New Social Networks for Lawyers

Omar Ha-Redeye writes on slaw.ca about two new social networks for lawyers: Lawyrs Looking for Alternative Social Networks and Social Network on Jurafide for American Clients.

Jurafide.com is a networking and marketing site that facilitates communication between U.S. clients and non-U.S. lawyers.

Lawyrs.net looks like a social networking platform for lawyers with some group discussions and legal news.

Omar signed up on Lawyrs but finds that it is missing the ability to pull in your contacts and see who you know is in the site. A fatal flaw.

I did not bother signing up for either one. Legal OnRamp seems to be the dominant site in the world of social networking in the legal field. I previously wrote about my bad experiences with LawLink and ABA’s LegallyMinded. I still hold out some hope for Martindale Hubbell Connected. So, I am skeptical that either of these two companies with no apparent connection to the US legal market can provide an interesting online networking platform.

Originally posted on KM Space.

Anti-Fraud Provision of the Investment Advisers Act

On September 10, 2007, the SEC Adopted Rule 206(4)-8. The SEC adopted this rule in response to the decision in Goldstein v. SEC, 451 F.3rd, 873 (in which the Court of Appeals for the District of Columbia ruled that the “client” of an investment adviser was the pool itself and not an investor in the pool).

Rule 206(4)-8 makes it clear that the SEC may prohibit fraudulent conduct of an investment adviser that impacts an investor in the investment pool, regardless of whether the investment adviser has registered with the SEC.

The rule does not create a private right of action.  It only provides the SEC with the authority to enforce the rule. But the SEC does have its broad authority to impose fines, sanctions bar individuals from the securities business and to seek criminal penalties.

The rule prohibits misleading statements and deceptive conduct and is not limited to “statements.” So,  the rule is applicable to non-written misstatements or omissions. The rule would include presentations at investor meetings and phone calls.

The bad act need not be made in connection with the sale of securities. Unlike 10b-5, this rule applies to regular disclosures and investor letters.

Unlike Rule 10b-5, there is no “in connection with” requirement and the SEC would not have to prove reliance or harm by any individual in an enforcement action. Also, Rule 206(4)-8 contains no scienter requirement, unlike Rule 10b-5.  The SEC need only prove that there was a misstatement or omission of a material fact.

The challenging piece is responding to requests for information from investors. If you are providing a piece of information to one investor and not providing it to others did you “omit to state a material fact”?

Although negligent conduct is proscribed, the SEC specifically stated that the rule does not create a fiduciary duty not otherwise imposed by law. This rule should not change the way an investment advisers perform their duties.  It merely removes the doubt regarding the scope of the SEC’s authority created by Goldstein.

From Burden to Benefit: Making the most of regulatory risk management

The Economist Intelligence Unit published an executive briefing: From Burden to Benefit: Making the most of regulatory risk management (executive summary) (full report .pdf).

It is an irony of modern business that regulation, a concept designed to reduce risk by protecting the interests of corporates, customers and society at large, has itself become one of the most serious risks that companies face. From dealing with unfamiliar regulatory frameworks in overseas markets to scanning the environment for new threats, regulatory risk management has become a time-consuming and costly activity that demands board-level engagement and a rigorous approach.

According to the report, two-thirds of respondents say the biggest problem that hinders their company’s ability to manage regulatory risk is “complexity of the regulatory environment.”

On the positive side, most said they had strong capabilities dealing with regulatory risk. But the big weakness, was the problem of dealing with multiple regulatory environments, both domestically and internationally, and juggling multiple projects.

Thanks to Leon of SOX First for pointing out the report: Compliance Challenges.

Ohio Retirement System Lobbyist

map_ohioOhio requires registration and annual filings if you are a Retirement System Lobbyist. See Ohio Revised Code §101.90. According to the law, it seems that any replacement agent hired by an investment fund is subject to registration if that agent discussed an investment offering with the Ohio retirement system.

Retirement system lobbyist means any person engaged to influence retirement system decisions or to conduct retirement system lobbying activity as one of the person’s main purposes on a regular and substantial basis. Retirement system lobbyist does not include an elected or appointed officer or employee of a federal or state agency, or political subdivision who attempts to influence or affect retirement system decisions in a fiduciary capacity as a representative of the officer’s or employee’s agency or political subdivision.

Engaged means to make any arrangement whereby an individual is employed or retained for compensation to act for or on behalf of an employer to actively advocate.

Compensation means a salary, gift, payment, benefit, subscription, loan, advance, reimbursement, or deposit of money or anything of value; or a contract, promise, or agreement, whether or not legally enforceable, to make compensation.

Employer means any person who, directly or indirectly, engages a retirement system lobbyist.

Retirement System Decisions means a decision of a retirement system regarding the investment of retirement system funds. Retirement system decision also includes the decision by a board of a retirement system to award a contract to an agent or an investment manager Retirement system lobbying activity means contacts made to promote, oppose, reward, or otherwise influence the outcome of a retirement system decision by direct communication with a member of a board of a state retirement system, a state retirement system investment official, or an employee of a state retirement system whose position involves substantial and material exercise of discretion in the investment of retirement system funds.

