WhistleBlower Security - Blog

ExBond Highflier Is Warned by SEC

JEAN EAGLESHAM — Tue, 21 Feb 2012 14:39:14 -0800

U.S. securities regulators have warned a former top architect of the structured-finance boom that they are considering civil charges alleging he misled investors in a mortgage-bond deal that imploded, people familiar with the situation said.

Alexander Rekeda, who led Japanese bank Mizuho Financial Group Inc.'s charge into the then-red-hot business of U.S. subprime debt in 2006, was warned by the Securities and Exchange Commission in October that he faces the potential charges, according to a regulatory filing. Mr. Rekeda received a so-called Wells notice, a letter typically giving the recipient a final opportunity to dissuade the SEC from filing an enforcement action.

It isn't clear how Mr. Rekeda responded to the warning, but SEC officials haven't dropped the case, according to people familiar with the matter. Civil charges could be filed by this summer, these people said, though the process has been slowed by the large number of individuals and companies involved in the probe and the complexity of some legal issues related to the case.

A lawyer for Mr. Rekeda declined to comment. READ MORE...

Exclusive SEC widens probe of exchangetraded funds

Jessica Toonkel, Carrick Mollenkamp and Cezary Podkul — Tue, 21 Feb 2012 10:11:17 -0800

(Reuters) - U.S. securities regulators have widened their inquiry into the trillion-dollar market for exchange-traded funds, according to a person familiar with the matter.

Prompted by a delay in a big trade at a popular ETF, the U.S. Securities and Exchange Commission is taking a closer look at a possible connection between high-frequency traders and hedge funds jumping in and out of ETFs, and instances where ETF trades fail to settle on time, this person said.

The SEC's inquiry is part of a wider probe that began last year and focused on complex ETFs that allow investors to magnify returns or bet against stock indexes.

U.S. and UK regulators are concerned that so-called settlement fails - when trades are not completed on time - could contribute to volatility and systemic risk in financial markets.

The probe's main focus is on illiquid ETFs, but regulators are now also examining popular ETFs and failed trades, according to the person.

An SEC spokesman confirmed that the agency is looking into failed trades and ETFs, but declined to elaborate.

The SEC's inquiry comes amid greater scrutiny of the ETF industry, which has surged in popularity since the early 1990s. It is still unclear how settlement delays might affect retail investors in ETFs.

ETFs are baskets of securities that, like mutual funds, give investors exposure to a pool of assets. But unlike mutual funds, they trade throughout the day. Early ETFs were created to mirror benchmarks such as the Standard & Poor's 500 index. ETF assets have doubled since 2007 to about $1.3 trillion, according to Deutsche Bank AG. Some of the most popular ETFs are those that use derivatives to give investors exposure to commodities, high-yield bonds or ETFs that own other ETFs. READ MORE...

DoddFrank in One Graph We read DoddFrank so you dont have to

Karen Weise — Mon, 20 Feb 2012 12:45:34 -0800

Big portions of the financial reform law are set to go into effect this year. Intended to make corporate practices transparent, the law itself is anything but. The government has yet to spell out the details of most of the 400 new regulations it imposes. A non-headache-inducing guide. READ MORE...

ACFE Annual Fraud Conference Stories from behind the scenes

Mandy Moody — Mon, 20 Feb 2012 09:42:20 -0800

Vindication. The one word to aptly sum up the tumultuous rollercoaster ride for whistleblower and ex-CEO Michael Woodford after hearing news break yesterday that Japanese prosecutors had arrested three of Olympus’ top executives and four of its consultants for a $1.7 billion fraud.

At each twist and turn of the Olympus scandal, I have followed Woodford’s plight and watched anxiously as he has moved from accuser to whistleblower to now, crusader, in a saga that is not even close to being finished. This story, along with many others, will be just a few of the highlights at the 23rd Annual Fraud Conference & Exhibition in Orlando this June.

Woodford is one of five keynote speakers to address the more than 2,300 anti-fraud professionals at this year’s Conference. Joining him is U.S. Senator Chris Dodd, co-author of the Dodd-Frank Act; Pamela Meyer, CFE, best-selling author of Liespotting; Diana Henriques, The New York Times senior financial writer and author of The Wizard of Lies; and Mark Whitacre, convicted fraudster and subject of “The Informant.”

To add to the keynote roster, the more than 60 breakout sessions spread out over 12 tracks round out a conference offering something for everyone. Here are a few session titles to spark your curiosity: READ MORE...

Traders Manipulated Key Rate Bank Says

JEAN EAGLESHAM, PAUL VIEIRA and DAVID ENRICH — Fri, 17 Feb 2012 15:49:32 -0800

A group of traders and brokers successfully managed to manipulate an interest rate that affects loans around the world, one of the banks being investigated has told regulators.

In a court filing in Ottawa, Canada's Competition Bureau said a bank it didn't identify has told the agency's investigators that people involved in the alleged scheme "were able to move" interest rates.

People familiar with the situation said the "cooperating party" is UBS AG.

The Swiss bank has said it is assisting regulators in a sprawling interest-rate probe in North America, Europe and Asia, which has led to a score of individuals being fired or suspended by major U.S. and European banks and leading brokers.

No banks or individuals have been charged with wrongdoing.

The benchmark interest rates at the center of the probe are used to price home and auto loans, corporate debt and derivatives totaling more than $350 trillion. READ MORE...

Citigroup pays $158 million in mortgage fraud pact

Jonathan Stempel — Fri, 17 Feb 2012 13:02:14 -0800

(Reuters) - Citigroup Inc has agreed to pay $158.3 million to settle U.S. civil claims that it defrauded the government into insuring thousands of risky home loans made by its CitiMortgage unit.

Wednesday's settlement resolves claims under the federal False Claims Act against the third-largest U.S. bank, and arose from a "whistleblower" lawsuit brought by Sherry Hunt, a CitiMortgage employee in Missouri.

CitiMortgage "admits, acknowledges and accepts responsibility" for misleading the government into insuring risky home loans, according to settlement papers filed in U.S. District Court in New York. Investigators said the misconduct lasted for more than six years.

The civil fraud case is part of a crackdown by the Department of Justice against lenders it believes contributed to the housing crisis by originating risky home loans that should not have been made, insured or sold. READ MORE...

Onts air ambulance program under investigation

Tristin Hopper, Postmedia News — Fri, 17 Feb 2012 12:19:36 -0800

TORONTO — Long suspected of mismanaging taxpayer funds, Ornge, Ontario's non-profit air ambulance service, has become the subject of a criminal investigation.

"The (Ontario Provincial Police) is conducting an investigation into possible criminal activities on the part of Ornge," Acting Insp. Cathy Bell said on Thursday. The OPP's Criminal Investigation Branch was summoned by the Ministry of Health, acting on preliminary data from auditors.

The police investigation is only the latest review to strike the provincial agency. Officials with the Ministry of Finance are continuing with a forensic audit, the provincial auditor general is conducting a "value-added audit" and the agency's own staff has begun an internal review of "all policies and procedures," wrote Ornge Chief Operating Officer Tom Lepine in a January statement. Lepine resigned this week.

Scrutiny of the air ambulance service emerged out of late-2011 revelations that CEO Chris Mazza was earning $1.4 million a year, effectively making him the province's highest-paid civil servant. Mazza is also accused of taking out more than $1 million in loans from the non-profit.

For years prior, former employees had been attempting to sound the alarm on Ornge, pointing to its high executive salaries and the "Crystal Palace," its posh headquarters near Toronto Pearson International Airport. Prominent in the lobby was a custom-built $50,000 motorcycle, a gift from Ornge's Italian helicopter supplier. READ MORE...

Minority report Corporate governance explains South Koreas low stockmarket ratings

Seoul - The Economist — Fri, 17 Feb 2012 11:59:34 -0800

IT is sometimes asserted that low South Korean equity valuations stem from the threat of instability in North Korea. That explanation looked a lot less convincing after the death of Kim Jong Il in December, when the KOSPI 200 index of leading shares and the won, the South Korean currency, both quickly shrugged off the news.

So what is the source of the “Korea discount”, which means that the KOSPI has a forward price-to-earnings ratio of under ten, below most other Asian stockmarkets. There are a few possibilities. The national economic model is still built on exports, often in highly cyclical industries such as shipbuilding. The capital structure of South Korean firms has historically been debt-heavy.

But the prime cause of the discount is more likely to be poor corporate governance at the family-run chaebol conglomerates that dominate the economy. Nefarious schemes to pass on control to sons, avoid taxes and exploit company assets for the benefit of family members are widely discussed in private. They are also lambasted abroad: a 2010 survey by CLSA, a broker, placed the country third-from-bottom in Asia on governance, ahead of only Indonesia and the Philippines.

The issue is now also getting more of an airing at home. A recent report by Tongyang Securities, a broker, drew an explicit link between Korea’s low equity valuations and the practices of “tunnelling” and “propping”, which benefit insiders at the expense of smaller investors. READ MORE...

Sask care home operator jailed for theft from client

By Lori Coolican, Postmedia News — Fri, 17 Feb 2012 11:06:26 -0800

Michelle Millora was sentenced to 15 months in jail on Wednesday for stealing from a care home resident she was responsible for.

SASKATOON — A former operator of a Saskatoon care home who used a mentally ill client's debit card to steal nearly $100,000 is headed to jail for the crime.

Michelle Millora, 36, received a 15-month sentence in Court of Queen's Bench on Wednesday. She pleaded guilty in December to stealing $98,850 and attempting to steal another $19,101 from 58-year-old Wendy Braid between October 2009 and May 2010.

Millora's actions were "a blatant breach of trust of the most vulnerable of vulnerables in society," Justice Mona Dovell said.

Braid has suffered from severe psychiatric conditions for more than 20 years and has lived in various care homes since 2000. In 2009, while living at a licensed home operated by Millora, she inherited about $168,000 from the estate of her estranged husband, who died in 2007.

Millora heard about the windfall, and got the PIN number for Braid's bank card by looking over her shoulder during a visit to a cash machine, court heard.

