s Form ADV and information that OCIE previously learned about the registrant.

Recommendation 6:

The Office of Compliance Inspections and Examinations (OCIE) should establish a procedure to thoroughly evaluate an investment adviser’s Form ADVs when OCIE becomes aware of issues or problems with an investment adviser. OCIE should document areas where it believes a Form ADV contains false information and initiate appropriate action, such as commencing a cause examination.

Recommendation 7:

The Office of Compliance Inspections and Examinations (OCIE) should re-evaluate the point scores that it assigns to advisers based on their reported assets under management. OCIE should assign progressively higher risk weightings to firms that have greater assets under management.

Recommendation 8:

The Office of Compliance Inspections and Examinations (OCIE) should re-evaluate the point scores that it assigns to firms based on their reported number of clients to which they provide investment advisory services. OCIE should assign progressively higher risk weightings to investment advisers that serve a larger number of clients.

Recommendation 9:

The Office of Compliance Inspections and Examinations (OCIE) should recommend to the Chairman’s office that it institute a Commission rulemaking that would require the following additional information to be reported as part of Form ADV:
• Performance information;
• A fund’s service providers, custodians, auditors and administrators, and applicable information about these entities;
• A hedge fund’s current auditor and any changes in the auditor; and
• The auditor’s opinion of the firm.

Recommendation 10:

The Commission should finalize the proposed rule titled Amendments to Form ADV [Release No. IA-2711; 34-57419]. In finalizing this rule, the Commission should consider what, if any, additional information investment advisers should include in Part II of Form ADV by consulting with the Office of Compliance Inspections and Examinations (OCIE) and the Division of Investment Management (IM). Further, the Commission, in consultation with OCIE and IM, should consider provisions that would assist OCIE to efficiently and effectively review and analyze the information in Part II of Form ADV.

Recommendation 11:

The Office of Compliance Inspections and Examinations (OCIE) should develop and adhere to policies and procedures for conducting third party verifications, such that OCIE verifies the existence of assets, custodian statements, and other relevant criteria.

This is now the fourth report the SEC’s OIG has issued as a result of Madoff, following up on:

Private Fund Investment Advisers Registration Act Status

OpenCongress allows you to create custom widgets for the status of bills in Congress. I decided to play around and create one for the House version of the Private Fund Investment Advisers Registration Act.


I’ll create one for the Senate version once they formally introduce the Restoring American Financial Stability Act of 2009.

New Workplace Posters – EEO is the Law

EEO Law

Starting November 21, 2009, you need a new workplace poster: EEO is the Law.pdf-icon

There are two new federal workplace laws the Genetic Information Non-Discrimination Act and the ADA Amendments Act. Federal law requires all employers covered by the federal anti-discrimination laws (those with 15 or more employees) to post multilingual notices describing the federal laws against job discrimination.

If you want a fresh poster you can use print out and use the “EEO is the Law“pdf-icon poster. If you already have a EEO poster, you can just add the “EEO is the Law” Poster Supplement.pdf-icon

References:

Federal Regulators Issue Final Model Privacy Notice Form

Eight federal regulatory agencies today released the final model privacy notice form. It’s supposed to make it easier for consumers to understand how financial institutions collect and share information about consumers. Under the Gramm-Leach-Bliley Act, institutions must notify consumers of their information-sharing practices and inform consumers of their right to opt out of certain sharing practices. The two model form issued today can be used by financial institutions to comply with these requirements. One form allows consumers to opt out of sharing of personal information. The other form has no opt-out.

Back in April, the Securities and Exchange Commission reopened the period for public comment because they tested the model notices and found weaknesses with the current form.

The final model privacy form was developed jointly by the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, Federal Deposit Insurance Corporation, Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency, Office of Thrift Supervision, and Securities and Exchange Commission. There is also a joint release of the rule that goes along with the Final Model Privacy Form under the Gramm-Leach-Bliley Act

References:

Fund Registration Act Will Cost the SEC $140 Million

CBO Congressional budget office

The Congressional Budge Office released a cost estimate of H.R. 3818, the Private Fund Investment Advisers Registration Act of 2009. Obviously, there will be an additional cost to fund managers that need to register with the SEC and operate under the SEC rules and oversight. There is also a real cost to the SEC (and therefore the taxpayers) for supervision of the newly regulated fund advisers.