You are required to submit a report three times a year (due May 31, September 30 and January 31) using Form 1010.93 AGT (.pdf) The Office of the Legislative Inspector General launched the Ohio Lobbying Activity Center (OLAC). The OLAC is an online filing system that allows registered Agents/Lobbyists and their Employers to electronically register their lobbying engagements and file their tri-annual Activity and Expenditure Reports.

See:

Deloitte’s Year End Reporting Issues: An Update on Current Issues and Items on the Horizon

Deloitte, as part of their Financial Reporting Series presented a webinar on year end reporting issues. The panel consisted of:

  • Bob Uhl
  • Beth Ann Reese
  • Glen Donovan
  • Stuart Moss

Valuations will be a hot topic for year end reporting. The problem is the current “market impairment” existing for many securities.

Auction Rate Securities settlements offer some particular accounting issues. Credit derivatives will require enhanced disclosures (both qualitative and quantitative) about why you are using derivatives under Statement 161.

The SEC staff is expecting an increase in the number of goodwill impairments compared to prior years. They are also expecting greater disclosure about the impairments.

The SEC’s Division of Corporation Financial has several initiatives to address the current market conditions. They are focusing on improvements in communications with issues.

Liquidity and capital resource disclosure are likely to be a concern. Companies will need to disclose if the there are uncertianties in their ability to access financing.

AICPA’s Generally Accepted Privacy Principles

The AICPA and Canadian Institute of Chartered Accountants formed a privacy task force and developed the ten principles of the Generally Accepted Privacy Principles:

Principle 1: Management
The first principle of the Generally Accepted Privacy Principles (GAPP) is Management. This principle requires that the entity define, document, communicate, and assign accountability for its privacy polices and procedures. [More Detail]

Principle 2: Notice
The second principle of the Generally Accepted Privacy Principles (GAPP) is Notice. This principle requires that the entity provide notice about its privacy policies and procedures and identify the purpose for which personal information is collected, used, retained, and disclosed. [More Detail]

Principle 3: Choice and Consent
The third principle of the Generally Accepted Privacy Principles (GAPP) is Choice and Consent. This principle requires that the entity describe the choices available to the individual and obtain implicit or explicit consent with respect to the collection, use, and disclosure of personal information. [More Detail]

Principle 4: Collection
The fourth principle of the Generally Accepted Privacy Principles (GAPP) is Collection. This principle requires that the entity collect personal information only for the purposes identified in the notice. [More Detail]

Principle 5: Use and Retention
The fifth principle of the Generally Accepted Privacy Principles (GAPP) is Use and Retention. This principle requires that the entity limit the use of personal information to the purpose identified in the notice and for which the individual has provided implicit or explicit consent. [More Detail]

Principle 6: Access
The sixth principle of the Generally Accepted Privacy Principles (GAPP) is Access. This principle requires that the entity provide individuals with access to their personal information for review and update. [More Detail]

Principle 7: Disclosure to Third Parties
The seventh principle of the Generally Accepted Privacy Principles (GAPP) is Disclosure to Third Parties. This principle requires that the entity disclose personal information to third parties only for the purposes identified in the notice and only with the implicit or explicit consent of the individual. [More Detail]

Principle 8: Security for Privacy
The eighth principle of the Generally Accepted Privacy Principles (GAPP) is Security for Privacy. This principle requires that the entity protect personal information against unauthorized access (both physical and logical). [More Detail]

Principle 9: Quality
The ninth principle of the Generally Accepted Privacy Principles (GAPP) is Quality. This principle requires that the entity maintain accurate, complete, and relevant personal information for the purposes identified in the notice. [More Detail]

Principle 10: Monitoring and Enforcement
The tenth principle of the Generally Accepted Privacy Principles (GAPP) is Monitoring and Enforcement. This principle requires that the entity monitor compliance with its privacy policies and procedures and have procedures to address privacy-related inquiries and disputes. [More Detail]

Blagojevich Investigation Started With Real Estate Corruption

According to a story in The New Yorker, an investigation into real estate corruption ultimately caught the governor of Illinois trying to sell Barack Obama’s Senate seat: Whistle-blower by Nina Burleigh.

According to the story, an Illinois hospital was having trouble getting permits from the planning board. That is until they agreed to hire a certain contractor. That incident started U.S. Attorney Patrick Fitzgerald’s Operation Board Games.  As the probe widened, more wiretaps were put in place, and more corruption was exposed. Eventually, recording Blagojevich discussing the sale of Obama’s Senate seat.

Strategies for Responding to Liquidity Needs of Investors in Real Estate Funds

goodwinprocter_logo

Goodwin Procter put together a great piece on Strategies for Responding to Liquidity Needs of Investors in Real Estate Funds.