There was no lock on the door to Braid's bedroom and on numerous occasions during the fall and winter of 2009-10, she noticed her bank card was missing from her wallet.

Braid told family and close friends that she suspected someone at the care home was using her bank card, but due to her illness, they didn't take it seriously at first.

That changed on May 7, 2010, when Braid stopped at a cash machine, accompanied by relatives who were visiting from out of province. When she tried to withdraw a small sum, the machine notified her that her daily cash limit had already been reached.

Investigators subsequently found more than 300 suspicious transactions — including $77,000 worth of large cash withdrawals from a single bank machine at a convenience store where Braid had never been before. Surveillance camera footage from that location clearly showed Millora repeatedly using the ATM at times that matched the withdrawals. READ MORE...

Alleged Ponzi scheme promoters worked outside scope of jobs officials

By David Baines, Vancouver Sun — Fri, 17 Feb 2012 11:00:15 -0800

Investors may not be able to hold notary society, credit union liable for losses

A former financial planner at Coast Capital Savings Credit Union says he referred about two dozen people to a Vancouver notary who was promoting an investment scheme that regulators now fear is a multimillion-dollar Ponzi scheme.

Arvindbhai Patel told B.C. Securities Commission investigator Michele (Mike) Pesunti on Feb. 6 that he initially became involved in the scheme in 2005, when his wife was ill with cancer and he was on leave from work, according to court documents.

Patel said he was approached by notary Rashida Samji regarding the scheme, and subsequently referred 20 to 25 people who collectively invested $8 million to $9 million.

Patel told Pesunti that, on Feb. 3 and 5, he spoke to Samji, who assured him the investments were guaranteed in a notary trust account, and everybody would get their money back after the professional association for notaries audited the account.

However, Wayne Braid, chief executive officer of the Society of Notaries Public of B.C., said Samji didn't have her own practice, rather she acted a "roving" notary, filling in for other notaries who were sick or on vacation.

"She hasn't had a trust account in quite a number of years," he said.

Braid also said that if Samji was operating as an investment manager, she was operating outside the scope of a notary.

If this proves to be the case, investors will not likely be able to hold the society liable for any losses they might suffer. READ MORE...

Charged telemarketing firm may have BC victims

CBC News — Fri, 17 Feb 2012 10:51:03 -0800

As many as 6 calls a day demanded payment for goods never ordered

A CBC News investigation has revealed that a Montreal telemarketing company is continuing to operate despite facing more than two dozen charges — and some B.C. businesses might have fallen victim to the company’s alleged tactics.

Royal Oak Pet Clinic, north of Victoria, is alleged to be one of the targets of the company, Express Transaction Services Inc. (ETS).

The clinic was called three years ago by someone asking for their address, and a week later, started receiving unwanted office supplies and an invoice from ETS for more than $300.

When clinic office manager Teka Cook refused to pay, the harassing phone calls began — as many as six a day.

"It was bullying and it was harassment, because it was non-stop,” Cook told CBC News.

ETS's offices were raided in 2007 and the company was charged last fall with one count of fraud and 24 counts of deceptive telemarketing and misleading representations under the Competition Act.

The company has not been convicted of any of the charges.

The company also has kept operating, but possibly not for long. When contacted by CBC News, one of the managers claims the bad publicity will force ETS to shut down at the end of the month.

Cook said she is skeptical. "They'll keep phoning, until someone shuts them down," she said. READ MORE...

UBS Suspends Traders in Libor Probe

Megan Murphy and Cynthia O�Murchu — Wed, 15 Feb 2012 14:23:08 -0800

UBS has suspended some of its most senior traders in connection with an international probe into the possible manipulation of interbank borrowing rates, in the latest controversy to hit the Swiss bank since the financial crisis.

Regulators in North America, Europe and Japan have been investigating whether traders at big US and European banks colluded to influence the London interbank offered rate, or Libor, and other benchmark lending rates.

That probe has widened in recent weeks, with more than a dozen traders fired, suspended or placed on administrative leave at banks including UBS, Royal Bank of Scotland, Deutsche Bank, JPMorgan Chase and Citigroup in connection with the investigation.

People familiar with the investigation told the Financial Times that Yvan Ducrot, the co-head of UBS’s rates business, and Holger Seger, the global head of short-term interest rates trading, are among a group of Zurich-based traders who have been suspended pending further inquiries into the bank’s rate-setting processes. READ MORE...

Obama proposes large budget boosts for SEC CFTC

Christopher Doering and Sarah N. Lynch — Wed, 15 Feb 2012 11:59:43 -0800

(Reuters) - The White House on Monday proposed big budget boosts for U.S. financial market regulators, which are months behind in finalizing Dodd-Frank reforms and are under pressure to more vigorously police markets in the wake of the 2007-2009 financial crisis.

The Securities and Exchange Commission would get an 18.5 percent funding increase, while the Commodity Futures Trading Commission would receive a 50 percent rise in spending under the Obama administration's fiscal 2013 budget.

The SEC's budget would rise to $1.566 billion from 2012's budget of $1.321 billion, while the CFTC would see a spending jump to $308 million from $205 million. President Barack Obama also called for legislation to fund the CFTC through user fees, bringing it in line with most other financial regulators.

"Without sufficient funding ... the nation cannot be assured that this agency can oversee the futures and swaps markets, that customers are protected, and that the public gets the benefit of transparent markets and lower risk," Gary Gensler, the chairman of the CFTC, said in a letter to lawmakers discussing the budget.

The Obama administration, under fire for a dearth of significant prosecutions related to the 2007-2009 financial and housing market meltdown, also called for adding $55 million to the Justice Department's proposed budget to prosecute financial crimes. READ MORE...

BC notary mutual fund salesman investigated in multimilliondollar fraud

By David Baines, Vancouver Sun — Wed, 15 Feb 2012 10:20:45 -0800

Regulators sound alarm over alleged Ponzi scheme

B.C. securities regulators are investigating the alleged involvement of a Vancouver notary and Surrey mutual fund salesman in a suspected multimillion-dollar investment fraud.

On Tuesday, the B.C. Securities Commission issued an “investor alert” warning investors not to send any money to notary Rashida Samji or mutual fund salesman Arvindbhai Patel.

“We felt it was important to warn investors not to send any money to either of these individuals,” BCSC enforcement director Lang Evans said in a news release.

The B.C. Society of Notaries Public has suspended Samji and appointed a custodian to take over her practice pending its own investigation. “This appears to be a financial fraud matter,” the society said in a Tuesday news release.

Patel has also been suspended. According to BCSC registration records, he was registered as a mutual fund dealer with Ontario-based Worldsource Financial Management Inc. in Surrey, but was employed as a financial planner at Coast Capital Savings Credit Union in Surrey.

According to an affidavit sworn by BCSC investigator Sharmin Lyon to obtain an investigation order, the scheme involved purported investments in a “real estate and import/export business involving wineries.”

It was referred to as the “Mark Anthony Investment,” but had no connection to the Mark Anthony Group, which owns the Mission Hill winery in Kelowna. READ MORE...

ExBear HedgeFund Managers Settle SEC Charges

JEAN EAGLESHAM — Mon, 13 Feb 2012 16:20:24 -0800

Two former Bear Stearns Cos. hedge-fund managers agreed with the Securities and Exchange Commission to settle civil-fraud charges for a total of $1.05 million.

In addition, the two managers of the Bear funds whose collapse in 2007 marked a prelude to the broader financial crisis also agreed to securities-industry bans. Ralph Cioffi agreed to a three-year ban and former co-manager Matthew Tannin agreed to a two-year ban, the federal judge overseeing the case was told Monday.

U.S. District Judge Frederic Block in the Brooklyn, N.Y., said he was "inclined to sign off" on the deal even though "it is being settled for, relatively speaking, chump change."

Representatives of Messrs. Cioffi and Tannin declined to comment.

An SEC spokesman said the proposed settlement payments and bans are "serious sanctions" that reflected "the defendants' misconduct, their ill-gotten gains and other considerations."

The SEC will detail its rationale for the deal in a written submission requested by the judge by Feb. 21, the SEC spokesman added.

If approved by the judge, the settlement will officially end one of the U.S. government's first efforts to tackle alleged wrongdoing during the lead-up to the financial crisis. READ MORE...

SEC looks into private equity industry practices WSJ

Karl Plume in Chicago; editing by Mohammad Zargham — Mon, 13 Feb 2012 10:51:43 -0800

(Reuters) - The Securities and Exchange Commission has launched an inquiry into how the private equity industry values its investments, how those investments are marketed, and other practices, the Wall Street Journal reported on Saturday.

Federal regulators sent letters to numerous private equity firms in December in an "informal inquiry" into the $1.2 trillion industry, which historically has not been a major focus of scrutiny by the SEC, the newspaper said.

It was unclear which firms received the SEC letter which "requested information related to 12 broad areas, including fund raising and fund formation," it said. READ MORE...

FDA says it monitored workers email to investigate potential leak

Ellen Nakashima and Lisa Rein — Fri, 10 Feb 2012 15:13:35 -0800

The Food and Drug Administration said Thursday that it monitored the personal e-mails of employees who had concerns about unsafe medical devices beginning in April 2010 but said it did so to investigate allegations that the employees had leaked confidential information to the public.

The FDA’s statement came in response to a Washington Post article last month that reported that the FDA intercepted and stored the Gmail communications of a group of agency doctors who raised concerns with Congress about the agency approving cancer-screening and other devices despite the doctors’ determinations that the devices were not safe or effective.

The statement comes as congressional inquiry into the e-mail surveillance has widened. In a letter Thursday to FDA Commissioner Margaret Hamburg, House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) warned that the FDA’s monitoring of personal communications between FDA doctors and congressional staff was “unlawful and will not be tolerated.”

The Post reported that the e-mail surveillance began as early as January 2009. Documents obtained by the FDA employees — all doctors and scientists who worked for the Office of Device Evaluation— showed contents of several e-mails from January 2009 between one scientist and a congressional aide.

Those e-mails were attached to a letter sent by an FDA official to another agency as evidence why the FDA could not allow the scientist to continue to work in its organization. “We simply cannot trust him,” the letter said. The e-mails were obtained from the Equal Employment Opportunity Commission, which had collected documents in an investigation of the employee’s complaint of retaliation. READ MORE...

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Whistleblowing Under Dodd Frank

Gregory Kowalsky — Fri, 10 Feb 2012 15:30:04 -0800

The Dodd Frank act has provided Wall Street with a host of new regulations to comply with. One in particular that will have far reaching effects to every publicly traded corporation is section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (otherwise known as section 21f of the 1934 Securities Exchange Act).[1] It provides that the SEC may pay awards to those persons who come forward with information that leads to the successful prosecution by the SEC of an enforcement action, which yields monetary awards of over 1 million dollars.[2] Under the statute, “whistleblowers” who provide such information may be entitled to anywhere between 10% to 30% of the total award.[3] This provision of the Dodd Frank Act didn’t take effect until August 12, 2011, so its ramifications may not be yet fully understood.

The provision allows for any employee who provides information “related to a possible violation of the federal securities laws” to the SEC to be eligible for a monetary award.[4] On top of this, the employees are also protected from any negative retaliation that their employer might take in response to their ‘whistleblowing’.[5] There was already a whistleblower protection statute in place prior to this Dodd Frank provision (Section 806), but it was much narrower.[6] The Dodd Frank Act protects those who provide information that leads to any judicial, administrative or other related proceeding, not just those that are specifically related to shareholder protections.

This new statute is sure to have a strong effect on labor relations. Since the American economy, and now the global economy as well, has been extremely unstable since 2008, and because the world of finance in America is ruled by securities laws and enforcement agencies such as the SEC, the DOJ, and the State Attorneys’ offices, the average employee is much more apt to identify securities violations. Insider trading has become a household term.[7] Regulatory bodies like the SEC are constantly watching average day-to-day financial transactions. The point of all this being that this new law is not only topical and current, but it is extremely necessary for our economy to make forward progress. READ MORE...

To Envision DoddFranks Future Look to Its Predecessor

JESSE EISINGER, ProPublica — Fri, 10 Feb 2012 08:58:57 -0800

As fears mount that Dodd-Frank, the financial overhaul law, is about to be emasculated, it’s worth reflecting on the 10-year anniversary of a major regulatory success.

I’m speaking of the mocked, patronized and vilified Sarbanes-Oxley, the law that cleaned up American corporate accounting.

SOX, as it’s known, was a response to an epidemic in corporate accounting fraud that swept American business in the late 1990s and early 2000s. Because the 2008 financial crisis dwarfs that earlier round of scandal, it’s easy to forget how rotten things were, said Broc Romanek, editor of TheCorporateCounsel.net, a site devoted to securities law and corporate governance. “Everyone had lost faith in the numbers put out by big public companies,” he said.

Cast your mind back. The scandals erupted in some of what were supposed to be the best, most recognizable companies in America. Enron and WorldCom were the two biggest names and the two biggest failures. Tyco and Adelphia were in the second tier. But there were appalling accounting disgraces at HealthSouth, Rite Aid and Sunbeam. Waste Management and Xerox barely survived theirs.

Today, there are certainly debates about stocks and their valuations — and some questionable accounting — but no company that finds itself under scrutiny now is anywhere near as large, respected or celebrated as those were then. READ MORE...

US Plans to Sue Banks Over Bonds

JEAN EAGLESHAM, SUSAN PULLIAM and DAN FITZPATRICK — Thu, 09 Feb 2012 09:48:04 -0800

SEC to Warn Several Wall Street Firms of Impending Legal Action Stemming From Financial Crisis

Federal securities regulators plan to warn several major banks that they intend to sue them over mortgage-related actions linked to the financial crisis, according to people familiar with the matter.

The move would mark a stepped-up regulatory effort to hold Wall Street accountable for its sale of bonds linked to subprime mortgages in 2007 and 2008. At issue is whether the banks misrepresented the poor quality of loan pools they bundled and sold to investors, the people said.

It isn't clear which firms will receive the formal Securities and Exchange Commission enforcement warnings, known as "Wells notices."

Banks whose activities are being examined in the civil investigation include Ally Financial Inc., Bank of America Corp., Citigroup Inc., Deutsche Bank AG and Goldman Sachs Group Inc., people familiar with the matter say.

Representatives of the banks declined to comment, as did a spokesman for the SEC.

In a meeting with reporters last month, Robert Khuzami, the SEC's enforcement chief, said the agency's mortgage-bond investigation was looking for evidence that firms "failed to disclose important information when selling these securities."

Mr. Khuzami declined further comment on the investigation.

The planned regulatory actions come at a critical juncture. The SEC, Justice Department and state prosecutors are pushing to complete a number of financial-crisis cases by the end of this year, partly to avoid having enforcement action curbed by statutes of limitations, the people said.

Some politicians have pressed federal authorities to hold Wall Street firms more accountable for questionable activity during the crisis.

President Barack Obama last month set up a new financial-crimes unit to pursue mortgage-securities fraud during the financial crisis, involving federal and state prosecutors and the SEC. This week, the SEC hosted a training day for prosecutors and other members of the new unit, the people say. READ MORE...

Diamond Removes CEO CFO Amid Probe

EMILY GLAZER And NATHALIE TADENA — Wed, 08 Feb 2012 16:10:00 -0800

Diamond Foods Inc. removed its chief executive and chief financial officer, and said it would restate two years worth of financial results, after an internal probe found it had wrongly accounted for payments to walnut growers.

Shares plunged 37% to $23.21 in after hours trading.

The company said Michael J. Mendes, who held the titles of chairman, president and CEO, and CFO Steven M. Neil have been placed on administrative leave pending negotiations about their severance and board seats, a person familiar with the matter said.

The snack company named director and former Del Monte Foods CEO Rick Wolford to serve as the company's acting president and CEO. It appointed Michael Murphy, a managing director at Alix Partners, as the company's acting chief financial officer. The company said it is launching searches for permanent replacements for the CEO and CFO posts.

Robert J. Zollars, who previously served as lead independent director, was named chairman of the board.

The board's audit committee concluded a $20 million "continuity" payment made to walnut growers in August 2010 and a $60 million "momentum" payment made to growers in September 2011 were not accounted for in the correct periods. Diamond will restate its statements for fiscal years 2010 and 2011 and said it will file all required reports with the U.S. Securities and Exchange Commission as soon as possible. READ MORE...

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Brokers suspended in Libor inquiry

Caroline Binham, Brooke Masters and Megan Murphy in London — Wed, 08 Feb 2012 15:52:30 -0800

More than a dozen traders and brokers in London and Asia have been fired, suspended or put on leave by their employers as a multinational probe into alleged manipulation of crucial global lending rates accelerates.

Regulators have been investigating US and European banks that help set interbank lending rates in London and Tokyo since late 2010, in an intensive profile inquiry that spans three continents and involves at least nine separate enforcement agencies.

In the last few months, officials have also expanded their enquiries to both hedge funds that place big bets on movements in those rates, and the interdealer brokers that serve as go-betweens with the banks, according to people familiar with the probe.

Icap, the world’s largest inter-dealer broker, has suspended one employee and put two more on administrative leave in the past six weeks. Icap, based in London, declined to comment beyond noting that it was “co-operating fully” with authorities and had disclosed the official requests for information late last year.

According to people familiar with the probe, traders have also been suspended, fired or placed on leave in recent months at Deutsche Bank, JPMorgan Chase, Royal Bank of Scotland and Citigroup. All four banks declined to comment.

Regulators are seeking to determine whether banks colluded to set the overnight lending rates known as Libor, Tibor and Euribor, and whether traders within the banks and their clients improperly used information on what future rates would be to place profitable trades. The rates, which serve as a benchmark for $3.5tn worth of financial products worldwide, are set by a daily poll of a panel of banks in each region.

US and UK regulators have sought information from the three interdealer brokers that dominate the rates market – Icap, Tullett Prebon and RP Martin. People familiar with the matter said they were looking at information-sharing among brokers, hedge funds and banks.

An RP Martin spokesman said the firm was not under investigation and declined to comment on suspensions. A Tullett Prebon spokesman said the firm had not suspended any employees.

Earlier this week, UBS said it had been granted conditional immunity from the Swiss Competition Commission relating to its submissions for certain rates. The Swiss group was granted similar immunity by the US Department of Justice last year because it is co-operating with the probe.

“Derivative traders working for a number of financial institutions might have manipulated these submissions by co-ordinating their behaviour, thereby influencing these reference rates in their favour,” said a statement published by Switzerland’s Competition Commission last week. “Moreover, derivative traders might have colluded to manipulate the difference between the ask price and the bid price [spread] of derivatives based on these reference rates to the detriment of their clients.”

Barclays, which is already being investigated over alleged improper communications between traders and back office staff over its rates submissions, declined to comment on whether any employees have been suspended in London.

With additional reporting by Kara Scannell in New York, Michiyo Nakamoto in Tokyo, and Paul J. Davies in Hong Kong

READ MORE...

Top Stanford witness says he tried to conceal fraud

Anna Driver — Tue, 07 Feb 2012 16:03:49 -0800

(Reuters) - A former top aide to Texas financier Allen Stanford said on Tuesday he continued to hide financial misdeeds as Stanford's empire was crumbling in early 2009.

James Davis, Stanford's former chief financial officer, said he drew up a document in February of that year showing Stanford's bank had assets of $6.3 billion, far more than was the case. This was despite learning in January that U.S. regulators were about to swoop down on the bank, Davis said.

Davis, who has pleaded guilty to fraud in a plea bargain, was on his fourth day of testifying against his former boss.

Stanford is on trial in federal court in Houston accused of bilking investors in his Caribbean bank in a $7 billion Ponzi scheme. He has denied the charges.

In a cross-examination that has gone on for two days, Stanford's lawyer, Robert Scardino, painted Davis as a habitual liar.

"You just said to the jury that you are no longer a liar. You quit lying?" Scardino asked.

"Yes, sir," Davis answered.

Under Scardino's questions, Davis said he was the source of a pie chart that showed the bank's assets at $6.3 billion. The chart was shown to other Stanford executives at a meeting in Miami in February 2009.

"Yes, sir I did put the $6.3 billion," Davis told the jury. READ MORE...

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SEC weighs two money market fund proposals

Sarah N. Lynch — Tue, 07 Feb 2012 15:55:03 -0800

(Reuters) - The chairman of the Securities and Exchange Commission is eyeing two potential plans to bolster the stability of money market funds, but their fate remains uncertain due to internal disagreement at the SEC over the need for more regulations.

Last month, agency staff circulated early drafts for either a capital buffer or a floating fund valuation, both aimed at preventing runs on money market funds and investor losses in the $2.6 trillion industry, people familiar with the matter said.

Regulators began to focus on new rules for the money market fund industry after the Reserve Primary Fund "broke the buck" in 2008, at the height of the financial crisis, when its net asset value below the $1 mark.

In 2010, the SEC adopted a series of new rules in response to that event, including tightening credit quality standards, shortening the maturities of fund investments and imposing a new liquidity requirement.

The industry and several SEC commissioners have questioned whether any further changes are required.

One of the new plans, favored by some SEC staff and banking regulators, would consist of both a capital buffer requirement and a 30-day hold-back on redemption requests by investors.

Under that proposal, funds would need to maintain a 1 percent capital cushion and they would hold back 3 percent of investor funds for 30 days after a redemption request.

The alternative plan calls for a floating net asset value to help curb investor complacency over the stable $1-per-share value that funds currently quote.

The concepts were first discussed by SEC Chairman Mary Schapiro in a major speech to the brokerage industry last November.

The Wall Street Journal reported on Tuesday that the SEC would unveil the plans in the coming weeks.

SEC staff are hoping to put both plans out for public comment, but would anticipate only adopting one of the two proposals, people with knowledge of the matter told Reuters. The goal is to unveil them sometime in the spring. READ MORE...

OSC launches new insider trading probe

tim kiladze — Tue, 07 Feb 2012 14:27:12 -0800

The Ontario Securities Commission is investigating its second high-profile insider trading case in as many months, signalling to Bay Street that it is cracking down on enforcement.

The latest case involves a former employee at GMP Securities, a venerable Canadian investment bank, and mining giant Ian Telfer, chairman of Goldcorp Inc. (G-T47.580.310.66%) The allegations centre on Eda Marie Agueci, a former executive assistant at GMP, who the OSC alleges tipped off others about pending transactions for which her firm acted as an adviser. Dennis Wing, a founding partner of investment bank First Marathon Securities, is also named in the case.

Although the OSC noted that Mr. Telfer did not participate in the insider trading scheme, the commission alleges that he helped Ms. Agueci to hide some trading activity and thereby acted contrary to the public interest.

It is the second case this year in which the OSC has tied high-powered mining executives to insider trading. In January, the OSC accused Jowdat Waheed and Bruce Walter of illegal insider trading, alleging that they profited from inside information only they were privy to during the prolonged takeover battle for Baffinland Iron Mines Corp.

The OSC alleges that the illegal activites generated profits of about $962,000 and that Ms. Agueci received direct and indirect payments that amounted to $25,000 in relation to this trading. READ MORE...

Symmetry Medical execs settle SEC fraud charges

Reuters — Mon, 06 Feb 2012 11:08:03 -0800

(Reuters) - Symmetry Medical Inc and several former executives and accountants have settled Securities and Exchange Commission charges over a "pervasive" alleged accounting fraud at a British unit that distorted the medical device company's results.

The settlement also marks one of the few times the SEC has invoked the Sarbanes-Oxley governance law of 2002 to claw back sums paid to senior corporate executives while a fraud was going on but who did not know it was occurring.

Former Chief Executive Brian Moore agreed to reimburse $450,000 to Symmetry, while Chief Financial Officer Fred Hite agreed to reimburse $185,000. Hite also agreed to pay a $25,000 civil penalty.

Symmetry also agreed not to violate rules related to financial reporting, books and records and internal controls.

The SEC accused Symmetry's Thornton Precision Components unit of having systematically overstated assets and revenue and understated costs, starting before the parent's December 2004 initial public offering and ending in late September 2007.

It said Symmetry was ultimately forced to restate results, reducing reported income from 2004 through the first two quarters of 2007 by more than two-thirds to about $23 million from about $76 million.

The four other former Symmetry executives settled related SEC charges, and two former Ernst & Young LLP UK auditors accused of failing to properly audit Thornton agreed to two-year suspensions from appearing before the SEC.

"Symmetry shareholders were investing their money, and Symmetry and TPC executives were collecting their bonuses, based in part on inflated numbers," Stephen Cohen, associate director of the SEC enforcement unit, said in a statement.

Thomas Sullivan, who succeeded Moore as chief executive last January, in an interview said the company reported the irregularities to the SEC in 2007 immediately after discovering them, and is pleased to settle. He also said he looked forward to "many years" working with CFO Hite.

Russ Ryan, a lawyer for Moore, in a statement said Sarbanes-Oxley "automatically requires reimbursement of certain amounts even when the CEO is innocent of wrongdoing, and that is what Mr. Moore agreed to do here. He is glad to have put the matter behind him."

Symmetry is based in Warsaw, Indiana. Its products include orthopedic implants, surgical instruments and engine parts used in aerospace. Thornton is based in Sheffield, England.

Executives affiliated with home builder Beazer Homes USA Inc, auto parts retailer CSK Auto Inc and automated teller machine manufacturer Diebold Inc have also agreed to clawbacks in other SEC cases that invoked Sarbanes-Oxley.

The cases are SEC v. Senior et al, U.S. District Court, Northern District of Indiana, No. 12-00060; SEC v. Moore, U.S. District Court, Northern District of Indiana, No. 12-00061.; In re: Symmetry Medical Inc et al, SEC Administrative Proceeding No. 3-14723; In re: Kelly et al, SEC Administrative Proceeding No. 3-14724.

For the SEC: Stephen Cohen

For Symmetry: Erich Schwartz of Skadden Arps Slate Meagher & Flom

For Moore: Russell Ryan of King & Spalding

For Hite: Nancy Grunberg of Venable

(Reporting by Jonathan Stempel and Sarah N. Lynch)

A $17 Billion Fraud Born of Earnings Management and a Poor Ethical Culture

Sheila Keefe, CFE, CPA - ACFE Insights — Mon, 06 Feb 2012 15:13:03 -0800

The $1.7 billion Olympus fraud, discovered through whistleblowing of the outgoing CEO Michael Woodford, has sent shockwaves throughout the corporate governance world as many wonder if such a fraud could occur at other organizations. To consider this validity of this concern, let’s look at the accounting piece and the role of poor corporate culture that allowed this fraud to continue for 13 years.

The Numbers

The accounting piece of the Olympus fraud was facilitated by the now-outlawed practice of tobashi, in which organizations spread the recognition of losses over multiple periods rather than immediately. To state it simply, tobashi is a form of earnings management. Olympus executed its tobashi scheme by selling devalued investments to an ‘unrelated’ entity under common control at historical costs. In this way, no loss was recorded by Olympus on the sale of the investment. The losses were recorded eventually as impairment of goodwill. To do this, Olympus would buy the ‘unrelated’ entity that held the investments, with the price set at the lower market value and then add in significant goodwill to the acquisition such that the new subsidiary would be bought for an amount equivalent to the historical cost of the devalued investments. Olympus would then gradually write-down goodwill from the acquisition of the previously ‘unrelated’ entity as a permanent impairment. At the end of the tobashi scheme, the devalued investment would be restored to Olympus’ balance sheet at the lower market value, and the losses would be recorded through the income statement but not as investment income but rather as impairment of goodwill.

While the tobashi scheme that Olympus initiated is no longer legal, earnings management is still popular with companies interested in avoiding shocks to stock prices. As recently as 2009, General Electric was fined $50 million by the SEC for earnings management.

The Role of Olympus’s Poor Ethical Culture: READ MORE...

Fighting Fraud 5 Key Concerns

Tracy Kitten, — Fri, 03 Feb 2012 11:57:15 -0800

Alisdair Faulkner of ThreatMetrix says financial institutions and businesses should focus on five key security areas. What make up the top five, and where do banks need to make the greatest fraud-prevention investments?

Faulkner, a technology entrepreneur who oversees security products for ThreatMetrix, says e-commerce, enterprise-level security, the need for stronger authentication, cyberwarfare threats and malware's multichannel attacks are top risk-management and security focuses for banks and business.

But addressing those security concerns won't be easy. Fighting fraud requires a multichannel approach. For financial institutions, that means addressing attacks waged against accounts from emerging channels, like mobile, while continuously monitoring attacks aimed at more traditional channels, such as online.

It also means protecting commercial and retail customers, which typically pose the greatest security vulnerabilities.

"You have to address fraud across multiple channels," Faulkner says. "What all financial institutions that look at customers' deposits find is that they need to integrate secure browsing technology. An attack does not have to come from one channel, and financial institutions not only have to protect themselves, but also those in their chain that are targeted."

Integrated, cross-channel fraud detection is critical, especially as banks and credit unions work to meet increasing regulatory demands, such as those outlined in the Federal Financial Institutions Examination Council's Authentication Guidance. READ MORE...

What Is Sarbanes Oxley

Financial Management — Fri, 03 Feb 2012 15:49:37 -0800

When the Enron and MCI scandals broke, it became clear to the US government as well as everyone else that something needed to be done to prevent financial abuses from harming the public. A bipartisan team of legislators led by Senator Paul Sarbanes and Representative Michael G. Oxley put together the Sarbanes Oxley Act, also titled the Public Company Accounting Reform and Investor Protection Act of 2002, and more manageably called SOX for short. It was overwhelmingly passed by the House of Representatives, and the Senate voted unanimously to pass the Sarbanes Oxley bill.

