The US Financial Crimes Enforcement Network has finally come around to realizing that US financial institutions should promote a culture of compliance. FinCEN does not point to any specific problem, but mere notes that “Shortcomings identified in recent Anti-Money Laundering enforcement actions confirm that the culture of an organization is critical to its compliance.” FinCEN’s … Read more »
Compliance Bricks and Mortar for August 8
These are some of the compliance-related stories that recently caught my attention. Lawyers as SEC Enforcement Targets, What a Fund Manager Needs to Know by Jay B. Gould in the Investment Fund Law Blog In a move that should place securities lawyers and their clients on notice, Commissioner Kara Stein of the Securities and Exchange … Read more »
Not Securities Fraud By Reason of Insanity
Some investment fraud schemes sound crazy, but leave just a enough truthful-sounding bits to catch people. But Thomas Lawler’s scheme sounds completely bonkers. He established the Freedom Foundation to offer investors the chance to erase their debts and collect lucrative profits through the purchase of “administrative remedies”. Never heard of profit-making “administrative remedies”? Lawler can … Read more »
Another Real Estate Ponzi Scheme From 2008
The 2008 financial crisis caused many real estate investment funds to run into trouble. Some fund managers stepped over the line hoping to wait out the turmoil and recover. The Securities and Exchange Commission finalized charges against a fund manager who hoped to divert funds to stay liquid during the turmoil. According to the SEC’s … Read more »
The SEC is Late to a Real Estate Fraud
The Securities and Exchange Commission charged M. “Shi” Shailendra with making false representations to investors, misappropriating money, and acting as an unregistered broker. Shailendra was selling interests in his Interstate North 5 Acres fund known as Shi Six. He was purportedly using the money to acquire distressed real estate. Instead, he was pocketing most of … Read more »
Weekend Reading: Flash Boys
I admit to being a Michael Lewis fanboy. I consider him one of the best business writers. He has a knack for using characters as a lens to explain an issue. The issue in Flash Boys is high frequency trading. Or high speed trading. Or electronic trading. It’s a bit of a confusing mix. Uncharacteristically, … Read more »
Compliance Bricks and Mortar for August 1
These are some of the other stories that recently caught my attention. Tips for finding the dirt during due diligence on funds, managers by Liz Skinner in Investment News Advisers who can describe an exhaustive process of researching the people and firms they recommend their clients invest with stand to gain the trust and confidence … Read more »
LRN’s 2014 Ethics and Compliance Program Effectiveness Report
For the past seven years, LRN has conducted its annual survey of Ethics and Compliance programs in search of benchmarking data, suggestions of leading practices, and trends. In 2012 LRN adopted the Program Effectiveness Index as a tool to determine the impact of compliance programs. The challenge with index is figuring out the difference between … Read more »
Meet the SEC Whistleblowers
Since the Securities and Exchange Commission set up its whistleblower program in 2011, 6500 people have stepped forward as “whistleblowers.” Maxwell Murphy of the Wall Street Journal made a Freedom of Information Act request to find out more. How successful has the program been and are the people filing really “whistleblowers”? Of those 6500, only … Read more »
How Do You Exit a Ponzi Scheme?
It looks like Bernie Madoff was $45 billion short of funds in his “investment strategy.” How was he ever going to get out of this? The original Ponzi schemer, Charles Ponzi, seems to think he could get out of his situation, at least according to Mitchell Zukoff, author of Ponzi’s Scheme: The True Story of … Read more »