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Good Risk Governance Pays

Investment Best Practices | Risk Management | Valuation

Category Archives: Governance

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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

BREXIT and Trust

Posted in Governance, International Investing
Like so many, I stayed up late to watch the vote count about whether the United Kingdom should remain part of the European Union (“EU”). With a margin of about 4% or 1.3 million people, “Leave” won the day, despite financial market trades that reflected an expectation to stay. Whatever your preferred outcome, it was certainly exciting to… Continue Reading

Reputation and the Investment Management Bottom Line

Posted in Customer Service, Disclosure and Transparency, Governance, Investment Consultants, Investment Management, Key Person, Risk Management
Those in the know understand that both qualitative and quantitative factors must be evaluated when estimating enterprise value. The list of appraisal considerations is too long to address in any one discussion. Suffice it to say that one should understand, measure and benchmark multiple facets of an organization’s business such as production processes, distribution channels, sales infrastructure and customer service. A clarity… Continue Reading

Investment Benchmarking “Must Do” Tasks

Posted in Disclosure and Transparency, Financial Reporting, Governance, Investment Management, Regulation, Risk Management
Whenever the topic of performance measurement comes up in conversation, I think back to a story someone told me about a woman who took the number two spot in a race. Proud of her accomplishment, she telephoned friends and family with the news. Here’s the catch. Only one other runner competed. Technically, her statement was… 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

Investment Advisors, Monitoring and Compliance

Posted in Fiduciary Liability, Governance, Investment Management, Regulation, Risk Management
I talked last week about the intricacies of investment monitoring as part of a Bloomberg BNA webinar entitled “Life After Tibble: Investment Monitoring and Litigation Defense Considerations for ERISA Fiduciaries.” One of the points I made, repeatedly I might add, is that it is critical to evaluate the facts and circumstances related to a specific situation.… 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

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

ERISA Litigation Conference Addresses Timely Fiduciary Issues

Posted in ERISA, Governance, Litigation, Pension, Regulation
Dr. Susan Mangiero announces the sponsorship of a forthcoming conference about ERISA litigation and regulatory issues by Fiduciary Leadership, LLC. Produced by the American Conference Institute (“ACI”), this mid-April event pairs attorneys (including corporate counsel) with jurists to address timely topics that include, but are not limited to, the following: Excessive fees; Church plan lawsuits; Fiduciary… Continue Reading

Class Action Opt-Outs and the Role of Institutional Investor Plaintiffs

Posted in Compliance, Governance, International Investing, Investment Management, Litigation, Risk Management
During a May 2014 trip to London, I had the pleasure of meeting with various attorneys who do work with institutional investors such as pension funds. While I did not have a chance to convene with Attorney David Seidel, our guest interviewee for this blog post, I did meet with his colleague, senior attorney and… Continue Reading

Do CEOs Work Hard Enough?

Posted in Disclosure and Transparency, Financial Reporting, Governance, Key Person, Regulation, Valuation
By invitation of the head of the finance department, Dr. Chinmoy Ghosh, I am guest lecturing to students this fall as part of a Financial Risk Management graduate-level course. During a recent session about executive compensation – one of the topics I was asked to address – more than a few students opined that CEOs earn too much and… Continue Reading

Business Faux Pas Can Have A Long-Term Impact On Value

Posted in Governance, Investment Management, Risk Management, Valuation
Alas, for those in the United States right now, we are in the silly season once again. Politicians are wasting millions of dollars with ads that impugn their opponents instead of discussing critical problems and potential solutions. The notable take-away is that the hyperbole, annoying and far from enlightening in a real sense, can have a long-term impact… Continue Reading

Investment Complexity Risk

Posted in Compliance, Disclosure and Transparency, Governance, Investment Management, Regulation
As a doctoral student, I had a professor, Dr. Thomas O’Brien, who insisted on having each person in his class translate complex formulas into plain language. His fervent belief was that the value of a mathematical expression was limited if it was too complicated for someone to explain in a sentence or two. I thought of him… Continue Reading

Foreign Corrupt Practices Act Settlements Are Costly

Posted in Compliance, Governance, Hedge Fund, Private Equity, Regulation
Beauty makes for great headlines these days. Mercedes-Benz Fashion Week in New York City just wrapped up. A few days ago, Pantone declared radiant orchid as its 2014 “Color of the Year.” Now, cosmetic giant, Avon Products, is reported to be in settlement talks with government regulators regarding Foreign Corrupt Practices Act (“FCPA”) compliance issues.… Continue Reading

Investment Advisers Sanctioned

Posted in Compliance, Disclosure and Transparency, Financial Reporting, Governance, Regulation
Here is a hat tip to the professionals at CounselWorks LLC for pointing out the news item regarding sanctions against several investment advisory firms by the U.S. Securities and Exchange Commission (“SEC”). In their October 23, 2013 press release, the SEC described a failure to correct deficiencies as the reason for punitive action. Problems that… Continue Reading

QPAM and INHAM Compliance Audit Information For Hedge Funds

Posted in Compliance, ERISA, Governance, Hedge Fund
If you missed the September 10, 2013 webinar entitled “ERISA Assets: QPAM and INHAM Audit Legal Requirements and Best Practices – Navigating DOL Rules for Pension Asset Management Compliance,” click to access the slides. Produced as a Strafford Continuing Legal Education webinar and featuring ERISA attorney Howard Seyfarth, auditor Virginia Bartlett and investment compliance expert… Continue Reading