The Sarbanes Oxley Act was signed into federal law on July 30, 2002. Its primary purpose is to protect investors by making corporate information released about accounting and finance more accurate and reliable. It addresses issues like the establishment of a public company, creation of an accounting oversight board, auditor independence, corporate responsibility, and enhanced financial disclosure.

According to President Bush, Sarbanes Oxley includes ‘the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt.’

That may be true, but it’s also one of the most complex and difficult to understand reforms ever passed. It covers topics such as:

Personal loans by the company to executive officers or directors

Financial report certification

More timely insider trading reporting

Strong limitations on insider trades

Public reporting of top executive real compensation and company profits
Auditing independence

Personal accountability by the chief officers of the company, backed up by criminal and civil penalties including serious jail time and financial penalties on individuals who misstate financial statements and commit securities violations

You can see how a bill covering so many different topics might be seen as discouragingly complex

Understanding Sarbanes Oxley

There are a few things you can do to learn how Sarbanes Oxley works. First, read reviews and synopses of the Sarbanes Oxley Act on the SEC website; they give an excellent overview of what the law is about. Second, you can get training focused in several different ways on the part of Sarbanes Oxley you need to understand.

The main thing to understand about Sarbanes Oxley, though, is that it primarily affects how you do your accounting, and thus how you run your IT services. Electronic controls must properly manage your financial information, so that you have clear, easy-to-access real-time information on your company’s finances. Corporate finances must be kept separate from executive finances, payroll, and other moneys. Auditing for accountability is crucial, so that if errors or misinformation enter the data stream you will be able to determine the source.

With Sarbanes Oxley, even if you were ignorant of what was going on in your accounting, if you are a major executive you will be both civilly and criminally liable for any errors released to the public, or the failure to release certain information in a timely manner. You must learn about Sarbanes Oxley, not just to comply with more government regulations, but to protect your personal life. READ MORE...

SEC Appoints GAOs Jeanette Franzel to PCAOB

Michael Cohn, Accounting Today — Fri, 03 Feb 2012 15:37:00 -0800

The Securities and Exchange Commission has named Jeanette M. Franzel, a managing director of the Government Accountability Office, as a member of the Public Company Accounting Oversight Board.

She will be replacing Daniel L. Goelzer, one of the founding members of the PCAOB, who has served two consecutive five-year terms with the PCAOB since the board was founded in 2002.

The Sarbanes-Oxley Act of 2002 created the PCAOB to provide independent oversight of audits of public companies and broker-dealers. The board is responsible for setting audit standards and for registering, inspecting, and disciplining public accounting firms. The SEC oversees the PCAOB and appoints its members.

Franzel currently leads all aspects of the GAO’s financial audit oversight of the federal government. She heads a team of approximately 250 staff that focuses on financial and performance audits, proper use of federal funds, internal control, financial systems, and federal audit and financial management policy. She is a CPA, Certified Internal Auditor, Certified Management Accountant, and Certified Government Financial Manager.

“Jeanette’s commitment to the public trust and America’s investors is demonstrated by her life-long public service and her constant dedication to increasing accountability, audit quality and audit standards,” said SEC chair Mary L. Schapiro in a statement. “She has extensive hands-on experience leading financial audits and deep expertise in audit quality control, which will serve the PCAOB well as it continues to execute a rigorous standard-setting, inspections, and enforcement agenda.”

“We look forward to working with Jeanette on the PCAOB’s important statutory mission of overseeing the auditors of public companies and SEC-registered broker-dealers,” said SEC chief accountant James L. Kroeker. “Her qualifications as a nationally and internationally recognized expert in auditing standards will benefit the PCAOB as it works to protect the interests of investors and strengthen audit quality.” READ MORE...

SEC advisory panel concerned about crowdfunding

By Sarah N. Lynch — Thu, 02 Feb 2012 11:43:14 -0800

(Reuters) - An advisory committee urged U.S. securities regulators on Wednesday to relax outdated rules that trigger public financial reporting for companies, but it stopped short of backing a new capital-raising strategy known as "crowdfunding."

In a public meeting, members of the Advisory Committee on Small and Emerging Companies voted on two proposed regulatory changes for the Securities and Exchange Commission to consider that would help private companies raise capital.

However, they raised concerns with crowdfunding, a new capital-raising strategy that lets investors take small stakes in private start-ups over the Internet, even though the idea has received some support from President Barack Obama and Congress.

The panel said it needed more time to study the issue to ensure it does not lead to investment scams.

"This is just an opportunity for fraud in the extreme," said committee co-chair Stephen Graham, who advises on securities offerings as co-chair of Fenwick & West's Life Sciences Practice.

"You can just imagine the unsophisticated investor that is just bombarded on the Internet." READ MORE...

Internal Control Manager FINCA Russia

FINCA International Inc. — Tue, 31 Jan 2012 15:37:12 -0800

Description
FINCA International, one of the world's leading microfinance institutions, provides financial services to more than 750,000 clients through 21 wholly-owned and operated subsidiaries in Africa, Eurasia, Latin America and the Greater Middle East. FINCA International is currently looking for an Internal Control Manager, Russia, to be based in Samara. The Internal Control Manager will manage a team of professionals; partner with regional and Company level management, and, serve as a member of FINCA team, and will report to the Chief Executive Officer (functional and administrative), and to the Regional Internal Control Manager (functional and technical). In conjunction with FINCA Eurasia Internal Control Manager, the Internal Control Manager will assist company’s management in creation and maintaining of internal control environment that supports the Company in pursuing its mission with a minimum of risk and a maximum of efficiency. The Internal Control Manager will assist company’s management in improving the overall performance and activities of the Company and in making decisions on the issues of risk identification and analysis. Working with the framework of FINCA regulation and in coordination with corporate functional heads, the Internal Control Manager will manage and monitor control activities and recommend corrective actions.

Ideal profile:
- University Degree in Business, Finance, Economics, Management or equivalent education.
- Minimum 2 years of experience in best-practice internal control management such as internal audit, independent audit, compliance, risk management.
- Minimum 1 year experience in a supervisory role.
- Outstanding interpersonal, communication and training skills.
- Strong business management and negotiating skills.
- Excellent technical report writing skills and computer literacy.
- Strong analytical and organizational skills.
- Fluency in Russian and English.

FINCA International Inc. is an Equal Opportunity Employer.

APPLY or VISIT the full vacancy description

Two Credit Suisse ExEmployees Plead Guilty in Bond Probe

CHAD BRAY, MICHAEL ROTHFELD and JENNY STRASBURG — Wed, 01 Feb 2012 11:17:59 -0800

NEW YORK—Two former Credit Suisse Group AG employees pleaded guilty Wednesday to criminal charges over alleged misstatements regarding the bank's mortgage-bond valuations during the financial crisis.

David Higgs, a U.K. citizen, pleaded guilty to conspiracy to falsify books and records and to commit wire fraud at a hearing before U.S. District Judge Alison J. Nathan in Manhattan federal court on Wednesday. Mr. Higgs, who is cooperating with prosecutors, faces up to five years in prison on the charge.

About an hour later at a separate hearing in the downtown Manhattan federal courthouse, Salmaan Siddiqui, a former Credit Suisse trader who reported to Mr. Higgs, pleaded guilty to conspiracy to falsify books and records. Mr. Siddiqui also is cooperating in the investigation.

The long-running investigation is expected to result in charges against fewer than half a dozen former Credit Suisse traders, according to people familiar with the matter.

The Manhattan U.S. Attorney's office is planning to allege in a criminal complaint as early as today that several former traders at the global investment bank misled its investors by booking inflated prices of mortgage bonds to boost their bonuses, despite knowing the values of those securities had dropped, The Wall Street Journal reported Tuesday night, citing people familiar with the matter.

The Securities and Exchange Commission is planning to file related civil charges, the people said.

Credit Suisse itself won't be charged in the case, the people said. A spokeswoman for Credit Suisse declined to comment Wednesday. READ MORE...

Money From MF Global Feared Gone

SCOTT PATTERSON and AARON LUCCHETTI — Mon, 30 Jan 2012 15:35:41 -0800

Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.

As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a "significant amount" of the money could have "vaporized" as a result of chaotic trading at MF Global during the week before the company's Oct. 31 bankruptcy filing, said a person close to the investigation.

Many officials now believe certain employees at MF Global dipped into the "customer segregated account" that the New York company was supposed to keep separate from its own assets—and then used the money to meet demands for more collateral or to unfreeze assets at banks and other counterparties as they grew more concerned about their financial exposure to MF Global.

Investigators also are examining other scenarios that have gained traction in recent weeks, such as the possibility that MF Global suffered steep losses on investments made using customer money. Officials investigating the case have looked into whether such investments were appropriate under rules at the time. READ MORE...

In Stanford Fraud Case Longtime Friends Become Courtroom Enemies

CLIFFORD KRAUSS — Mon, 30 Jan 2012 15:00:12 -0800

HOUSTON — R. Allen Stanford and James M. Davis were roommates at Baylor University and trusted friends over three decades who together built an international financial empire. But this week they are scheduled to confront each other in federal court as indicted swindlers ready to cross swords.

Mr. Davis, who was the chief financial officer of the Stanford Financial Group before it collapsed three years ago, is now the chief prosecution witness against Mr. Stanford. He will testify that he witnessed and participated in a $7 billion Ponzi scheme set in motion and directed by Mr. Stanford from a bank on the island of Antigua.

“It’s very similar to an organized crime or Mafia case,” said Adam Gershowitz, a professor of criminal law at the University of Houston, “where you have friends who go back years and have worked together for years and one turns on the other to save his own skin.”

Mr. Stanford’s lawyers have already told the jury that Mr. Davis’s story is a lie. They are certain to cross-examine him hard on his contention that all of the illegal things he has already confessed to — cooking the books for an empire that included offshore banking, two airlines, Caribbean real estate and even a cricket team — were all at the instruction of Mr. Stanford. The case could well come down to who the jury decides was really the mastermind of what prosecutors described as an international crime that defrauded nearly 30,000 investors from 113 countries over more than 20 years and corrupted the highest levels of the government of Antigua. READ MORE...