The CBO estimates that the SEC will need an additional $140 million over the 2010-2014 period to implement the provisions of H.R. 3818. That means 150 employees new SEC employees by fiscal year 2011 to write regulations and undertake the additional examination and enforcement activities required by the bill. That’s about a 4 percent increase over the SEC’s 2009 staffing levels. The $140 million is to cover the cost of salaries and benefits, overhead, preparation of reports, and upgrades to information technology systems for the new employees.

The CBO report estimates that H.R. 3818 would result in 1,300 new registrations. That excludes venture capital funds which are exempted under this bill, but does include private equity firms that are exempted under the Senate version of the Private Fund Investment Advisers Registration Act. Doing the math, that results in $108,000 in additional costs for each new fund manager that registers.

On the manager side, the CBO estimates that it will only cost $30,000 for each fund manager to comply with Private Fund Investment Advisers Registration Act of 2009.

References:

New Anti-Bribery Compendium

trace-compendium-logo

Trace International has launched an online, fully-searchable database containing summaries and analyses of international anti-bribery enforcement actions and investigations in the U.S. and throughout the world. The Trace Compendium summaries are searchable by name or by numerous other criteria, including year, substantive criteria, enforcement authority, and enforcement result.

Want the actions involving officials in Thailand?
You can see the actions involving Thailand Officials.

Want the actions from the Tokyo District Public Prosecutors Office?
You can find the actions from the Tokyo District Public Prosecutors Office.

Want all the cases involving property development?
You can search for the cases involving property development.

It’s a fantastic resource if you are looking at bribery and corruption cases.

References:

  • The Trace Compendium
  • Trace Launches Anti-Bribery Compendium from the Wrage Blog

Criticism and Praise

drunkards walk

Do criticism and praise work to affect performance?

Leonard Mlodinow briefly addressed this topic in The Drunkard’s Walk: How Randomness Rules Our Lives. He explores the studies of Daniel Kahneman who was lecturing the Israeli air force flight instructors on behavior modification. Kahneman was trying to make the point that rewarding positive behavior works, but punishing mistakes does not.

One of the students called him out. He had praised people warmly for beautifully executed maneuvers and the next time they do worse. He screamed at people for badly executed maneuvers and they improve the next time. The other flight instructors agreed. But Kahneman’s research demonstrated that rewards worked better than punishment.

So what was going on?

Regression toward the mean. In a random series of events, an extraordinary event is most likely to followed by an ordinary one. Due purely to chance, it’s hard to have two extraordinary events in a row.

The fighter pilots have a certain level of ability. An extraordinarily good performance is most likely to be followed by an ordinary performance. So the praise would seem to fail to maintain the extraordinarily good performance. Similarly, an extremely bad performance is most likely to be followed by an ordinary performance, which in this case would be better than the bad performance. So the screaming criticism would seem to cause an improvement in performance.

So it appears that the criticism does some good and the praise does no good. What is really happening is a misconception of uncertainty and probabilities. The connection between actions and results is not as direct as we might think.

In compliance, we eschew lots of data. It’s good to step back every now and then to think about the implications of the data and the underlying assumptions.

The First CMBS Eligbile for TALF

DDR-Developers Diversified Realty Corp.

Developers Diversified Realty Corp. sold $400 million worth of of debt backed by shopping centers backed by 28 malls in 19 states. The offering is the first to use the Federal Reserve’s Term Asset-Backed Securities Loan Facility since it was opened to the debt in June.

Investors can take out loans from the TALF to purchase the AAA portion of the bond sale, enabling them to boost returns with borrowed cash. TALF was started in March to revive the market for asset backed securities.

The $323.5 million AAA-rated portion of the DDR offering was priced to yield 140 basis points more than benchmark swap rates. Investor demand allowed the company to reduce the spread from as much as 175 basis points.

References: