Month: July 2016

Crash!

I had my first cycling crash of the season this weekend. My fault. No cars involved. I was complying with traffic laws. I just made a mistake. We all make mistakes. This one left me on the tarmac.

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I spent the weekend dropping off The Girl at sleep-away camp in the Berkshires. (Her first time at sleep-away camp). To keep up my bike training regime for the Pan-Mass Challenge I decided to bike back home.

It was cool and sunny at the start, but the rain came in, turning a pleasant ride into a cold, wet, tortuous ride.

I was not familiar with the route. I was not lost, but was relying on memorization of route and occasional glances at the GPS. Since the roads were unfamiliar, I never knew if there was a big hill up ahead or how much longer to get home. It was getting dark. To the extent I had actually been on the roads before, the features were melting away as the sun set.

When I saw the sign for Davis Mega Maze I finally knew where I was. Now that I knew how much further I had to go, I felt some more energy flow back into my legs. I was excited to see that I only had 30 miles to go.

Perhaps I was too excited. I saw the railroad tracks ahead. I knew they would be wet and slippery. I knew I should slow down.

But I didn’t.

I came up on the tracks too fast. They were at a 45 degree angle to the road, making them even more treacherous. The bike and I went sideways, slipping and sliding down the road.

By slipping and sliding, I mean sliding my skin on the roadway. I stood up bloodied and battered.

Rule #5 was in effect. So I pulled myself back up, wiped off some blood and pedaled the rest of the way home.

That’s what I do to train for the Pan Mass Challenge.

There is still time to sponsor my Pan Mass Challenge ride: http://www2.pmc.org/profile/DC0176

100% of your donation goes to the Dana Farber Cancer Institute to fund its fight against cancer,

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Compliance Bricks and Mortar for July 8

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

Bricks Tanzania

One Thought on Blockchain in Money Compliance

Blockchain could make AML obsolete, in theory. Blockchain is the decentralized database system that allows for recordkeeping of transactions nearly impossible to fake. And because of it, it sort of creates a world that is zero sum. It isn’t completely zero sum, especially in the beginning because no sources of transaction have been recorded, but eventually so many transaction have been recorded that whatever currency is being tracked could be traced to its original source, in this case the first transaction on the database. [More…]

Farewell to Ralph Stanley and Success in Repatriation by Tom Fox in FCPA Compliance Report

I thought about Stanley’s genius when considering one of the challenges in anti-corruption going forward; which is the issue of repatriation of the funds stolen from a country through bribery. Matt Stephenson, over at the Global Anti-Corruption Blog (GAB), has been a persistent commentator of the difficulties of such a repatriation. However, an article in the Financial Times (FT) by Kara Scannell, entitled “Moving money out of purgatory”, detailed one of the success stories in this area while also reporting on many of the difficulties outlined by Stephenson in the GAB. [More…]

Small Firm Cybersecurity Checklist

FINRA has created a Cybersecurity Checklist (Excel 114 KB) to assist small firms in establishing a cybersecurity program to identity and assess cybersecurity threats, protect assets from cyber intrusions, detect when their systems and assets have been compromised, plan for the response when a compromise occurs and implement a plan to recover lost, stolen or unavailable assets. This checklist is primarily derived from the National Institute of Standards and Technology (NIST) Cybersecurity Framework and FINRA’s Report on Cybersecurity Practices. Use of this checklist does not create a “safe harbor” with respect to FINRA rules, federal or state securities laws, or other applicable federal or state regulatory requirements.

Legislators Boast That Shrinking Size of GE Capital Proves Dodd-Frank Is a Success by Steven Lofchie in Cadwalder Cabinet

Facts belie the legislators’ political assertion that Dodd-Frank has had the effect of shrinking big firms and increasing market share for smaller firms. A look at the three most significant types of Dodd-Frank-regulated financial intermediaries: banks, broker-dealers and futures commission merchants (“FCMs”) makes this clear: [More…]

The average American woman now weighs as much as the average 1960s man by Christopher Ingraham in The Washington Post

The average American woman weighs 166.2 pounds,according to the Centers for Disease Control and Prevention. As reddit recently pointed out, that’s almost exactly as much as the average American man weighed in the early 1960s. [More…]

If you enjoy Compliance Building, please support my Pan-Mass Challenge ride to fight cancer. You can read more and donate here: https://www2.pmc.org/egifts/DC0176

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The Wild West of Wyoming

I run across compliance stories that make me scratch my head when I find something odd.  I just came across another that made me remember one of the quirks of registration with the Securities and Exchange Commission as an investment adviser.

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The SEC was after Timothy Sexton and his advisory firm, Bantry Bay Capital. Examiners showed up at Bantry Bays offices and were surprised to find no office. The address was listed at 3465 N Pines Way in Jackson, Wyoming in its Form ADV filing as its principal place of business. The examiners found a UPS Store instead of an operating office.

One aspect of registration between state and SEC registration is that investment advisers in Wyoming register with the SEC, regardless of the amount of assets under management. Some advisers try to sneak into Wyoming. It looks like Bantry Bay had rented a post office box at that UPS Store. That is not enough for a principal place of business.

Wyoming does not have a state level regulator of investment advisers so all Wyoming investment advisers are under SEC jurisdiction.

That will change next year. Wyoming passed a securities law and is implement a regulatory regime for investment advisers. On June 1, 2017, those 21 investment advisers in Wyoming will be required to state registration.

Wyoming will no longer be the wild, wild west for investment advisory firms.

Sources:

Buildings in Jackson, Wyoming, located at the crossing of Deloney Avenue and Center Street
By DXR
CC BY SA

Brexit and the Real Estate Markets

I don’t know and don’t pretend to know what the long term effects of the UK leaving the European Union will be. We saw in the short term that it sent the financial markets into turmoil and send the British pound to the lowest levels in years. The U.K property market looks like it is now suffering the fallout from Britain’s vote to leave the European Union.

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M&G Investments stopped trading in a £4.4 billion U.K. property fund. Aviva Investors suspended trading in a U.K. property fund. Standard Life Investments was the first to cancel trading in its U.K. Real Estate Fund.

The funds were receiving an increase in redemption requests. At some point the funds would need to start selling assets to meet the redemption requests. Investors these ‘open-ended’ funds can get redemptions even though the underlying buildings will several months or longer to sell.

The compliance aspect is the same as that for any fund that can put gates in place to halt redemptions. The key is that a gate is allowed by the fund documents. Then the fund manager needs to make sure that the gate is being lowered to protect the investors overall. I assume the fund managers are taking the position that forced sales for liquidity will depress asset prices and hurt the fund as a whole.

Sources:

Happy Original Brexit Day

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

Those words were true in 1776 and they are true today. Our forefathers fought to pull themselves out from under the weight of British rule, to enjoy better social and economic freedom. I’m thankful for them and all that fought for freedom over the centuries.

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Compliance Bricks and Mortar – Canada Day Edition

Today marks the joining of the British North American colonies of Nova Scotia, New Brunswick, and the Province of Canada into a federation of four provinces on July 1, 1867.

These are some compliance-related stories that caught my attention recently, even though they have nothing to do with Canada.

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BREXIT and Compliance by Jonathan Armstrong in SCCEs The Compliance Ethics Blog

In the short-term the change will be minimal. Longer term there is likely to be lots to do on the separation and with the UK putting in place agreements to replace current EU deals – many variations are currently possible. UK politicians have talked of a 6-month scoping exercise as the work on separation starts. Then there is effectively a notice period of two years as the UK exits the EU. [More…]

AIFMD Meets Brexit by Debevoise Plimpton

It is the uncertainty that now exists, and that will continue to exist during the transitional period that will begin on the day that the United Kingdom exits the European Union and end on some unknown date thereafter, that will be destabilising for the UK funds industry and potentially damage the popularity of the United Kingdom as a fund manager jurisdiction of choice [More…]

How to Hire Honest People By Bruce Weinstein, Ph.D. The Ethics Guy® in SCCEs The Compliance Ethics Blog

There are two downsides to asking a direct question about dishonesty. First, it immediately strikes fear in the candidate’s heart, even if the candidate is fundamentally an honest person. I don’t like the idea of making a job candidate squirm. The second is that the question seems to present a no-win situation for the candidate. [More…]

BATTLE OF THE SOMME WEEK – PART V: WHAT DID IT ALL MEAN? by Tom Fox in the FCPA Compliance Report

Today, July 1 is the 100th anniversary of the first day of the Battle of the Somme. As I have written this week, there is no single battle in modern British history that has made a greater impression on the British psyche. The five month long battle cost the British some 420,000 casualties. For territory, it was worth a few miles. Daniel Todman, writing in the Financial Times (FT) article entitled “Stories of the Somme”, said, “Both in its scale and duration, the Somme was different to anything the British had done before. With wartime volunteers involved en masse in the most intense combat for the first time, the impact of the battle was felt throughout the Empire. The second world war saw combat that was just as horrific — and a global slaughter that was much worse — but Britain avoided the same enormous and prolonged commitment of its army to the task of breaking the strength of a great power opponent on land.” [More…]

‘Hold’ everything: SEC may be stuck at three commissioners for a while by Bruce Carton in Compliance Week

As I have been following here for many months, President Obama nominated Hester Peirce and Lisa Fairfax to be SEC commissioners in October 2015 to fill open Republican and Democrat seats on the Commission, respectively. Peirce is currently a senior research fellow at the Mercatus Center at George Mason University and Fairfax is a law professor at the George Washington University Law School. The story of how basically nothing has happened with their nominations is chronicledhere and elsewhere on this site, and is comparable to watching paint dry.

Yesterday, Andrew Ackerman of the WSJ reported, these two nominations were delayed even further by the Senate when an unidentified Democratic Senator moved to block any confirmation vote on Peirce through a procedural step known as a “hold.” The WSJ reported that “overcoming a hold generally requires the high hurdle of support from 60 senators.”  [More…]