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From the Experts Preparing for Whistleblowers Under DoddFrank

Matt Morley and Carol Elder Bruce — Fri, 27 Jan 2012 16:20:53 -0800

Dodd-Frank’s Whistleblower Provisions

The Dodd-Frank whistleblower provisions, codified as Section 21F of the Exchange Act, require the SEC to pay bounties to persons who provide information leading to a successful securities law enforcement action, in which more than $1 million is recovered. Bounties will range from ten to 30 percent of the total monetary sanctions obtained by authorities, with the precise amount to be determined unilaterally by the SEC.

Whistleblowers are not required to inform the company of their concerns at any time, and almost anyone can be a whistleblower, including current or former employees, spouses, consultants, or competitors. Whistleblowers can submit tips anonymously by acting through counsel, and their identity may never be publicly known. Even persons bound by fiduciary duties or ethical obligations can, under certain circumstances, become eligible to receive a bounty for reporting to the SEC.

For example, compliance and internal audit personnel are ordinarily ineligible for bounties, but may qualify if they have a reasonable basis to believe that disclosure may be necessary to prevent substantial injury to the company or its investors, or if the company fails to report a violation to the SEC within 120 days after learning of it. Whistleblowers can even qualify for an award if they obtained their information in breach of civil or criminal law, unless they are convicted of a criminal violation in connection with obtaining the information.

SEC investigations arising out of whistleblower tips may prove more difficult to handle than staff-initiated inquiries, given the potentially active involvement of a financially motivated whistleblower who may push the SEC to undertake investigative steps that it might not otherwise pursue. Indeed, it seems likely that SEC investigations arising from whistleblower complaints will receive a disproportionate amount of staff attention and resources, given the importance of the program and the staff’s sensitivity about previous failures to heed whistleblowers. These factors may also make such investigations, once initiated, more difficult for the staff to close. READ MORE...

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Obama announces a Wall Street crackdown

SOX First — Mon, 30 Jan 2012 12:00:52 -0800

In his State of the Union address, Obama has announced a task force to go after the fraud that caused the financial crisis.

"We will…establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud and protect people's investments. Some financial firms violate major anti-fraud laws because there's no real penalty for being a repeat offender. That's bad for consumers, and it's bad for the vast majority of bankers and financial service professionals who do the right thing. So pass legislation that makes the penalties for fraud count. And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans."

The lack of prosecution of the bankers and financial engineers who caused the financial crisis is one of the great public frustrations with this administration. A New York Times analysis , nearly all of the biggest financial companies – Citigroup, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America to name a few – have settled fraud cases by promising the SEC that they would never again violate an antifraud law, only to do it again in another case a few years later. In other words, they weren't prosecuted because they made a promise, and then they broke the promise.

We don't know where this will go. As The Wall Street Journal says, it's an unashamedly populist speech in an election year. Who know? Maybe, we'll see some big banks getting prosecuted in the lead up to the election. For Obama, it might be a winner. READ MORE...

Phillips & Cohen Says Appointment of Director for CFTC Whistleblower Office Gives Program a Jumpstart

PRNewswire via COMTEX - SOURCE Phillips & Cohen LLP — Fri, 27 Jan 2012 16:13:18 -0800

WASHINGTON, Jan. 27, 2012 /PRNewswire via COMTEX/ -- With the recent appointment of a director for the new Commodity Futures Trading Commission (CFTC) Whistleblower Office, the CFTC has shown it is ready to move forward with its new whistleblower program, says whistleblower law firm Phillips & Cohen LLP.

The CFTC announced earlier this month that it hired Vincente Martinez as the first director of the CFTC's Whistleblower Office. Prior to coming to the CFTC, Martinez was Assistant Director in the Securities and Exchange Commission's Division of Enforcement.

"The CFTC has long made clear from its statements and actions that it welcomes whistleblowers who know of misconduct in the commodity markets," said Erika A. Kelton, a Washington, DC, attorney with Phillips & Cohen. "With the appointment of Mr. Martinez, the CFTC has chosen someone with experience in enforcement who can jumpstart the program." READ MORE...

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Doctors must not sign antiwhistle blowing contracts

Claire Churchard - People Management — Fri, 27 Jan 2012 15:30:09 -0800

More to be done to protect patients, says NHS Employers

Doctors must not sign work contracts that include ‘gagging clauses’ preventing them from raising concerns about poor quality care, according to new guidance from the General Medical Council (GMC).

The doctors’ regulator called such clauses “totally unacceptable” and said that doctors complying with them are breaking professional obligations and risking patient welfare, and their own careers.

This move throws additional weight behind efforts to encourage healthcare staff to speak out about unacceptable standards of care as staff fear reprisals and even the sack.

Niall Dickson, GMC chief executive, said: “Being a good doctor involves more than simply being a good clinician. It means being committed to improving the quality of services and being willing to speak up when things are not right – that is not always easy but it is at the heart of medical professionalism.

“Our new guidance also makes clear that doctors must not sign contracts that attempt to prevent them from raising concerns with professional regulators such as the GMC and systems regulators, such as the CQC. Nor must doctors in management roles promote such contracts or encourage other doctors to sign them. Those who promote or sign such agreements are breaking their professional obligations and putting their careers at risk.”

Commenting on the new guidance Dean Royles, director of NHS Employers, said that the right to raise concerns is “underwritten in NHS terms and conditions of employment” making it a professional duty to report problems because it is crucial to patient safety.

"The NHS has worked hard to create a culture that encourages staff to report misconduct, malpractice or wrong-doing that might affect patient safety, without fear of victimisation. Anonymous NHS staff surveys show that most staff know how to report concerns and feel confident to do so,” Royles said. READ MORE...

Cabinet to discuss protection for whistleblowers

The Journal — Mon, 30 Jan 2012 11:51:11 -0800

THE CABINET IS set to discuss whistleblower legislation at a meeting tomorrow morning.

The issue, which has been raised in recent weeks following the dismissal of a whistleblower working in St Brendan’s Hospital at Grangegorman, is contained within the Programme for Government.

Fine Gael TD for Dublin Mid-West Derek Keating welcomed the move.

“If advocates like Louise Bayliss are to continue to unveil wrong-doings as they see them, they need to know that they will be protected by the State,” he said.

“Louise’s treatment at the hands of her employer has led her to believe that there are many other people who are being treated badly or threatened by middle management in an attempt to cover up low standards, wrong-doings to service users or bad management practices”.

The Programme for Government contains a plan for a Whistleblowers Act which would protect public servants who expose serious issues in their jobs.

There was controversy last year when the HSE took over a Dublin nursing home after allegations that residents may have been subjected to physical and verbal abuse.

Kathleen Lynch, the Minister for State with responsibility for Older People, said at the time that she was horrified that whistleblowers had been afraid to be interviewed by the health services watchdog. READ MORE...

Subpoenas issued to financial firms in expanded probe

Aruna Viswanatha and James Vicini — Mon, 30 Jan 2012 09:07:41 -0800

(Reuters) - The Justice Department issued civil subpoenas to 11 financial institutions as part of a new effort to investigate misconduct in the packaging and sale of home loans to investors, Attorney General Eric Holder said on Friday.

Holder declined to provide specifics, including the names of the firms.

"We are wasting no time in aggressively pursuing any and all leads," Holder said at a news conference announcing details of a new working group to investigate misconduct in the residential mortgage-backed securities (RMBS) market, "you can expect more to follow."

President Barack Obama said he directed Holder to create the new unit in his State of the Union speech late Tuesday, saying it was needed to "help turn the page on an era of recklessness."

On Friday a slew of federal and state officials appeared at the news conference to provide details about the new group.

Housed within an earlier financial fraud task force that Obama created in 2009, it is expected to be staffed with around 50 attorneys, analysts and agents, officials said.

Some skeptics have questioned whether the new group is largely a political move because the other fraud task force already exists.

Also, the Obama administration has received heat from left-leaning activist groups that believe a separate effort to investigate misconduct in processing foreclosures and servicing home loans may not be rigorous enough to extract a meaningful settlement.

In exchange for providing up to $25 billion in housing relief, much in the form of cutting mortgage debt for distressed borrowers, the top U.S. banks are expected to put behind them government lawsuits about lending and servicing abuses - but not securitization claims.

The banks involved in the discussions include Bank of America, Wells Fargo & Co, JPMorgan Chase & Co, Citigroup and Ally Financial Inc. READ MORE...

2011 Sees Focus on Whistleblowing and DoddFrank Claims

Chris W. Haaf and Monica C. Platt — Thu, 26 Jan 2012 15:33:16 -0800

In 2011, courts addressed a variety of securities law claims arising from the newly enacted Dodd-Frank Act. Signed into law in July 2010, passage of the Dodd-Frank Act was spurred in part by the Bernard Madoff Ponzi scheme in addition to other smaller-scale fraudulent schemes. It contains whistleblower provisions meant to both encourage reporting and expand protection from retaliation for informants. Dodd-Frank also expanded the Securities and Exchange Commission's (SEC) ability to bring aiding and abetting claims by allowing them to be brought under the Securities Act of 1933 and the Investment Company Act of 1940 in addition to the two other statutes under which they could already be brought. Many 2011 cases focused on the interpretation and the applicability of the whistleblower provisions (which included a fresh look at Sarbanes-Oxley's whistleblower provisions), but one court also considered the act's retroactivity in the area of aiding and abetting. The cases show that while Dodd-Frank may have expanded protections for informants, Sarbanes-Oxley is still very much in play. Both will likely continue to be major themes of 2012.

