This document summarizes several regulatory and compliance issues that may arise in 2011 for broker-dealers and investment advisers. Key topics discussed include:
1) The SEC moving forward to create a fiduciary standard for broker-dealers providing investment advice to retail customers.
2) Criticism of a FINRA proposal requiring broker-dealers to provide new customers with an ADV-type disclosure document about conflicts and fees at the start of the business relationship. Compliance groups argue FINRA moved too quickly.
3) Lessons from a recent FINRA enforcement action fining a firm for failing to adequately implement anti-money laundering controls and steps firms can take to improve their AML programs.
This presentation discusses the changing financial landscape after the 2008 crisis and lessons learned. It covers four main topics: 1) how the financial crisis occurred and the role of poor policy and incentives, 2) changes in regulation and the financial system, 3) key lessons on risk management and governance, and 4) focus areas including liquidity, capital, and compensation. The presentation emphasizes that while regulation is important, the underlying issues were related more to incentives and risk culture within firms.
Mortgage banking has evolved significantly in recent years due to regulatory changes. Stricter rules were implemented to address issues that arose from the subprime mortgage crisis, requiring lenders to establish compliance departments to ensure adherence to regulations. For small and mid-sized mortgage banks, establishing and maintaining an effective compliance department is very costly. As a result, industry experts predict that many small and mid-sized lenders will be forced to close, merge with larger lenders, or sell their business, as generating sufficient revenue to cover the expenses of compliance will be challenging without a high loan volume of at least $25 million per month. Over time, this will likely lead to consolidation in the industry with mostly large national lenders and banks
In Depth: Asset Backed Lending And Hedge FundsLisa Krow
Stillwater Capital Partners manages three hedge funds and a private equity real estate fund that have all achieved double-digit returns with low volatility. Their asset-backed lending fund makes short-term bridge loans secured by real estate, personal injury law firms, and life insurance policies. The loans allow borrowers to access cash quickly when traditional lenders take longer. Stillwater mitigates risk by ensuring adequate insurance on properties and getting two independent appraisals. They also secure law firm loans with expected future case settlements. The asset-backed fund of funds invests in managers pursuing similar lending strategies and verifies assets with an independent auditor.
2015 banking outlook: The future is bright, but change your password Grant Thornton LLP
Organic growth will remain elusive, but banks can boost performance by focusing on honing operational efficiencies and shoring up risk management.
Learn more - http://gt-us.co/1uaqYal
In late 2017, we hosted a webinar for financial legislation experts to answer questions about ICOs and their legal status in various jurisdictions. These slides are a preview of 18 insights and answers to the key questions every company
considering an ICO needs to ask.
2017 AICM Credit Symposium - Australian Institute of Credit ManagementMark Harley
Unfair Contract Terms – generally and amendments for B2B protection (with some exceptions)
Insolvency Law Reform Amendments – amendment to the definition of “relation-back day” for purpose of the Corporations Act
Dealing with Trust Assets of Corporate Trustees in Liquidation
The document discusses identity theft and provides information on how employers can protect themselves and their employees. It summarizes identity theft laws like FACTA and the "Red Flag" rules, and explains that employers are responsible for protecting sensitive personal information and establishing an identity theft prevention program. It recommends designating a compliance officer, providing employee training, and having policies to securely handle and protect non-public information.
This presentation discusses the changing financial landscape after the 2008 crisis and lessons learned. It covers four main topics: 1) how the financial crisis occurred and the role of poor policy and incentives, 2) changes in regulation and the financial system, 3) key lessons on risk management and governance, and 4) focus areas including liquidity, capital, and compensation. The presentation emphasizes that while regulation is important, the underlying issues were related more to incentives and risk culture within firms.
Mortgage banking has evolved significantly in recent years due to regulatory changes. Stricter rules were implemented to address issues that arose from the subprime mortgage crisis, requiring lenders to establish compliance departments to ensure adherence to regulations. For small and mid-sized mortgage banks, establishing and maintaining an effective compliance department is very costly. As a result, industry experts predict that many small and mid-sized lenders will be forced to close, merge with larger lenders, or sell their business, as generating sufficient revenue to cover the expenses of compliance will be challenging without a high loan volume of at least $25 million per month. Over time, this will likely lead to consolidation in the industry with mostly large national lenders and banks
In Depth: Asset Backed Lending And Hedge FundsLisa Krow
Stillwater Capital Partners manages three hedge funds and a private equity real estate fund that have all achieved double-digit returns with low volatility. Their asset-backed lending fund makes short-term bridge loans secured by real estate, personal injury law firms, and life insurance policies. The loans allow borrowers to access cash quickly when traditional lenders take longer. Stillwater mitigates risk by ensuring adequate insurance on properties and getting two independent appraisals. They also secure law firm loans with expected future case settlements. The asset-backed fund of funds invests in managers pursuing similar lending strategies and verifies assets with an independent auditor.
2015 banking outlook: The future is bright, but change your password Grant Thornton LLP
Organic growth will remain elusive, but banks can boost performance by focusing on honing operational efficiencies and shoring up risk management.
Learn more - http://gt-us.co/1uaqYal
In late 2017, we hosted a webinar for financial legislation experts to answer questions about ICOs and their legal status in various jurisdictions. These slides are a preview of 18 insights and answers to the key questions every company
considering an ICO needs to ask.
2017 AICM Credit Symposium - Australian Institute of Credit ManagementMark Harley
Unfair Contract Terms – generally and amendments for B2B protection (with some exceptions)
Insolvency Law Reform Amendments – amendment to the definition of “relation-back day” for purpose of the Corporations Act
Dealing with Trust Assets of Corporate Trustees in Liquidation
The document discusses identity theft and provides information on how employers can protect themselves and their employees. It summarizes identity theft laws like FACTA and the "Red Flag" rules, and explains that employers are responsible for protecting sensitive personal information and establishing an identity theft prevention program. It recommends designating a compliance officer, providing employee training, and having policies to securely handle and protect non-public information.
The document discusses three main proposals for restructuring financial institution regulation that are being debated in the House Banking Committee. It also discusses other related issues like community reinvestment obligations and estimates of future costs to resolve failed banks. The three main regulatory restructuring proposals are: 1) A Bush administration plan to create a single regulator under Treasury; 2) A proposal by Rep. Gonzalez to create an independent regulator; 3) A task force plan to merge two existing regulators and reduce the Fed's role. Debate reflects turf battles among regulators as much as philosophies. The status quo may remain as more proposals complicate reaching a consensus.
After the acquisition: 5 steps to manage the tax processGrant Thornton LLP
A detailed plan is critical to accomplishing all the tax-related tasks that need to occur in the months after an M&A transaction closes. Your 100-day plan for managing the tax process should include five key steps.
Business Leasing and Finance News (BLFN) 2012 Summer EditionPatton Boggs LLP
1. The document summarizes decisions made by the FASB and IASB regarding changes to lease accounting standards. Key decisions include adopting a two-lease approach for lessees and lessors.
2. For equipment leases, it will now be presumed that leases will be accounted for using the interest and amortization method, resulting in front-loaded expenses for lessees. Fewer equipment leases will qualify for straight-line rent recognition.
3. For real estate leases, it will still be presumed that leases will be accounted for using the single lease expense method, allowing for straight-line rent recognition. This is viewed as good news for real estate lessees
Chapter 2 the regulatory framework of amlQuan Risk
The chapter discusses Hong Kong's regulatory framework for anti-money laundering (AML). It outlines several key ordinances related to money laundering and terrorist financing. It then describes Hong Kong's AML statutory framework, including the core Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). It also discusses the AML regulatory framework and the different regulators responsible for financial institutions and other industries.
The purpose of this directory, which the FSB has delivered to the April 2019 G20 Finance Ministers and Central Bank Governors meeting, is to provide information on the relevant regulators and other authorities in FSB jurisdictions and standard-setting bodies who are dealing with crypto-assets issues, and the aspects covered by them. Contacts information with regard to the below functions has been shared among the authorities mentioned.1.