As a result of the current economic downturn and global economic credit crisis, some investors find themselves over-allocated to investments in private real estate funds because their private real estate investments have not been written down in value to the same degree as their public investments (the so-called “denominator effect”). In addition, many large pension plans, foundations and endowments have suffered well-publicized losses in the public equity markets.

These pressures facing such investors are compounded by the fact that the virtual shutdown of the credit markets has dramatically reduced the volume of real estate transactions in the marketplace, which in turn has reduced the amount of distributions that real estate funds are able to make to their investors. Despite these liquidity constraints on investors, the current reduction in cash flows and sale proceeds means that many real estate funds may encounter an even greater than expected need to call capital from investors in the near term in order to fund operating costs and debt service, and to complete development or capital improvement projects.

Best Practice Advice for Improving Employee Awareness of Your GRC Program

This post gathers my notes from a webinar entitled Best Practice Advice for Improving Employee Awareness of Your GRC Program which was presented by EthicsPoint.

Barbara Upton-Garvin from the Boys & Girls Club of Greater Kansas City started off with a discussion of their awareness programs. They highlighted their ethics policies and their whistleblower’s policy.

Francine Obregon of Eisai handed out schwag with the whistleblower hotline information. The awareness program was in part designed to advise the employees know that the hotline is part of a larger compliance program. They had recently changed the principles of corporate conduct. She thought it was important to let peopel know that the person answering the hotline would not be answering the questions. The hotline was merely an anonymous conduit.

Barry Elmore from the Majestic Star Casino wanted a program to educate their employees and marketing of the reporting process. They have a broad range of education and knowledge for their employees. They found that the education process was over the heads of many front line employees so they stuck to the basics. They also educated their vendors as part of the program. They conduct new hire training and annual training. They also advertise the hotline in employee break areas and employee newsletters. They sent a copy of the code of conduct to each vendor. Some of his challenges include the 24 hour operations of the business, lots of turnover and confusion between HR issues and code of conduct violations.

Francine pointed out that Eisai focused on branding issues so that all of the compliance materials and schwag all had a similar look and feel.

Barry emphasized that you cannot be boring in delivering the message and training. The examples need to be on the “lighter side.”

Julie Rivera of Red Robin put up posters and handed out wallet cards. “Honest ro Goodness. It’s not just about gourmet burgers. It’s about treating people respectfully.” Red Robin started out with a top-down approach of getting buy-in from corporate in its push out to the individual restaurants. There was some confusion between the open-door policy and hotline. They do get a fair number of low level HR issues on the hotline.

The panel had some trouble answering a question about the effectiveness of the awareness program. Barry and Barbara both see an increase in the number of reports shortly after a training session.

Whistleblower Hotlines for Home Builders

In running through the Compliance Week database, I ran across a few Whistleblower sites and related information for construction companies.

Beazor Homes Confidential Ethics Hotline

Through the Ethics Hotline, you can report evidence of known or suspected fraud, theft, accounting or auditing improprieties, other financial misconduct, or any other type of misconduct involving the assets, operations or employees of Beazer Homes.

Toll Brothers Ethics Reporting

Toll Brothers, Inc. has a simple way for anyone to confidentially report activities that may involve unethical or otherwise inappropriate behavior relating to conflicts of interest, financial reporting, employee misconduct, safety, or other potential violations of the Toll Brothers, Inc. Code of Ethics and Business Conduct.

Pulte Homes Speak Up (.pdf)

HOW WE DO BUSINESS IS AS IMPORTANT AS THE BUSINESS WE DO.
If you have a concern regarding unethical activity, don’t keep it to yourself. Discuss it with your manager.
Or, if you prefer to remain anonymous, call: The Network.

D.R. Horton Complaint Procedures for Accounting, Internal Control, Auditing and Financial Matters. (.pdf)

Any person may submit a good faith complaint regarding accounting, internal accounting control, auditing or financial matters (collectively, “Accounting Matters”) to the management of D.R. Horton. D.R. Horton is committed to achieving compliance with all applicable securities laws and regulations, accounting and financial standards, accounting controls and audit practices. D.R. Horton’s Audit Committee will oversee treatment of concerns in this area.

KB Home Ethics Policy (.pdf)

DOING THE RIGHT THING FOR THE RIGHT REASON
At KB Home, our commitment to doing the right thing for the right reason is the foundation of our homebuilding success and 100% Complete/100% Satisfied culture. Legal obligations and public expectations regarding appropriate business conduct make it more important than ever that we continue to follow the highest ethical standards in everything that we do. Our failure to do so can have serious consequences, including civil and criminal penalties and significant damage to our reputation in the eyes of our customers, business partners and investors. The KB Home Ethics Policy reflects our commitment to operate in an ethical manner, with integrity and in compliance with applicable laws and regulations, and it establishes principles to guide actions and decisions that can be applied in everyday situations.

If you have any questions or concerns, please report them to an immediate supervisor, to one of the designated Ethics Officers, to the Ethics Policy Hotline or to the Ethics Policy Reporting Website.