Whistleblowing Claims under Dodd-Frank and Sarbanes-Oxley

In 2011, a number of courts explored the intersection of the whistleblower provisions of the Sarbanes-Oxley Act and the whistleblower and bounty provisions of the new Dodd-Frank Act. In the wake of the Enron accounting scandal, Congress enacted Sarbanes-Oxley in 2002 in part as a response to a culture that discouraged employees from reporting fraudulent behavior, whether internally or to federal authorities. Under Sarbanes-Oxley, individuals successfully claiming whistleblower protection may be entitled to reinstatement, back pay, and special damages, including attorney's fees and costs. Sarbanes-Oxley's whistleblower provisions protect individuals from adverse employment action in retaliation for providing information on activity that is in violation of securities laws in addition to other federal laws relating to fraud against shareholders. Only a handful of the more than 1,400 retaliation complaints that have been lodged under Sarbanes-Oxley since its passage have been successful.

Dodd-Frank contains its own whistleblower provisions, including a bounty provision to encourage reporting. Prior to Dodd-Frank, the SEC's whistleblower provisions were limited to insider trading, with awards capped at 10 percent of penalties. Now, under Dodd-Frank, whistleblowers seeking a bounty stand to gain 10 to 30 percent of the money collected in sanctions in a successful action. Additionally, Dodd-Frank's provisions apply to individuals providing information to the SEC relating to any violation of securities laws. Similar to Sarbanes-Oxley, Dodd-Frank also has a retaliation provision, protecting informants against adverse employment action for providing information to the SEC; initiating, testifying in, or assisting in investigations or judicial or administrative actions; or making disclosures required or protected under various other federal laws and regulations. The remedies available under Dodd-Frank's whistleblower provisions are reinstatement, back pay with interest, and litigation costs. READ MORE...

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SinoForest keeping OSC in dark about committees probe report

The Canadian Press — Fri, 27 Jan 2012 13:42:47 -0800

VANCOUVER — Sino-Forest Corp. has failed to respond to information requests by the Ontario Securities Commission, according to a Globe and Mail report.

It cites a senior OSC investigator as saying the timber company has not yet provided information about its assets and relationships with key business partners in China.

Wayne Vanderlaan said in a sworn affidavit that Sino-Forest has not replied to requests made Dec. 7, 2011 regarding claims that the company’s “cash balances, timber assets, book values and revenues” were “verified” by an independent committee of directors.

Vanderlaan told the Globe that the OSC letter asked the independent committee “a number of questions” about Sino-Forest’s statement that the committee’s review verified these assets, but the OSC has not received specific responses. READ MORE...

Committee Considers Enhancing Whistleblower Protections

Article provided by The Whistleblower Law Firm — Fri, 27 Jan 2012 10:44:44 -0800

Committee Considers Enhancing Whistleblower Protections

A committee hearing was held recently in conjunction with debate over a new bill that would solidify and even expand whistleblower protections for employees of government contractors.

January 27, 2012 /24-7PressRelease/ -- Recently, a bipartisan subcommittee of the Senate Homeland Security and Governmental Affairs Committee heard compelling testimony from an employee of a government contractor who was removed from a government project for voicing concerns over safety. The hearing was held in conjunction with debate over a new bill that would solidify and even expand whistleblower protections for employees of government contractors.

Whistleblower Testifies About Violations, Retaliation

The employee answered questions regarding his work on the Hanford Nuclear site in Richland, Washington, where he led an oversight project for the safe and permanent storage of radioactive waste. While committed to the project, he made clear his concerns regarding a number of cost overruns and violations of law and professional standards committed by the Bechtel Corporation in the construction of a plant to stabilize and safely dispose of hazardous nuclear waste.

As a result of speaking out, he contends that he was removed from his position with the project and relegated to a basement copy room as a warning to other would-be whistleblowers. The employee has since filed a whistleblower lawsuit under the False Claims Act against his employer and the Department of Energy, which is the agency overseeing the project.

Members of the senate committee asked pointed questions of the employee to emphasize the dilemma faced by those who question the practices of an employer. One member of the committee commented that approximately a half a trillion dollars is paid to contractors performing work for the government, and whistleblowers are vital to ensure that work is being performed competently and correctly. READ MORE...

Get WhistleBlower Security's Anonymous Hotline - Protect your company & your employees

SEC pushes back in Koss case

Rich Kirchen - Senior Reporter - The Business Journal — Wed, 25 Jan 2012 15:21:35 -0800

The U.S. Securities and Exchange Commission has pushed back against a federal judge who questioned the adequacy of a settlement between the regulator, Koss Corp. and the company’s CEO Michael Koss.

The SEC, in a Wednesday filing, defended the agreement as “fair reasonable, adequate, and in the public interest.”

The SEC was responding to a December 2011 directive from U.S. District Court Judge Rudolph Randa that he needed more information from the SEC demonstrating the effectiveness of the agreements before he could approve them.

The SEC filed both a civil complaint and a settlement document in October 2011 on allegations the company and Michael Koss violated the Securities Exchange Act during former executive Sujata “Sue” Sachdeva’s embezzlement. [READ MORE...]

Insurance Fraud Marketforce and the IEAs 3rd Annual Conference

Marketforce — Wed, 25 Jan 2012 10:45:41 -0800

27th March 2012, One Whitehall Place, London

Conference overview:

Building on the success of our long-running The Future of General Insurance and Claims Forum events, Marketforce and the IEA are delighted to bring you the Insurance Fraud Forum.

At a time when margins are being squeezed and fraud is on the increase due to the economic environment, claims fraud is rising up the agenda. This dedicated one day conference will provide in-depth insights into advance fraud prevention and detection strategies, and presents an opportunity for the industry to share best practice and work together to combat fraud.

Why should you attend Insurance Fraud in 2012?

Learn about the psychology of fraud, how to use this to understand fraudsters and creating an effective deterrent
Hear from the City of London Police and the Insurance Fraud Bureau for updates on the latest industry collaboration
Discuss best practice and innovations in detection and prevention with leaders in the field
Take away valuable insights on where best to target future investment

Preventing Healthcare Fraud and Abuse in Professional Practices

The Identity Advocate — Tue, 24 Jan 2012 15:41:20 -0800

Preventing healthcare fraud and abuse continues to be a huge challenge for healthcare organizations. From smaller healthcare practices to giant corporations, it appears no one is immune to the threat of healthcare data breaches.

According to federal health officials, almost 300 doctors, hospitals, and insurance companies have reported medical data breaches in the past two years. US government data suggests nearly eight million people have had their medical records improperly exposed during this period. This exposure makes it easy for hackers and thieves to steal personal information, and further puts a spotlight on the need for impenetrable systems to prevent healthcare data breaches.

Professional practices are often unprepared and therefore completely vulnerable to attack. Large organizations have security systems in place, but their size often leads to the inability to control those systems and the people operating them—not to mention the fact that the amount of personal data in their systems makes them the “big fish” in the ongoing game of preventing healthcare fraud and abuse. READ MORE...

ExCIA Officer Charged in Information Leak

CHARLIE SAVAGE — Tue, 24 Jan 2012 14:22:44 -0800

WASHINGTON — The Justice Department on Monday charged a former Central Intelligence Agency officer with disclosing classified information to journalists about the capture and brutal interrogation of a suspected member of Al Qaeda, Abu Zubaydah — adding another chapter to the Obama administration’s crackdown on leaks.

In a criminal complaint filed on Monday, the Federal Bureau of Investigation accused John Kiriakou, the former C.I.A. officer, of disclosing the identity of a C.I.A. analyst who worked on a 2002 operation that located and interrogated Abu Zubaydah. The journalists included a New York Times reporter, it alleged.

“Safeguarding classified information, including the identities of C.I.A. officers involved in sensitive operations, is critical to keeping our intelligence officers safe and protecting our national security,” said Attorney General Eric H. Holder Jr., in a statement.

At the same time, the department on Monday cleared of wrongdoing a legal defense team for inmates at Guantánamo Bay, Cuba, for its efforts to identify officials involved in the coercive interrogations of “high value” suspects. The effort was a project by the American Civil Liberties Union and the National Association of Criminal Defense Lawyers to bolster the representation of detainees facing death sentences in military commissions.

Mr. Kiriakou, who was released on a $250,000 bond after appearing in federal court in Alexandria, Va., on Monday, was a leader of the team that captured Abu Zubaydah, and he came to public attention in late 2007 when he gave an interview to ABC News portraying the suffocation technique called waterboarding as torture, but calling it necessary. (It later emerged that he significantly understated the C.I.A.’s use of the technique.) His lawyer did not return a call for comment on Monday.

The prosecution of Mr. Kiriakou is the sixth criminal case brought under President Obama against current or former government officials accused of providing classified information to the media, more such cases than all previous presidents combined. The crackdown, long sought by the C.I.A. and other agencies, has won the administration some credit with security officials angered by the president’s earlier decision to release classified legal opinions on the agency’s interrogation program.

Officials have said the administration’s campaign against leaks has resulted from a belief among the intelligence agencies and members of both parties in Congress that unauthorized disclosures by government employees holding security clearances were out of control. But Mr. Obama entered office pledging unprecedented transparency for government operations, and his record has drawn fire from civil libertarians and groups supporting whistle-blowers and press freedoms.

Among other things, the F.B.I. complaint accuses Mr. Kiriakou of being a source for a June 2008 front-page Times article, written by reporter Scott Shane. It identified a C.I.A. employee, Deuce Martinez, who played a major role interrogation of Abu Zubaydah, believed to have handled logistics for Al Qaeda, and Khalid Shaikh Mohammed, the self-described mastermind of the Sept. 11 attacks.

Robert Christie, a spokesman for The Times, declined to comment.

The case is the second against a former C.I.A. officer for allegedly disclosing classified information to reporters within the past year. In 2011, Jeffrey Sterling, a former agency employee, was charged with leaking information allegedly used by James Risen, a Times reporter, in his 2006 book, “State of War.” (That case may be collapsing due to a judge’s ruling barring two witnesses from testifying; the prosecution has appealed.)

In a statement on Monday warning C.I.A. employees not to leak information, the C.I.A. director, David H. Petraeus, took note of both cases, saying that the agency “fully supported the investigation from the beginning and will continue to do so.”