Https://digitalis.id
Venture Capital Investing Maintains Steady Pace in Q3 2003mensa25
Venture capital investing maintained a steady pace in Q3 2003, with $4.2 billion invested in 667 companies. This represents a slight decline from Q2 2003 but an uptick from Q1 2003. For the past 5 quarters, venture capital investment has remained around $4 billion per quarter. The life sciences sector, including biotechnology and medical devices, received 30% of total funding and showed continuing strength. Biotechnology was the top funded industry for the first time in 7 years, surpassing software. Venture capitalists continued to invest most funds in expansion stage companies but maintained a balanced approach across all stages of development.
The document summarizes key discussions from the 14th Annual ELFA/IMN Investor Conference. There was high confidence in the equipment finance sector. Competition in the industry was increasing due to more players entering the space, but this also fueled innovation. However, some panelists warned that rising competition could lead to weaker underwriting standards over time. Overall, the investor demand for equipment ABS was strong and continuing to grow the market.
The document discusses the growing issue of identity theft and how it poses significant legal and financial risks for companies. It notes that identity theft has led to millions lost in credit and loans for lenders, and thousands of victims spending huge amounts of time and money fixing the issues. For a company, the costs of an identity theft incident involving customers could reach tens or even hundreds of millions of dollars, considering fines, lawsuits, and time spent by victims. The document stresses that companies need to take reasonable steps to protect personal information and implement identity theft prevention programs to help mitigate these risks.
This document contains a mock exam for Level 3 of the CMT exam. It includes 5 questions testing different subject areas: Ethics, Behavioral Finance, Intermarket Analysis, Risk Management, and Strategies and Techniques. Each question contains multiple parts requiring short answers. The questions present scenarios and charts to test the examinee's knowledge of technical analysis and portfolio management principles.
This document summarizes questions and answers from a webinar on fair lending compliance.
Jerry Miller addresses questions on Regulation B requirements for commercial vs consumer lending, problems that can arise from using proprietary scoring models or FICO scores to decline loans, recommendations for using proxies for HMDA data fields, whether UDAAP applies to commercial lending, issues with charging flat loan processing fees, laws that apply to commercial lending regarding fair housing and lending, HMDA reporting requirements for loan purchases, discretion in pricing commercial loans, and differences between fair banking exams by the OCC vs FDIC.
Financial incentives and loan officer behavior: multitasking and allocation o...FGV Brazil
We investigate the implications of providing loan officers with a compensation structure that rewards loan volume and penalizes poor performance. Using a unique data set provided by a large international commercial bank, we examine the three main activities that loan officers perform: monitoring, origination, and screening. We find that when loan officers are at risk of losing their bonus, they increase monitoring and origination, but not screening effort. On the other hand, having lost a bonus in the previous period does not entail higher effort. We document unintended consequences of the incentive contract showing the incompleteness of such contracts.
Date: 2015
Authors:
Behr, Patrick Gottfried
Drexler, Alejandro
Gropp, Reint
Guettler, Andre
JOBS Act Rulemaking Comments on SEC File Number S7-06-13 Part 3Jason Coombs
The document is a letter from Jason Coombs, CEO of Public Startup Company, Inc., submitted to the SEC regarding proposed rules under Release No. 33-9416. The letter provides commentary on several comments submitted to the SEC regarding the proposed rules. Coombs expresses concerns that the rules could unintentionally penalize startups and advocates for more clarity and flexibility in the rules to promote capital formation while maintaining investor protection.
President favours crowdfunding, but is it good enoughSilicon Halton
The President supports crowdfunding but questions if current proposals go far enough. Current securities laws prohibit general solicitation and limit participation to accredited investors, preventing startups from crowdfunding. Proposed legislation aims to allow crowdfunding but maintains complex rules, which may not be practical for small businesses to use. Simpler reforms, like allowing general solicitation and small investments from non-accredited investors under existing Rule 506, could enable effective crowdfunding without new complicated regulations.
- Private investment counsel, which provides personalized portfolio management services, was traditionally only accessible to investors with portfolios over $1 million. However, declining costs of technology and the rise of ETFs have allowed some firms to lower their minimums to as little as $100,000. This has democratized access to private investment counsel services.
- While still not widespread, some brokerages and independent advisers are now serving clients below $500,000. Technology has significantly reduced the back-office costs required to manage smaller portfolios. ETFs also allow effective diversification with fewer holdings.
- Private investment counsel provides a personalized approach with a dedicated portfolio manager, unlike mutual funds where investors don't interact with the
Cost vs. Risk: Finding the right balance for hedge fund administrationGrant Thornton LLP
Hedge Funds—Taking a fresh look at operations: How hedge fund managers can engage the right mix of internal, outside and shadow administration. Read the full paper at http://gt-us.co/1rjV3Se
This document discusses internal investigations of exceptions flagged by anti-money laundering systems. It outlines the SAFE assessment approach used by the JFIU, which involves screening transactions for suspicious indicators, asking customers questions, finding customer records, and evaluating all information. Common exceptions involve customer names matching sanctions lists or transactions resembling suspicious scenarios. Internal assessments justify false positives while suspicious transaction reports are filed for true positives.
This document summarizes legal ethics issues for lawyers in a changing profession. It discusses trends affecting law firms like changing firm structures, challenges with marketing and funding, and diversity issues. It also outlines new ABA Model Rule 8.4(g) regarding harassment and discrimination. The document discusses lawyers' role as gatekeepers regarding money laundering. It provides guidance on handling client funds and trust accounts, storing client information, and practicing across state lines. The presentation emphasizes that technological changes require proactive steps to maintain confidentiality and security online.
Cultural Issues In Asia Private Equity and Venture Capital TransactionsPamir Law Group
Current trends in venture capital and private equity in Asia include:
1) Understanding local business culture, regulatory environments, and how parties evaluate comparative advantages is key to successful deals.
2) Knowing the concerns, goals, decision-making dynamics and motivations of local parties helps structure optimal deals.
3) Common issues include preference for relationships over contracts, family-owned businesses, tax havens, hierarchy, and incentivizing good behavior through penalties rather than rewards.
Discussion #1Based on authoritative sources (including peer revi.docxcuddietheresa
Discussion #1
Based on authoritative sources (including peer reviewed articles from the library, Fraud Examiners Manual, etc), give some examples and discuss current ways in which you could obtain information from public and private sources if you were asked to investigate an employee in accounts receivable that is believed to be embezzling funds from your company. Do you think the data you obtained is reliable from these public and private sources, why or why not?
Comment (FG)
The investigation's study element includes specialists in publicly sourced data obtaining appropriate data about people and organizations suspected of fraud participation (PWC, 2008). This is one of the first measures taken when a suspect was recognized in an inquiry. Most of the information and paperwork used in an inquiry are produced internally – it comes from within the organization or is otherwise easily accessible within the organization (in the event of invoices from the seller). However, sometimes it becomes vital to have information or paperwork that is only accessible from external sources. Public data and documents are typically accessible to the general government either by visiting a website or facility or on request from the record holder. In most instances, government agencies maintain public records. There are two wide categories of external information sources, public and non-public. For instance, if an employee posts pictures or makes statements on social media, this data could be easily accessible to all spectators. “Investigators should always use caution when accessing this information, especially if the information is only available to ‘friends’ or other contacts that the individual has granted special access to.” (Pomerantz & Zack, 2017)
Non-public documents are confidential and private. Holders of such documents are under no obligation to generate such documents unless they have given their permission or are required to do so as a consequence of legal proceedings, such as a court order or summons. This category includes records such as private bank statements from people who may be the topic of an inquiry. Researchers do not normally have ready access to these records. Non-public records include information about a private and confidential person or business. Must get from 1) Consent, 2) Legal process 3) Search warrant.
An employer who uses a third party to conduct a workplace investigation no longer has to obtain the prior consent of an employee if the investigation involves suspected: 1) Misconduct, 2) Violation of law or regulations, 3) Violation of any preexisting policy of the employer (ACFE, 201
Discussion #2
Play the video titled 5 Steps to Reduce Small Business Fraud located on the ACFE website http://www.acfe.com/Video-Library.aspx
What did you learn from this video that you could relate to your current, past or future job in accounting? Be sure to use authoritative sources (including peer reviewed articles from the library, F ...
2015
English 306, Christolear Nathan Afshin
Response to the new proposed labor department rules
The Labor Department has proposed a set of rules and regulations that would put financial advisers under a fiduciary standard. This would legally require these advisers to put their clients’ interests above their own. While the spirit of these proposals is all in good intention, they will not be good for the investors or the industry and ought not to be enacted.
Executive Summary
Since the financial crisis, the trust in financial advisers has eroded deeply. Many have lost trust in not only the financial system but also individual advisers. Their loss of trust is not completely unwarranted, conflicts of interest do in fact exist within the financial services industry and they have dire consequences. Conflicted advice for financial advisers to their clients can lower the expected returns of the clients’ investments and lead to a cumulative billions in annual wealth that is lost in the U.S. economy.
To combat this horrid phenomenon, the U.S. Labor Department has proposed a set of rules and regulations that would put a federal law in place that puts a fiduciary standard on financial advisers. This standard would legally require financial advisers to put the interest of the clients above the interests of the adviser. Although this may seem adequate and necessary on the surface, these rules would put a damper on the financial services industry and would end up hurting the very people trying to be protected. These rules would not work because they would cause a regulatory overlap and could end up reducing options for smaller investors.
Instead of proposing rules that would hurt the industry and consumers or rather do nothing at all and stick with the horrid status quo, I have proposed a solution. This proposal would be a private, objective nonprofit body that ensures the financial industry can fix itself rather than be attempted to be fixed by an outside body. This way we will be able to write our own destiny, rather than be told what it is. This non-profit body, with a tentative name of The Financial Ethics Body, will be funded by financial services companies that participate in this plan as a fixed percentage of their profits. By participating in the program, companies will have an ethics audit every six months to ensure that all of their employees are behaving in the most ethical way possible. If they pass this audit, companies will get an accreditation. I know some might say, “Why would any company pay dues to get audited with no guarantee of passing”, and I will tell you why. Companies will participate in this curriculum because it will become a nationwide standard to have and will show the public that a company is trustworthy and therefore eligible for their business. Not having this accreditation will be a red flag for businesses and drive potential clients away. This is, without a doubt, the best possible solution to this problem.
Na.
This document discusses due diligence in international transactions. It begins with an introduction that defines due diligence and its importance when evaluating potential investments, mergers, or acquisitions. It then discusses the different types of due diligence, including legal, financial, and commercial due diligence. The document also outlines the key steps in a typical due diligence framework. Finally, it emphasizes the importance of due diligence for reducing risk and gaining valuable information when conducting international business transactions.
The document discusses three main proposals for restructuring financial institution regulation that are being debated in the House Banking Committee. It also discusses other related issues like community reinvestment obligations and estimates of future costs to resolve failed banks. The three main regulatory restructuring proposals are: 1) A Bush administration plan to create a single regulator under Treasury; 2) A proposal by Rep. Gonzalez to create an independent regulator; 3) A task force plan to merge two existing regulators and reduce the Fed's role. Debate reflects turf battles among regulators as much as philosophies. The status quo may remain as more proposals complicate reaching a consensus.
After the acquisition: 5 steps to manage the tax processGrant Thornton LLP
A detailed plan is critical to accomplishing all the tax-related tasks that need to occur in the months after an M&A transaction closes. Your 100-day plan for managing the tax process should include five key steps.
Business Leasing and Finance News (BLFN) 2012 Summer EditionPatton Boggs LLP
1. The document summarizes decisions made by the FASB and IASB regarding changes to lease accounting standards. Key decisions include adopting a two-lease approach for lessees and lessors.
2. For equipment leases, it will now be presumed that leases will be accounted for using the interest and amortization method, resulting in front-loaded expenses for lessees. Fewer equipment leases will qualify for straight-line rent recognition.
3. For real estate leases, it will still be presumed that leases will be accounted for using the single lease expense method, allowing for straight-line rent recognition. This is viewed as good news for real estate lessees
Chapter 2 the regulatory framework of amlQuan Risk
The chapter discusses Hong Kong's regulatory framework for anti-money laundering (AML). It outlines several key ordinances related to money laundering and terrorist financing. It then describes Hong Kong's AML statutory framework, including the core Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO). It also discusses the AML regulatory framework and the different regulators responsible for financial institutions and other industries.
The purpose of this directory, which the FSB has delivered to the April 2019 G20 Finance Ministers and Central Bank Governors meeting, is to provide information on the relevant regulators and other authorities in FSB jurisdictions and standard-setting bodies who are dealing with crypto-assets issues, and the aspects covered by them. Contacts information with regard to the below functions has been shared among the authorities mentioned.1.
Https://digitalis.id
Venture Capital Investing Maintains Steady Pace in Q3 2003mensa25
Venture capital investing maintained a steady pace in Q3 2003, with $4.2 billion invested in 667 companies. This represents a slight decline from Q2 2003 but an uptick from Q1 2003. For the past 5 quarters, venture capital investment has remained around $4 billion per quarter. The life sciences sector, including biotechnology and medical devices, received 30% of total funding and showed continuing strength. Biotechnology was the top funded industry for the first time in 7 years, surpassing software. Venture capitalists continued to invest most funds in expansion stage companies but maintained a balanced approach across all stages of development.
The document summarizes key discussions from the 14th Annual ELFA/IMN Investor Conference. There was high confidence in the equipment finance sector. Competition in the industry was increasing due to more players entering the space, but this also fueled innovation. However, some panelists warned that rising competition could lead to weaker underwriting standards over time. Overall, the investor demand for equipment ABS was strong and continuing to grow the market.
The document discusses the growing issue of identity theft and how it poses significant legal and financial risks for companies. It notes that identity theft has led to millions lost in credit and loans for lenders, and thousands of victims spending huge amounts of time and money fixing the issues. For a company, the costs of an identity theft incident involving customers could reach tens or even hundreds of millions of dollars, considering fines, lawsuits, and time spent by victims. The document stresses that companies need to take reasonable steps to protect personal information and implement identity theft prevention programs to help mitigate these risks.
This document contains a mock exam for Level 3 of the CMT exam. It includes 5 questions testing different subject areas: Ethics, Behavioral Finance, Intermarket Analysis, Risk Management, and Strategies and Techniques. Each question contains multiple parts requiring short answers. The questions present scenarios and charts to test the examinee's knowledge of technical analysis and portfolio management principles.
This document summarizes questions and answers from a webinar on fair lending compliance.
Jerry Miller addresses questions on Regulation B requirements for commercial vs consumer lending, problems that can arise from using proprietary scoring models or FICO scores to decline loans, recommendations for using proxies for HMDA data fields, whether UDAAP applies to commercial lending, issues with charging flat loan processing fees, laws that apply to commercial lending regarding fair housing and lending, HMDA reporting requirements for loan purchases, discretion in pricing commercial loans, and differences between fair banking exams by the OCC vs FDIC.
Financial incentives and loan officer behavior: multitasking and allocation o...FGV Brazil
We investigate the implications of providing loan officers with a compensation structure that rewards loan volume and penalizes poor performance. Using a unique data set provided by a large international commercial bank, we examine the three main activities that loan officers perform: monitoring, origination, and screening. We find that when loan officers are at risk of losing their bonus, they increase monitoring and origination, but not screening effort. On the other hand, having lost a bonus in the previous period does not entail higher effort. We document unintended consequences of the incentive contract showing the incompleteness of such contracts.
Date: 2015
Authors:
Behr, Patrick Gottfried
Drexler, Alejandro
Gropp, Reint
Guettler, Andre
JOBS Act Rulemaking Comments on SEC File Number S7-06-13 Part 3Jason Coombs
The document is a letter from Jason Coombs, CEO of Public Startup Company, Inc., submitted to the SEC regarding proposed rules under Release No. 33-9416. The letter provides commentary on several comments submitted to the SEC regarding the proposed rules. Coombs expresses concerns that the rules could unintentionally penalize startups and advocates for more clarity and flexibility in the rules to promote capital formation while maintaining investor protection.
President favours crowdfunding, but is it good enoughSilicon Halton
The President supports crowdfunding but questions if current proposals go far enough. Current securities laws prohibit general solicitation and limit participation to accredited investors, preventing startups from crowdfunding. Proposed legislation aims to allow crowdfunding but maintains complex rules, which may not be practical for small businesses to use. Simpler reforms, like allowing general solicitation and small investments from non-accredited investors under existing Rule 506, could enable effective crowdfunding without new complicated regulations.
- Private investment counsel, which provides personalized portfolio management services, was traditionally only accessible to investors with portfolios over $1 million. However, declining costs of technology and the rise of ETFs have allowed some firms to lower their minimums to as little as $100,000. This has democratized access to private investment counsel services.
- While still not widespread, some brokerages and independent advisers are now serving clients below $500,000. Technology has significantly reduced the back-office costs required to manage smaller portfolios. ETFs also allow effective diversification with fewer holdings.
- Private investment counsel provides a personalized approach with a dedicated portfolio manager, unlike mutual funds where investors don't interact with the
Cost vs. Risk: Finding the right balance for hedge fund administrationGrant Thornton LLP
Hedge Funds—Taking a fresh look at operations: How hedge fund managers can engage the right mix of internal, outside and shadow administration. Read the full paper at http://gt-us.co/1rjV3Se
This document discusses internal investigations of exceptions flagged by anti-money laundering systems. It outlines the SAFE assessment approach used by the JFIU, which involves screening transactions for suspicious indicators, asking customers questions, finding customer records, and evaluating all information. Common exceptions involve customer names matching sanctions lists or transactions resembling suspicious scenarios. Internal assessments justify false positives while suspicious transaction reports are filed for true positives.
This document summarizes legal ethics issues for lawyers in a changing profession. It discusses trends affecting law firms like changing firm structures, challenges with marketing and funding, and diversity issues. It also outlines new ABA Model Rule 8.4(g) regarding harassment and discrimination. The document discusses lawyers' role as gatekeepers regarding money laundering. It provides guidance on handling client funds and trust accounts, storing client information, and practicing across state lines. The presentation emphasizes that technological changes require proactive steps to maintain confidentiality and security online.
Cultural Issues In Asia Private Equity and Venture Capital TransactionsPamir Law Group
Current trends in venture capital and private equity in Asia include:
1) Understanding local business culture, regulatory environments, and how parties evaluate comparative advantages is key to successful deals.
2) Knowing the concerns, goals, decision-making dynamics and motivations of local parties helps structure optimal deals.
3) Common issues include preference for relationships over contracts, family-owned businesses, tax havens, hierarchy, and incentivizing good behavior through penalties rather than rewards.
Discussion #1Based on authoritative sources (including peer revi.docxcuddietheresa
Discussion #1
Based on authoritative sources (including peer reviewed articles from the library, Fraud Examiners Manual, etc), give some examples and discuss current ways in which you could obtain information from public and private sources if you were asked to investigate an employee in accounts receivable that is believed to be embezzling funds from your company. Do you think the data you obtained is reliable from these public and private sources, why or why not?
Comment (FG)
The investigation's study element includes specialists in publicly sourced data obtaining appropriate data about people and organizations suspected of fraud participation (PWC, 2008). This is one of the first measures taken when a suspect was recognized in an inquiry. Most of the information and paperwork used in an inquiry are produced internally – it comes from within the organization or is otherwise easily accessible within the organization (in the event of invoices from the seller). However, sometimes it becomes vital to have information or paperwork that is only accessible from external sources. Public data and documents are typically accessible to the general government either by visiting a website or facility or on request from the record holder. In most instances, government agencies maintain public records. There are two wide categories of external information sources, public and non-public. For instance, if an employee posts pictures or makes statements on social media, this data could be easily accessible to all spectators. “Investigators should always use caution when accessing this information, especially if the information is only available to ‘friends’ or other contacts that the individual has granted special access to.” (Pomerantz & Zack, 2017)
Non-public documents are confidential and private. Holders of such documents are under no obligation to generate such documents unless they have given their permission or are required to do so as a consequence of legal proceedings, such as a court order or summons. This category includes records such as private bank statements from people who may be the topic of an inquiry. Researchers do not normally have ready access to these records. Non-public records include information about a private and confidential person or business. Must get from 1) Consent, 2) Legal process 3) Search warrant.
An employer who uses a third party to conduct a workplace investigation no longer has to obtain the prior consent of an employee if the investigation involves suspected: 1) Misconduct, 2) Violation of law or regulations, 3) Violation of any preexisting policy of the employer (ACFE, 201
Discussion #2
Play the video titled 5 Steps to Reduce Small Business Fraud located on the ACFE website http://www.acfe.com/Video-Library.aspx
What did you learn from this video that you could relate to your current, past or future job in accounting? Be sure to use authoritative sources (including peer reviewed articles from the library, F ...
2015
English 306, Christolear Nathan Afshin
Response to the new proposed labor department rules
The Labor Department has proposed a set of rules and regulations that would put financial advisers under a fiduciary standard. This would legally require these advisers to put their clients’ interests above their own. While the spirit of these proposals is all in good intention, they will not be good for the investors or the industry and ought not to be enacted.
Executive Summary
Since the financial crisis, the trust in financial advisers has eroded deeply. Many have lost trust in not only the financial system but also individual advisers. Their loss of trust is not completely unwarranted, conflicts of interest do in fact exist within the financial services industry and they have dire consequences. Conflicted advice for financial advisers to their clients can lower the expected returns of the clients’ investments and lead to a cumulative billions in annual wealth that is lost in the U.S. economy.
To combat this horrid phenomenon, the U.S. Labor Department has proposed a set of rules and regulations that would put a federal law in place that puts a fiduciary standard on financial advisers. This standard would legally require financial advisers to put the interest of the clients above the interests of the adviser. Although this may seem adequate and necessary on the surface, these rules would put a damper on the financial services industry and would end up hurting the very people trying to be protected. These rules would not work because they would cause a regulatory overlap and could end up reducing options for smaller investors.
Instead of proposing rules that would hurt the industry and consumers or rather do nothing at all and stick with the horrid status quo, I have proposed a solution. This proposal would be a private, objective nonprofit body that ensures the financial industry can fix itself rather than be attempted to be fixed by an outside body. This way we will be able to write our own destiny, rather than be told what it is. This non-profit body, with a tentative name of The Financial Ethics Body, will be funded by financial services companies that participate in this plan as a fixed percentage of their profits. By participating in the program, companies will have an ethics audit every six months to ensure that all of their employees are behaving in the most ethical way possible. If they pass this audit, companies will get an accreditation. I know some might say, “Why would any company pay dues to get audited with no guarantee of passing”, and I will tell you why. Companies will participate in this curriculum because it will become a nationwide standard to have and will show the public that a company is trustworthy and therefore eligible for their business. Not having this accreditation will be a red flag for businesses and drive potential clients away. This is, without a doubt, the best possible solution to this problem.
Na.
This document discusses due diligence in international transactions. It begins with an introduction that defines due diligence and its importance when evaluating potential investments, mergers, or acquisitions. It then discusses the different types of due diligence, including legal, financial, and commercial due diligence. The document also outlines the key steps in a typical due diligence framework. Finally, it emphasizes the importance of due diligence for reducing risk and gaining valuable information when conducting international business transactions.
Online apparel shopping has grown in popularity due to the convenience of shopping from home and the ability to easily compare prices, but retail shopping still has advantages in allowing customers to physically see and try on items before purchase and provides a more interactive shopping experience. While online shopping offers a wider selection, lower prices, and 24/7 availability, many customers still prefer retail stores for the social aspect of shopping and the instant gratification of walking out with purchases. Both online and retail channels have pros and cons for customers seeking apparel depending on their priorities around convenience, selection, pricing, and shopping experience.
Freescale Semiconductors, Inc.
Advanced Auditing
December 9, 2014
Threat of prison terms deter executives
Wide range in sentencing
Longer prison terms
No perfect answer
Additional laws and harsher penalties on financial fraud can eliminate or mitigate financial fraud.
Does the threat of prison terms deter executives from committing wide-scale financial frauds? In my opinion, yes and no.
An executive engaging in accounting fraud is typically not planning on getting caught. Therefore, stricter sentencing guidelines wouldn’t seem to have much of an impact on an executive’s thought as to not commit fraud. If an executive isn’t planning on getting caught, a potential prison term of 10 years versus five years is no different.
If the goal of sentencing is really punishment over deterrence, the longer prison sentences are meeting that goal. Society needs protection from these criminal minds who cause widespread financial damage to so many.
No perfect answer exists when it comes to white-collar crimes and prison sentences. The system is still evolving and will likely continue to do so for a long time to come. What is important to recognize is that white-collar crimes can have many victims and can cause widespread damage. For that, stiff sentences to punish and possibly deter the fraud perpetrators are necessary, and lawmakers should work to make those sentences fair and equitable.
2
SOX protection
Sentencing guidelines have changed dramatically
Is there still fairness
Powerful deterrent
Additional laws and harsher penalties on financial fraud can eliminate or mitigate financial fraud, continued
Since the corporate scandals the SOX Act of 2002 sought to protect retail investors from financial statement fraud. Sentencing guidelines have changed dramatically because of Sarbanes-Oxley. For example, wire and mail fraud previously carried maximum five-year sentences, and that was increased to 20 years under the legislation.
The increase in the length of sentences for white-collar crimes now puts many of these crimes ahead of crimes such as drug trafficking and manslaughter. Some question the fairness of this. While financial crimes can cost millions or billions of dollars, to some it still seems irrational to make those prison sentences harsher than the sentences for violent crimes. Others recognize the widespread financial devastation even one white-collar crime can cause, and hope that lengthy sentences will serve as a powerful deterrent.
3
Shallow sentencing should be examined closer
Limited resources tendency to focus on violent crimes
Direct involvement cooperation lighter sentencing
The publicity of fraud
Additional laws and harsher penalties on financial fraud can eliminate or mitigate financial fraud, continued
The fact remains that shallow sentencing should be examined closer. Lawmakers, judges, and prosecutors owe it to consumer and victims to work toward a system that is fair and equitable ...
The document discusses why financial institutions exist and how they promote economic efficiency. It covers topics like transaction costs, adverse selection, moral hazard, and how these concepts influence financial structure. Financial institutions help address issues like the "lemons problem" that can arise from asymmetric information between parties. They do this through tools like producing private information, regulation, financial intermediation, debt contracts, collateral requirements, and monitoring borrowers.
Our endeavour upheld group has more than 50 years of experience working with systematic investment management, and software development. By utilizing machine learning, data science and automation, we enable advisors to manage portfolio risk in near real-time.
1Ethics and the Nonprofit March 2013Ethics and the NonprofAnastaciaShadelb
1Ethics and the Nonprofit March 2013
Ethics and the Nonprofit
March 2013
Table of ContentsEthics and the Nonprofit March 2013
Contents
Introduction .................................................................... 1
Protecting the Most Important Asset of a Nonprofit ........ 3
The Code of Ethics .......................................................... 4
Implementation and Operation of Codes of Ethics ......... 7
Specific Ethical Issues in Tax Policy for Exempt
Nonprofits .................................................................... 8
Conclusion .................................................................... 10
Authors
Toni Boucher
Director
Commonfund Institute
15 Old Danbury Road
Wilton, CT 06897
[email protected]
Stephen Hudspeth
Visiting Clinical Lecturer in Law
Yale Law School
P.O. Box 208215
New Haven, CT 06520
[email protected]
About Commonfund Institute
Commonfund Institute houses the education and research
activities of Commonfund and provides the entire commu-
nity of long-term investors with investment information and
professional development programs. Commonfund Institute
is dedicated to the advancement of investment knowledge and
the promotion of best practices in financial management. In
addition to teaming with NACUBO to produce the NCSE,
Commonfund Institute provides a wide variety of resources,
including conferences, seminars and roundtables on topics
such as endowments and treasury management; proprietary
and third-party research and publications, including the
Higher Education Price Index (HEPI); and events such as the
annual Commonfund Forum and Commonfund Endowment
Institute.
1Ethics and the Nonprofit March 2013
Other
Nonprofit
Organizations
29%
Public
Charities
8%
Private
Foundations
64%
Other
Nonprofit
Organizations
41%
Private
Foundations
53%
Public
Charities
7%
1999
1.3 Million Nonprofits
(Allocation by Type)
2009
1.6 Million Nonprofits
(Allocation by Type)
5.5% 9.2%
0%
50%
100%
GDP by Sector Wages and Salaries
by Sector
Nonprofits All Other Sectors
Summary
The American nonprofit sector is large, effective and influen-
tial, but with influence comes responsibility. Ethical lapses,
whether real or perceived, can draw the attention of regula-
tors and the public, leading to financial and reputational
damage that can impair an organization’s ability to carry out
its mission. Written ethics and compliance policies, when
consistently followed, can provide a first line of defense. This
paper, written for nonprofit trustees and staff, outlines the
major ethical issues facing U.S. nonprofits and describes policy
norms and governance mechanisms designed to address them.
It reviews the topics that a code of ethics should cover, includ-
ing compensation, conflicts of interest, financial controls and
disclosure. Compliance with applicable laws and regulations
is an area of particular focus. The paper closes by describing
the governance ...
The document summarizes five ways the SEC Enforcement Division has strengthened enforcement efforts and how these changes may affect individuals and companies. The SEC has established specialized investigative units focused on areas like market abuse, structured products, and foreign corrupt practices. It has also streamlined management, improved intake of tips and complaints, and begun using cooperation agreements to encourage cooperation from individuals and companies under investigation.
This document summarizes how corporate compliance has affected the financial advising industry. It discusses how the 2008 market crash prompted more regulations through laws like the Dodd-Frank Act. Now there are new policies around social media use, marketing, and ensuring ethical practices. The document examines the role of synthetic CDOs in causing the recession and how this led to changes in regulations governing the financial industry.
Eco-Products, Inc. was founded in 1990 by Steve Savage and his father to provide eco-friendly paper and janitorial supplies. In the early years through 2003, it operated as a small lifestyle business out of Boulder, Colorado, relying on friends and family for funding. Margins were low and growth was slow as consumers were slow to adopt eco-friendly products. By 2007, Eco-Products had expanded significantly but was still losing money, burning through over $3 million in cash that year according to its financial statements.
The 2017 Regulatory and Examination Priorities Letter1, published by FINRA on January 4th, is a fitting reminder of the resolve of Regulators to better execute their mission of investor protection and market integrity. Although the Libor and FX scandals might seem like distant memories, Regulators have continued on the war path. We would like to share some thoughts based on work we have been involved in last year. The idea is to help lawyers and banks have a grown-up discussion and be prepared if, or rather more likely, when, the Regulator knocks at the door.
The 2017 Regulatory and Examination Priorities Letter1, published by FINRA on January 4th, is a fitting reminder of the resolve of Regulators to better execute their mission of investor protection and market integrity. Although the Libor and FX scandals might seem like distant memories, Regulators have continued on the war path. We would like to share some thoughts based on work we have been involved in last year. The idea is to help lawyers and banks have a grown-up discussion and be prepared if, or rather more likely, when, the Regulator knocks at the door.
The 2017 Regulatory and Examination Priorities Letter, published by FINRA on January 4th, is a fitting reminder of the resolve of Regulators to better execute their mission of investor protection and market integrity. Although the Libor and FX scandals might seem like distant memories, Regulators have continued on the war path. We would like to share some thoughts based on work we have been involved in last year in a regulatory competition investigation.
Similar to Michael Clements Avenir financial group (14)
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The E-Way Bill revolutionizes logistics by digitizing the documentation of goods transport, ensuring transparency, tax compliance, and streamlined processes. This mandatory, electronic system reduces delays, enhances accountability, and combats tax evasion, benefiting businesses and authorities alike. Embrace the E-Way Bill for efficient, reliable transportation operations.
UnityNet World Environment Day Abraham Project 2024 Press ReleaseLHelferty
June 12, 2024 UnityNet International (#UNI) World Environment Day Abraham Project 2024 Press Release from Markham / Mississauga, Ontario in the, Greater Tkaronto Bioregion, Canada in the North American Great Lakes Watersheds of North America (Turtle Island).
ZKsync airdrop of 3.6 billion ZK tokens is scheduled by ZKsync for next week.pdfSOFTTECHHUB
The world of blockchain and decentralized technologies is about to witness a groundbreaking event. ZKsync, the pioneering Ethereum Layer 2 network, has announced the highly anticipated airdrop of its native token, ZK. This move marks a significant milestone in the protocol's journey, empowering the community to take the reins and shape the future of this revolutionary ecosystem.
