Good Risk Governance Pays

Good Risk Governance Pays

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Category Archives: Compliance

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Trading Ahead Of Investment Policies and Procedures

Posted in Compliance, Fiduciary Liability, Governance, Investment Management, Non-Profits, Risk Management, Trading
In response to a recent request by a reporter, I examined some public documents relating to what appears to be unauthorized trading. As is the situation when only some information is available, it’s hard to tell whether said trades can be characterized as rogue, mistaken or deemed to fall within a broader, albeit ill-communicated, mandate. Should this matter proceed further, obviously… Continue Reading

Wall Street Ethics

Posted in Compliance, Ethics
I’ve been waiting to see Equity since I read about the project a few months ago. I like films about business and this one has received lots of attention because it is written, produced and directed by women. The story about taking a technology company public was interesting enough and the sub-plot about life in the Wall Street fast… Continue Reading

Investment Management Delegation Challenges

Posted in Compliance, Fiduciary Liability, Investment Consultants, Investment Management, Risk Management
Chief Investment Officer describes the surge in delegated management activity as “staggering,” noting a nearly nine hundred percent rise in discretionary assets in recent times. Of the 188 asset owners that were questioned as part of a 2016 survey, many cited “better performance as being either ‘critical’ or ‘important’ to their decision to outsource…” Other findings suggest a willingness to authorize third… Continue Reading

Investment Vendor Due Diligence and the Fiduciary Rule

Posted in Compliance, Credit Risk, Disclosure and Transparency, Fiduciary Liability, Financial Reporting, Liquidity, Susan Mangiero
When I was a university professor and gave written homework, I frequently found myself in the position of having to remind students that reliance on a spell checker may not always produce good results. “I through the ball” is grammatically incorrect but would not reveal itself as an error. Someone would have to know that “threw” is… Continue Reading

It’s Heeeere – The Fiduciary Rule Has Arrived – Now What?

Posted in Compliance, Disclosure and Transparency, ERISA, Fees, Fiduciary Liability, Governance, Investment Management, Mutual Funds, Regulation
Like most people who work in the financial services arena, I hastily downloaded the long anticipated “Fiduciary Rule” when it was released by the U.S. Department of Labor (“DOL”) on April 6, 2016 and am busy tackling this final version. With more than two hundred pages, it’s going to take longer than a lunch break but is nevertheless vital reading. DOL’s Fact… Continue Reading

Breach of Fiduciary Duty Tops FINRA Disputes Again

Posted in Compliance, Fiduciary Liability, FINRA, Investment Management
According to dispute resolution statistics, published by the Financial Industry Regulatory Authority (“FINRA”), breach of fiduciary duty continues to lead the list of “controversy types in customer arbitrations.” Negligence, failure to supervise, misrepresentation, breach of contract, suitability and omission of facts follow. That breach of fiduciary duty allegations feature so prominently in FINRA customer disputes… Continue Reading

Governance, Risk Management and Compliance (“GRC”) and Nasty Colleagues

Posted in Compliance, Investment Management, Regulation, Risk Management
Effective Governance, Risk Management and Compliance (“GRC”) critically depends on the hiring, retention and oversight of talented and ethical professionals. These individuals don’t need to be best friends. To the contrary, a risk manager must be tough and able to say no to traders and deal-makers if their individual or collective activity jeopardizes enterprise value.… Continue Reading

The Perils of “Sort Of” Investment Risk Management

Posted in Compliance, Disclosure and Transparency, Governance, Investment Management, Risk Management
As someone who writes all the time, I respect words. I acknowledge that being able to communicate clearly is a time-consuming labor and requires care. For those who strive for excellence in this area, keep up the great work. For those who have fallen under the spell of soundbite gimmickry, may I suggest that you… Continue Reading

One Size Does Not Fit All When It Comes To Pay

Posted in Compliance, Disclosure and Transparency, Financial Reporting, Governance, Key Person, Regulation
At a time when skilled talent is hard to find, business executives may want to resist the urge to socially engineer. One tech company CEO learned this lesson the hard way. According to “Seattle company copes with backlash on $70,000 minimum wage” (Seattle Times, August 1, 2015), across-the-board raises to establish a minimum base salary,… Continue Reading

