The Madoff scandal is one of the low points in the history of the Securities and Exchange Commission. Every Congressional hearing or SEC-basher inevitably uses the failure to catch Madoff as evidence of the ineffectiveness of the SEC. In a continuing journey down the rabbit hole, the SEC’s Inspector General David Kotz released his 123-page … Read more »
But the Computer Did It!
The Securities and Exchange Commission brought charges of securities fraud for concealing a significant error in the computer code of the quantitative investment model. I found this case to be interesting because it was not flawed human decisions, but flawed computer decisions. However, we still live in the age where computers do what we tell … Read more »
Compliance Bits and Pieces for September 23
These are some compliance related stories that recently caught my attention: Forgotten Bookmarks: Investment in Reading Pays Off by Michael Popek in Forbes I come across a lot of interesting items left behind in books, but I’d say that most of them don’t interest Forbes readers all that much. I hope this find will pique … Read more »
Was Full Tilt Poker a Ponzi Scheme?
The United States Government forced online poker sites to the fringes of the financial system. The U.S. government has long argued that online poker gambling is illegal under the Wire Act, a 1961 law that explicitly prohibits sports betting conducted over electronic communication. In 2006, Congress made it illegal for financial institutions to process funds … Read more »
Miscommunication
Are you speaking the same language as the rest of your firm? Do they understand your questions? Do they understand your answers? Miscommunication is at the root of many problems. Many compliance policies are written by lawyers, for lawyers. That may work fine once there is an investigation or a problem. But they do little … Read more »
Conflicts of Interest and Securitizations
The Big Short highlighted some of the difficulties of taking an investment position in a real estate downturn. The situation was taken a step further with Goldman Sachs’ help in putting together mortgage backed securities with the primary purpose of helping a client take an investment position that the securities will default. It turned out … Read more »
What Does a Criminal Look Like?
A group of Kentucky men would prefer to spend time in jail time rather comply with vehicle safety rules. As you can see from their booking photos, the men are Amish and belong to the Old Order Swartzentruber Amish group. They say their religious beliefs forbid the placement of bright orange safety triangles on the … Read more »
Compliance Bits and Pieces for September 16
Here are some recent compliance related stories that caught my attention: How do You Evaluate a Risk Assessment? by Tom Fox What is the amount of risk that your company is willing to accept? Before you even get to this question how does your company assess risk and subsequently evaluate that risk? CEO pushes Reg … Read more »
Investment Adviser Oversight Act of 2011
FINRA is elbowing its way into an oversight role for investment advisers. House Financial Services Committee Chairman Spencer Bachus has introduced the Investment Adviser Oversight Act of 2011. The argument is that the SEC is too overburdened to effectively oversee investment advisors. I find it strange that Congress wants to make the shift. If the … Read more »
Carried Interest and Obama’s American Jobs Act
The tax treatment of carried interest has been eyed as a revenue source off and on for the past few years. It’s back in the sights of the administration in the new American Jobs Act. Subtitle B – Tax Carried Interest in Investment Partnerships as Ordinary Income Section 411 – Partnership Interests Transferred in Connection … Read more »