Cleades Robinson, a respected leader in Philadelphia's police force, is known for his diplomatic and tactful approach, fostering a strong community rapport.
Methanex is the world's largest producer and supplier of methanol. We create value through our leadership in the global production, marketing and delivery of methanol to customers. View our latest Investor Presentation for more details.
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Michael Clements Avenir financial group
1. Whistleblower Plan Blasted.......3
Firm Ousted over Mark-ups.......6
January 3, 2011
(2011, continued on page 2)
(Disclosure document, continued on page 4)
(AML program, continued on page 5)
Movement toward fiduciary standard,
conflicts disclosure among 2011 issues
Activity around a fiduciary standard for BDs is
one of the leading topics looming for the year 2011.
“It’s been made clear the SECSECSECSECSEC intends to move
forward in creating this new fiduciary standard” for
broker-dealers, says Joan HinchmanJoan HinchmanJoan HinchmanJoan HinchmanJoan Hinchman, CEO of the
National Society of Compliance ProfessionalsNational Society of Compliance ProfessionalsNational Society of Compliance ProfessionalsNational Society of Compliance ProfessionalsNational Society of Compliance Professionals.
DaDaDaDaDavidvidvidvidvid TTTTTittsittsittsittsittswwwwworororororththththth, executive director of the
InInInInInvvvvvestmentestmentestmentestmentestment AdviserAdviserAdviserAdviserAdviser AssociationAssociationAssociationAssociationAssociation, says it’s difficult to
predict what the SEC will say in its report due out
this month about the obligations of broker-dealers
versus investment advisers. But he said there’s
widespread belief that the SEC eventually could
mandate some type of fiduciary standard for BDs.“I
Groups say FINRA is moving too fast
on disclosure document idea
A group that represents compliance officers says
some of the provisions in FINRAFINRAFINRAFINRAFINRA’’’’’sssss early-stage
proposal to require firms to disclose conflicts and
other information at the start of a business
relationship are fraught with problems.
In addition, that group, the National Society ofNational Society ofNational Society ofNational Society ofNational Society of
Compliance ProfessionalsCompliance ProfessionalsCompliance ProfessionalsCompliance ProfessionalsCompliance Professionals, is in synch with SIFMASIFMASIFMASIFMASIFMA
in arguing that FINRA jumped the gun with its
proposal.They say FINRA should wait until the SECSECSECSECSEC
releases results of its study on the obligations of
broker-dealers versus investment advisers this month
or even wait until later.
The SEC’s congressionally mandated study is
expected to fuel the Commission’s movement
toward requiring some type of fiduciary duty
standard for BDs that give investment advice to
retail customers.
The comment period just ended regarding the
Enforcement Alert
FINRA case illustrates steps to take
to improve AML program
A recent FINRAFINRAFINRAFINRAFINRA settlement with a firm accused
of failing to adequately implement an AML program
offers a chance to look at what steps to take to
substantially upgrade AML performance.
Fined $150,000 was the Miami-based broker-
dealer Global Strategic Investments LLC.Global Strategic Investments LLC.Global Strategic Investments LLC.Global Strategic Investments LLC.Global Strategic Investments LLC. FINRA
says that in several instances, Global — acting
through associated person Cesar HernandezCesar HernandezCesar HernandezCesar HernandezCesar Hernandez —
failed to detect, analyze or report highly suspicious
transactions, or to implement an adequate customer
identification program from January 2007 through
April 2009.
Hernandez, who has held various positions with
the firm since May 2001, including CEO, CCO, and
AML compliance officer, was fined $25,000 and
suspended from serving in a principal capacity for
three months, starting Nov. 15, 2010.
2. BD Week • 9737 Washingtonian Blvd., Suite 100 • Gaithersburg, MD 20878-7364 • Fax (301) 287-2535
PAYMENT OPTION 1 — Charge $1,595 to my credit card.
PAYMENT OPTION 2 — Enclosed is my check or money
order for $1,595 made payable to UCG (TIN: 52-1130564).
PAYMENT OPTION 3 — Bill my company for $1,595.
January 3, 20112
2011 (cont. from pg. 1)
Name _________________________________________________________
Title___________________________________________________________
Firm __________________________________________________________
Address _______________________________________________________
City _____________________________State __________ Zip __________
Telephone (______) ____________________________________________
Fax (______)___________________________________________________
E-mail address_________________________________________________
For fastest service, call TOLL FREE (866) 777-8567
or fax this card to (301) 287-2535.
SUBSCRIPTION CERTIFICATEBDWEEK
Card # ____________________________________________________
Exp. Date_______________Signature___________________________
* Discount applies to new subscribers only.
(2011, continued on page 3)
think most people think the SEC will split the baby
in some sense, that it’s probably not just going to be
all the Advisers Act fiduciary duty, or the status quo,
it’ll be something in the middle, but I think it’s pretty
hard to predict.”
“I think it will certainly be proposed,” says
MicMicMicMicMichael Khael Khael Khael Khael Kofofofofofffffflerlerlerlerler, a partner in the New York office of
SutherlandSutherlandSutherlandSutherlandSutherland, who wrote a white paper on the
fiduciary topic for the firm EnEnEnEnEnvvvvvestnetestnetestnetestnetestnet. But even if
adopted in 2011, the compliance date likely would
be the latter part of 2011 or later, Koffler says.“One
would think there would be a healthy lead-in time.”
Lisa RothLisa RothLisa RothLisa RothLisa Roth, the CCO and CEO of KKKKKeeeeeystoneystoneystoneystoneystone
Capital CorporationCapital CorporationCapital CorporationCapital CorporationCapital Corporation and an active member of the
NationalNationalNationalNationalNational Association of Independent BrAssociation of Independent BrAssociation of Independent BrAssociation of Independent BrAssociation of Independent Brokokokokokererererer
DealersDealersDealersDealersDealers, says she thinks the SEC will issue the
fiduciary duty rule this year.
Here are a few comments from knowledgeable
industry players about other developments likely on
the horizon in the year ahead:
✔ Point of business contact disclosure forPoint of business contact disclosure forPoint of business contact disclosure forPoint of business contact disclosure forPoint of business contact disclosure for
BDsBDsBDsBDsBDs — FINRAFINRAFINRAFINRAFINRA’’’’’sssss concept proposal (Regulatory
Notice 10-54 ), would require BDs to give new
customers an ADV-type disclosure document about
services, fees, and conflicts (see related story, pg.1).“I
don’t think that’s going to go anywhere in its
present form, but it’s a shot across the bow,” Koffler
says. He thinks the proposal will be changed a great
deal.
Roth says FINRA’s concept for the proposal is
“great,” but as currently written, it “doesn’t do one
thing to help investors,” and would just provide “a
heyday for consultants and attorneys and regulatory
examiners.” She hopes, instead, that FINRA takes
some of the information it already has in its systems
— such as some of the information in Gateway —
and puts it in a format that’s interactive and that lets
investors see it.
✔ SEC’SEC’SEC’SEC’SEC’s whistlebs whistlebs whistlebs whistlebs whistleblololololowwwwwer prer prer prer prer proposaloposaloposaloposaloposal — The
controversial proposal, if finalized, would pay money
awards to whistleblowers who voluntarily provide
original information about securities law violations.
To get the award, tips would need to lead to the SEC
getting at least $1 million in sanctions. If finalized,
firms would need to craft policies and procedures
that reflect the provisions and also educate staff
about the provisions, Hinchman says.
Tittsworth notes that the SEC has delayed
creating the formal office of the whistleblower until
Congress frees up money for it.The new Congress is
expected to be more fiscally conservative.
As to whether the new Congress might scuttle
major provisions of the Dodd-Frank financial reform
law such as the whistleblower program,Tittsworth
says,“I think that the odds that the new Congress is
just going to come in and repeal large chunks of
Dodd-Frank is highly improbable.”
“I do think that the new Republican leadership in
the House is likely to convene a number of hearings.
I think those hearings will focus on a variety of
provisions in Dodd-Frank … whistleblower could be
part of that, [the idea of an] SRO [for investment
advisers] could be part of that, derivatives certainly
could be part of that, the Volcker rule could certainly
3. January 3, 2011 3
2011 (cont. from pg. 2)
(Whistleblower, continued on page 4)
be part of that, but I think it’s pretty hard to predict.”