Investment Compliance and the Nanny’s Right to Sue

Posted in Compliance, Governance, Investment Management, Risk Management, Susan Mangiero
I admit to reading the gossip magazines whenever I want a few minutes of fluff. I am never sure what is accurate but the stories make for five-minute intrigue. One recent example says it all. In a not so private tussle, an alleged affair between the husband of a Hollywood power duo and the couple’s… Continue Reading

Good Players Pay For Other People’s Bad Investment Compliance

Posted in Compliance, Financial Crisis, Governance, Investment Management, Municipal Bonds, Pension, Regulation
Much to my chagrin, I am told that it is my responsibility to pay for the removal of my neighbor’s tree after it fell in my backyard. Never mind that the tree is old and was left untended for many years until a bad storm destroyed its ability to stand. Ignore the fact that I… Continue Reading

Marshmallows and Financial Fraud

Posted in Compliance, Ethics, Fraud, Governance
Long deemed to be a seminal assessment of delayed gratification, the Marshmallow Test was designed by then Stanford University psychology professor Walter Mischel (now at Columbia University) and remains popular today. In a typical experiment, youngsters are told that they can have one sweet now or wait awhile and receive two as compensation for their… Continue Reading

Electronic RFP Process and Fiduciary Duty

Posted in Compliance, Fiduciary Liability, Financial Expert, Investment Management, Pension
As I have mentioned on other occasions, my work as a forensic economist (and sometimes testifying expert witness) has frequently focused on how service providers were selected and then monitored. Always interested in knowing about industry innovations as they occur, I was intrigued to recently learn about a firm called InHub. Founded in 2014 by… Continue Reading

Non-Profit Compliance and Size

Posted in Compliance, Non-Profits
I sometimes hear individuals expressing the view that larger tax-exempt organizations are better managed. The thinking is that more resources allow for the payment of bigger salaries, presumably to attract otherwise unattainable talent. The acquisition of expensive technology systems that can track cash flows and any financial limit violations is another cost that smaller entities… Continue Reading

New York City Comptroller Urges New Fiduciary Rules

Posted in Broker Dealers, Compliance, Fiduciary Liability, Investment Management
In a March 25, 2015 press release, Mr. Scott M. Stringer laid bare the details of his plan to “enact a state law requiring that financial advisors disclose whether they put their own financial interests above those of their clients.” In support of his desire for an expanded fiduciary standard to be implemented across the… Continue Reading

Heroism in Business and Politics

Posted in Banking, Compliance, Ethics, Governance, Regulation
Coincidentally, two lectures I attended this weekend focused on the concept of heroism, individual rights and integrity. Although the speakers drew from different historical events, their interesting anecdotes about people who made a difference offer important lessons for modern time decision-makers. In “The Heroic City: New York As A Microcosm of America (March 7, 2015),… Continue Reading

Investment Risk Management, Kanye West and Paul McCartney

Posted in Broker Dealers, Compliance, Disclosure and Transparency, FINRA, Investment Management, Liquidity, Regulation, Risk Management, Valuation
Thank heavens for the absurdities of life. A few chuckles here and there make the difference between blah and pizzazz in life. A recent example is the Twitterverse response to a recent artistic collaboration between Kanye West and Paul McCartney. Supposedly some of the members of the younger generation are unaware of this Beatle’s musical eminence. See “Genius… Continue Reading

Investment Risk and Litigation

Posted in Compliance, Financial Expert, Investment Management, Litigation, Regulation, Risk Management
For anyone involved in compliance, 2015 may be the year that gives “so much to do, so little time” new meaning. In hs December 10, 2014 “Remarks to the ICI 2014 Securities Law Developments Conference,” Norm Champ describes points to keep in mind. Notable is his mention of risk monitoring as a key area for his… Continue Reading

Investment Performance Magic Can Cost Millions

Posted in Compliance, Disclosure and Transparency, Financial Reporting, Investment Management, Regulation
Having spent a few days in Las Vegas over the holidays, one is reminded of the lure of legerdemain. A few bells go off, some flashing lights and a win here and there can tempt even the most staid rationalist into believing that magic can happen. If you have seen “Chicago,” you may recall Billy Flynn’s musical urging… Continue Reading