✔ Regulators getting into new areas —Regulators getting into new areas —Regulators getting into new areas —Regulators getting into new areas —Regulators getting into new areas — Some
firms might need to get used to regulators with new
authority, such as the Municipal SecurMunicipal SecurMunicipal SecurMunicipal SecurMunicipal Securitiesitiesitiesitiesities
Rulemaking Board,Rulemaking Board,Rulemaking Board,Rulemaking Board,Rulemaking Board, that could affect day-to-day
compliance regimes, Roth says. She also notes that
FINRA is “angling hard to get oversight of
investment advisers,” and states could be stepping up
their authority. California, she notes, now requires
third-party marketers to register as lobbyists. Small
firms might need to get more connected with trade
organizations to stay abreast of the regulatory
changes taking place, Roth says.
✔ ArbitrArbitrArbitrArbitrArbitrationationationationation — There’s a possibility that
mandatory arbitration for broker-dealers could be
done away with, Koffler says.
✔ DOL regulationsDOL regulationsDOL regulationsDOL regulationsDOL regulations — Broker-dealers that
provide investment advice to employee benefit plans
and individual retirement accounts could fall within
a new, broadened definition of ERISA fiduciary.
“There are a lot of questions on the BD side,” Koffler
says. He says it will be interesting to see how BDs
that are classified as fiduciaries under the regs deal
with the restrictions that come with that
classification.
✔ BloBloBloBloBlowups aheadwups aheadwups aheadwups aheadwups ahead and rand rand rand rand riskiskiskiskisky pry pry pry pry productsoductsoductsoductsoducts — “The
things that are likely to blow up are the instruments
that have historically been considered safe, which,
because of the economic environment, are no longer
safe,” Hinchman says, emphasizing municipal
securities.“I think we’ll be seeing some
municipalities defaulting,” she adds. She also says that
sovereign foreign debt used to be considered safe
but now “it’s an increasingly risky instrument.”
More investors might be approached with
complex instruments. “I’m sure this is on FINRA’s
mind:There’ll be generally a desperate search for
deals.And what people should be watching for is the
increase in offerings of complex derivative
instruments with lots of leverage.The baby boom
generation that is retiring, they’re most susceptible,”
Hinchman says.
She says the sales force will look to the baby
boomers for transactions.“The question will be, will
the baby boomers understand what they’re getting
into when they fall prey to ‘chasing the yield’?”
Hinchman adds that:“With the new products hard
times inspire, firms will need to increase their due
diligence efforts, as well as their educational
offerings to be certain their sales force understands
what they’re selling.”
Compliance groups seek change in SEC
whistleblower proposal
Among the last bunch of written comments the
SECSECSECSECSEC received on its proposed whistleblower rule are
several from those representing business and
compliance interests who say whistleblowers should
have to first report wrongdoing to effective, internal
compliance programs before being eligible for the
SEC’s award program.
Otherwise, they argue, the program will
undercut internal compliance programs.
The proposal doesn’t require internal reporting
first, with the logic that whistleblowers need an
outside avenue to report if they fear retaliation, or if
they think the internal program will be ineffective.
The proposed regulations “offer substantial
financial incentives for employees to bypass internal
mechanisms and go directly to the SEC,” said a letter
representing some of the largest global companies in
the U.S., including AlcoaAlcoaAlcoaAlcoaAlcoa, CitigCitigCitigCitigCitigrrrrroupoupoupoupoup, IntelIntelIntelIntelIntel
CorporationCorporationCorporationCorporationCorporation, JPMorgan Chase & Co.JPMorgan Chase & Co.JPMorgan Chase & Co.JPMorgan Chase & Co.JPMorgan Chase & Co., PrudentialPrudentialPrudentialPrudentialPrudential
InsurInsurInsurInsurInsurance Companance Companance Companance Companance Company ofy ofy ofy ofy of AmerAmerAmerAmerAmericaicaicaicaica, and KrKrKrKrKraft Faft Faft Faft Faft Foodsoodsoodsoodsoods.
Similar sentiments were expressed by the
Business Roundtable Institute for CorporateBusiness Roundtable Institute for CorporateBusiness Roundtable Institute for CorporateBusiness Roundtable Institute for CorporateBusiness Roundtable Institute for Corporate
EthicsEthicsEthicsEthicsEthics, the National Society of ComplianceNational Society of ComplianceNational Society of ComplianceNational Society of ComplianceNational Society of Compliance
PrPrPrPrProfofofofofessionalsessionalsessionalsessionalsessionals, The Institute of InterThe Institute of InterThe Institute of InterThe Institute of InterThe Institute of Internalnalnalnalnal AAAAAuditoruditoruditoruditoruditorsssss,
and the Society of Corporate Secretaries &Society of Corporate Secretaries &Society of Corporate Secretaries &Society of Corporate Secretaries &Society of Corporate Secretaries &
Governance ProfessionalsGovernance ProfessionalsGovernance ProfessionalsGovernance ProfessionalsGovernance Professionals.
The program, the groups argue, should
encourage the use of internal compliance programs
as opposed to merely trying to avoid discouraging
their use.
The proposed program would allow the SEC to
grant money awards to those who voluntarily
provide original information about securities law
violations.To get the award, those tips would have to
lead to successful enforcement actions where the
SEC gets at least $1 million as a result of sanctions.
The whistleblower would get 10% to 30% of the
sanction .
Among the other points made:
4. 4 January 3, 2011
(Disclosure document, continued on page 5)
Whistleblower (cont. from pg. 3)
✔ If the SEC insists on allowing whistleblowers
to go straight to the Commission, there should be
clear-cut factors that reduce the amount of the award
the whistleblower ultimately gets, said the NSCP.
✔ Lengthen the 90-day grace period the proposal
provides whistleblowers to report information to the
SECSECSECSECSEC after first reporting it internally. Compliance
programs will need more time to investigate the
allegations, they said.The NSCP says the time period
should be longer, and the rule should give the SEC the
discretion so that firms have a “reasonable” amount of
time to deal with the problem.The Business
Roundtable suggested lengthening it to 180 days.
✔ The NSCP said the SEC should expand the
categories of those who generally would be ineligible
to be whistleblowers to also include employees in the
areas of operations, finance, technology, credit, risk,
and similar areas who perform control functions that
are mainly related to compliance.These functions
would include supervision and monitoring.
✔ The coalition of large companies said under no
circumstances should an employee with compliance
or similar functions be eligible to become a
whistleblower. (The proposal allows an exception if
the whistleblower thinks the employer is acting in
bad faith or not reporting the problem to the
Commission in a “reasonable”amount of time.
✔ Individuals should be ineligible if the
information provided to the SEC is already related to
an internal investigation underway, the NSCP
suggested.
concept proposal FINRA issued in October
(Regulatory Notice 10-54 ).That proposal sought
industry views on the idea of requiring BD’s to give
retail investors an ADV-type document that would
disclose the firm’s services, payment incentives, fees,
and conflicts (BD Week, Nov. 1, 2010).
The five elements in the disclosure would include:
1) the types of accounts and services the firm
provides; 2) disclosures designed to enable customers
to “evaluate” the firm (e.g. the fees associated with
each brokerage account); 3) disclosures of financial
or other incentives for recommending certain
products or strategies; 4) disclosure of conflicts that
may arise between a firm and its customers; and 5)
limitations on the duties the firm owes its customers.
The NSCP says it applauds enhanced disclosures
but it also sharply criticized various aspects of the
proposal as unclear and having the potential to pose
huge burdens on firms.And SIFMA argued the
proposal is so premature it wouldn’t be “cost-
effective or useful” to submit detailed comments
now, so it submitted a slimmed-down version and
plans to add more later.
SIFMA and NSCP added that FINRA’s plan, if it
isn’t slowed down, could result in FINRA and the
SEC issuing conflicting disclosure rules if the SEC
decides to require the fiduciary standard for broker-
dealers. NSCP recommended that it’s “prudent for
FINRA to delay rulemaking until the SEC
promulgates final rules” about the fiduciary standard.
“Investors are not harmed by this delay,” it added.
(When FINRA issued the release, it said there’s no
need to wait for the SEC to issue its study or its rule
on fiduciary duty because the Dodd-Frank financial
reform law “requires the SEC to facilitate simple and
clear disclosures of material conflicts by both
broker-dealers and investment advisers.”)
Among the criticisms and recommendations
NSCP made regarding the concept proposal:
✔ The disclosure statement FINRA envisions is
“overly broad” because it would treat all BDs alike,
despite there being differing business models, such
as firms that exist purely as a distributor for a
mutual fund company.
✔ Some provisions would replicate what a firm
already does. Publishing a summary of the services
the firm provides appears to be “redundant without
substantial benefits to clients,” NSCP said.
✔ Publishing the scope of services the firm
provides retail customers could be “unduly
burdensome” because of the wide variety of products
available at BDs and the latitude they have in
defining the scope of individual products (such as
levels of options trading).
✔ FINRA should study investors’ needs and
create a model disclosure format to be used by firms.
The idea of a study also was suggested by the
Financial Services InstituteFinancial Services InstituteFinancial Services InstituteFinancial Services InstituteFinancial Services Institute, which sent a note to its
members urging them to make that point and others
when writing to FINRA.
Disclosure document (cont. from pg. 1)
5. January 3, 2011 5
Disclosure document (cont. from pg. 4)
(AML program, continued on page 6)
✔ FINRA’s idea of requiring firms to disclose all
fees associated with each brokerage account can
pose a real problem, the society said.“Rate schedules
for many firms can be quite detailed and extensive,”
NSCP said. Another problem, it added, is that the
requirement might have a competitive impact on
many firms that don’t currently publish their fee and
rate schedules, especially commission rates. If the
SEC and FINRA insist on such disclosure, they should
standardize the types of fees that are disclosed and
how they are presented so that investors could
compare firms, NSCP said. It also suggested that
FINRA could publish these fees on its web site.
✔ If the document can be presented to clients in
an electronic format, that would help firms save
money and enable them to be updated quickly, NSCP
said. SIFMA and the FSI also suggested allowing
firms to offer the documents electronically, unless
clients want hard copies.
✔ The three organizations suggest having a
tiered approach in which a general, streamlined
version of the document can be provided to the
customer, who could then request a more detailed
version if desired.
✔ The documents should be updated annually,
both NSCP and SIFMA suggested.
✔ FINRA will need to clarify whether the
document would be subject to its advertising rule
requirements, the NSCP said.
✔ FINRA should clarify that the document be
presented at the time the person becomes a client, or
no later than 10 business days after the person
becomes a client, NSCP said.The current phrase, it
argued, is vague because it says the document should
be provided “at or prior to commencing a business
relationship with a retail customer.”
FINRA said the amount of the fine against Global
reflects “the significant remedial efforts undertaken
by the firm.”
Corrective action taken
Part of the corrective action Global took was to
bring in new leadership. It named a new chief
executive officer, Lionel BaughLionel BaughLionel BaughLionel BaughLionel Baugh, and a new chief
compliance officer, DaDaDaDaDavid Mahlervid Mahlervid Mahlervid Mahlervid Mahler, according to a
statement Global attached to FINRA’s Letter of
Acceptance,Waiver and Consent.
Mahler, an attorney with 30 years experience in
the securities industry, including positions with some
of the biggest firms, will be responsible for Global’s
AML compliance program. Last week, he declined to
comment about the changes the firm is making,
noting the difficulty of getting clearance to comment
during a holiday week.
But the firm’s letter of correction explains some
of those changes, which include contracting with the
accounting firm KPMGKPMGKPMGKPMGKPMG to conduct a “lookback” of
the firm’s wire, check and journal activity to
determine whether any unusual or potentially
suspicious activity hadn’t been previously identified.
Global voluntarily gave FINRA a copy of the
accountant’s report on its findings.
FINRA said that as a result of the lookback
review, which started in 2008, the firm ended up
filing about 46 Suspicious Activity Reports.
Among other corrective actions the firm took:
✔ Contracting with KPMG to review Global’s
AML policies, procedures and processes to ensure
compliance with rules, regulations, and industry best
practices and to help implement certain internal
controls;
✔ Implementing a number of computerized
compliance tools to help with AML compliance,
including Worldcompliance software for OFAC/PEP
screening.
✔ Bolstering AML training for firm employees.
Best practices tips
Here are some tips to keep in mind when
upgrading an AML program suggested by MicMicMicMicMichaelhaelhaelhaelhael
ClementsClementsClementsClementsClements, the CCO of a hedge fund who also runs
WWWWWall Strall Strall Strall Strall Street Consulting Sereet Consulting Sereet Consulting Sereet Consulting Sereet Consulting Servicesvicesvicesvicesvices, which is in the
network associated with Bekker ComplianceBekker ComplianceBekker ComplianceBekker ComplianceBekker Compliance
Consulting PConsulting PConsulting PConsulting PConsulting Pararararartnertnertnertnertners:s:s:s:s:
✔ Look back at how the firm’s exception-
reporting system has performed to see whether it’s
picking up the transactions it’s supposed to pick up.
Test the system by putting in transactions that
should be flagged.
✔ Update AML/BSA policies and procedures to
ensure they reflect AML regs and FINRA’s Rule 3010
AML program (cont. from pg. 1)
6. Group PublisherGroup PublisherGroup PublisherGroup PublisherGroup Publisher Hugh Kennedy
ExExExExExecutivecutivecutivecutivecutive Editore Editore Editore Editore Editor VincentTaylor
ContrContrContrContrContributing Editoributing Editoributing Editoributing Editoributing Editor CarlAyers
BD Week strives to provide you with accurate, fair and balanced
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6 January 3, 2011
AML program (cont. from pg. 5)
provisions calling for supervisory procedures to be
tested and updated if needed.
✔ Verify the source of assets for foreign
customers, Clements said.“In many instances, they
need to verify the assets, which means if a customer
says I received this million dollars from a relative
who passed away, it might be smart – because of the
origination of the assets – to say,‘Fine, can you
please send me a copy of the will or something
demonstrating the transfer of the estate to that
person?’That’s something that’s overlooked a lot,”
Clements said.
✔ Ask about the movement of money between
relatives’ accounts, such as money moving from a
husband’s account in one bank to a wife’s account at
another bank, and then back into a brokerage
account. ”Questions need to be asked to the
customer ….‘Why are you transferring the money
in, moving the money to another relative, buying a
security on Monday, selling the security a week or
two later, and then transferring the money back out
to another bank?’ They need to ask questions, which
is not done,” Clements said.
✔ Document the responses you get when you
ask about suspicious activity. Send a confirming
letter to the customer about that conversation, with
a statement at the end that asks the customer to
contact you immediately if anything in the letter is
incorrect.“The only protection that a firm has is in
the investigations and documentation that they
keep,” Clement says.
Global Strategic Investment violations under Hernandez
FINRA said that Global and Hernandez didn’t
identify and analyze “numerous” transactions to
determine whether they were suspicious, despite
firm policies directing them to do otherwise.
In many instances, according to FINRA, Global
and Hernandez let foreign customers deposit funds
into their accounts and within days or weeks
disburse them from their accounts to first and third-
parties, and, in some cases, in amounts slightly below
$10,000.
BD Week is taking its scheduled winter
break.The next issue of BD Week will be
e-mailed on Jan. 14, 2011.
Firm ousted over mark-ups; former
president and a rep are barred
FINRAFINRAFINRAFINRAFINRA has expelled an Austin,Texas-based firm,
barred its former president, and barred a rep in a
settlement involving a series of excessive mark-ups
that in several instances exceeded 10% and in one
instance was 67%. Expelled was APS FAPS FAPS FAPS FAPS Financialinancialinancialinancialinancial
CorporationCorporationCorporationCorporationCorporation. Barred was former president GeorgeGeorgeGeorgeGeorgeGeorge
ConwillConwillConwillConwillConwill, and rep PPPPPeter Keter Keter Keter Keter Kennethennethennethennethenneth AmanAmanAmanAmanAman.Among the
firm’s victims was a man who’s at least 89 years old
who was overcharged by $1.2 million, FINRA said.