The agency had initially pressed for an investigation of the Guantánamo detainee lawyers — not of its own former employee. The inquiry traces back to the spring of 2009, after government officials learned that Guantánamo defense lawyers were trying to identify C.I.A. interrogators — including the discovery of 32 pages of photographs in the cells of several Guantánamo detainees. The photos were a line-up of random people and suspected interrogators; the attorneys were trying to identify potential witnesses who could testify about abusive treatment, as mitigating evidence against death sentences.

That discovery led to an uproar within the C.I.A., where critics feared the move could put officials involved in the interrogation program at risk. The agency pressed for a criminal investigation, and Mr. Holder eventually appointed Patrick J. Fitzgerald, a United States attorney who led a high-profile C.I.A. leak investigation during the Bush administration, to handle it.

The investigation, in turn, led to Mr. Kiriakou. Citing e-mails, the complaint said he had disclosed the name of a different C.I.A. officer involved in the Zubaydah operation to another journalist, who in turn had supplied it to the a defense team investigator; it ended up in a classified court filing by defense attorneys in January 2009. (The investigator did not photograph the officer because his identity was covert, the complaint said, and no one has published his name.)

The F.B.I. also discovered other messages that it claimed showed Mr. Kiriakou was a source for The New York Times article about the interrogator. While his identity was not covert, The Times was criticized for publishing his name — including by Mr. Kiriakou.

Investigators, the complaint said, also found e-mails in which Mr. Kiriakou allegedly bragged to the co-author of his 2010 memoir, “The Reluctant Spy,” about misleading a C.I.A. review board about a classified technique for tracking cellphones, used in hunting Abu Zubaydah, so that they would not censor it. A reference to such a device also appeared in The Times article.

But, F.B.I. agent Joseph Capitano wrote in court documents, investigators cleared the defense team representing the detainees: “No law or military commission order expressly prohibited defense counsel from providing their clients with the photographic spreads in question under these circumstances.”

Anthony Romero, the executive director of the A.C.L.U., said the organization was “relieved” but criticized the opening of the investigation, saying it — and the Obama-era leak investigations more broadly — had had a “chilling effect on defense counsel, government whistle-blowers, and journalists.” READ MORE...

A version of this article appeared in print on January 24, 2012, on page A1 of the New York edition with the headline: Ex-C.I.A. Officer Charged in Information Leak.

READ MORE...

Two Insurers Sued Over Unclaimed Policies

LESLIE SCISM — Tue, 24 Jan 2012 14:38:29 -0800

A whistleblower lawsuit alleges MetLife Inc. and Prudential Financial Inc. avoided handing over unclaimed life-insurance policies to Illinois's abandoned-property department, and seeks more than $1 billion in damages on behalf of the state.

The lawsuit, filed in January 2011 and unsealed by a Cook County, Ill., state-court judge last week, underlines how litigation stemming from unclaimed policies may continue to dog the life-insurance industry even as some major companies move to settle state-government probes into possible violations.

The plaintiff, Total Asset Recovery Services LLC of Auburn Hills, Mich., is an investigative firm that specializes in unclaimed-property searches. The firm alleges that it used public records and detective work to conclude that, from 1988 to 2010, MetLife and Prudential failed to transfer to Illinois a total of 4,766 policies worth an estimated $524.3 million that they "knew or should have known" were overdue for transferring as abandoned property.

The lawsuit alleges the insurers committed "massive fraud" in not transferring the policies. READ MORE or subscribe to the Wall Street Journal

MetLife said the lawsuit vastly overstates the dollar amount of policies in question; Prudential declined to comment. Both companies have said they obey state unclaimed-property laws and go beyond contractual requirements in their policies, which specify that beneficiaries file claims for death benefits. They have said they are cooperating with the regulatory probes.

Many states are looking at whether insurers have violated laws by using a Social Security death database to cut off retirement-income checks while failing to use it to determine if death benefits should be paid to dead policyholders' survivors or turned over to states as abandoned property. Industry executives maintain that fewer than 1% of policies have gone unpaid.

Under whistleblower laws, a government entity can join a civil suit to help prove its allegations. But Tom Prescott, one of Total Asset's owners, said in an email that the Illinois Attorney General's office has told the firm's attorney it wants to join the suit to settle with the insurers.

A spokeswoman for the Illinois Attorney General's office declined to comment.

In the lawsuit, Total Asset seeks 15% to 25% of any proceeds that result if the attorney general intervenes, and 25% to 30% if the state doesn't intervene and it pursues the case on its own.

The plaintiff assumed as part of the lawsuit that each policy is worth $110,000, which is the size of the average life policy in Illinois, according to the American Council of Life Insurers.

The MetLife spokesman said the lawsuit's methods for calculating potential damages are wrong, because many of the policies at issue in Total Asset's analysis would be decades-old with maximum face amounts of $1,000.

The suit seeks penalties under the whistleblower law of $5,500 to $11,000 for each of the 4,766 policies, or at least $26.2 million. It seeks damages of three times the $524.3 million it contends is property overdue to the state.

Mr. Prescott said Total Asset has whistleblower suits pending under seal against various insurers in other state courts, declining to elaborate.

Earlier this month, Prudential agreed with 20 states to improve its effort to identify if policyholders have died by taking into account such things as possibly inaccurate Social Security numbers.

READ MORE or subscribe to the Wall Street Journal

Write to Leslie Scism at leslie.scism@wsj.com

ANONYMOUS ETHICS HOTLINE SERVICES

KPMG No Longer Loaning Tax Staff To GE

Francine McKenna, Contributor — Tue, 24 Jan 2012 15:24:36 -0800

KPMG will no longer loan tax professionals to GE during busy season, according to a source close to the situation. KPMG was billing an extra $8-10 million, over and above the audit each year, for the service.

It looks like a regulator got to both KPMG and GE, but quietly. I doubt we’ll ever see a public sanction or fine from the PCAOB or the SEC for KPMG.

My story exposing this prohibited activity by an auditor for an audit client was published in this column last March. Loaning, assigning, or “seconding” tax or any “bookkeeping” staff to an audit client is prohibited by the Sarbanes-Oxley Act of 2002 and by regulations that precede Sarbanes-Oxley.

KPMG was recently sanctioned by the SEC for a similar transgression involving their Australian office.

KPMG Australia and at least one other KPMG member firm outside Australia seconded non-tax professional staff to work at each client’s premises, under the supervision and direction of each client, doing the same types of work that each client’s own employees or managers ordinarily would perform, in violation of the prohibition under Rule 201(c)(4)(vi) against “[a]cting, temporarily or permanently, as a director, officer, or employee of an audit client, or performing any decision-making, supervisory, or ongoing monitoring function for the audit client.”

I guess they thought the SEC/PCAOB would never go after them in the U.S. – and never for trying to “please” such a long-term, high-profile client. KPMG has been GE’s auditor for more than 100 years.

Going Concern reported in September, based on a tip, that KPMG professionals had been ordered to preserve all correspondence and documentation related to the tax “loaned staff” assignment with long-time client GE. That meant someone – the SEC or PCAOB – was investigating my story. READ MORE...

The 2012 Governance Risk Management and Compliance Summit

The GRC Summit — Tue, 24 Jan 2012 13:58:22 -0800

About The GRC Summit

Learn best practices from case studies and thought leaders in the GRC arena:

May 8-10, 2012 • Hyatt Harbor Side • Boston, MA

The summit provides risk and compliance executives a venue to share ideas, learn from peers and evolve existing methodologies that have been created to support the people, process and technologies of their organizations. The GRC Summit is an intimate gathering that focuses on educating today’s leaders on the significance of the GRC methodology.

In it’s 6th installment The 2012 Governance, Risk Management and Compliance Summit will be looking at a multitude of GRC topics. From more general discussions surrounding the GRC framework to more granular topics of financial risk assessments, regulatory compliance and IT GRC. Among topics covered an emphasis will be given to the following major GRC discussion points:

Developing and deploying an integrated GRC strategy

Managing the risk of information security and privacy

Analyzing regulatory reform and financial risk

Financial processes, mandates and audit functions

Building ethics into a coordinated GRC process

READ MORE...

he GRC Summit Boston

PDAC2012 International Convention Trade Show

PDAC.ca — Tue, 24 Jan 2012 13:50:23 -0800

Prospectors & Developers Association of Canada - International Convention, Trade Show & Investors Exchange

March 4-7, 2012, Toronto, Canada

Metro Toronto Convention Centre - South Building

Only going to one mining investment show this year? Make it this one.
PDAC International Convention, Trade Show & Investors Exchange is the world’s leading Convention for people, companies and organizations in, or connected with, mineral exploration.

The four-day annual Convention held in Toronto, Canada has grown in size, stature and influence since it began in 1932 and today is the event of choice for the world’s mineral industry. In addition to meeting over 1,000 exhibitors, between 27,700 attendees from 120 countries, it allows you the opportunity to attend technical sessions, short courses as well as social and networking events .

PDAC 2012 – Where the world’s mineral industry meets!

READ MORE...

MassMin 2012 6th International Conference & Exhibition on Mass Mining

CIM.org — Tue, 24 Jan 2012 13:39:57 -0800

June 11-13, 2012 - Sudbury, Ontario

Registration opens February 1, 2012

MassMin 2012 will bring together researces, engineers and practitioners to present the latest accomplishments, innovations and potential future directions in mass mining and its applications around the world.

The objective of MassMin is to facilitate close dialogue among experts on issues relating to research, technological development and the application of Mass Mining around the world.

This conference promotes strong interactions between academic and industry in all the aspects of the technology.

Conference Chairs

Professor Greg Baiden, Canada

Dr. Yassiah Bissiri, Canada

READ MORE...

Asia Mining Congress Capital Raising & Investment Conference for the Mining Industry

Asia Mining Congress — Tue, 24 Jan 2012 13:28:40 -0800

Asia’s most influential capital raising and investment conference for the mining industry

Exploration, investment and development for miners, financiers and investors

26 - 30 March 2012, Marina Bay Sands, Singapore

Asia Mining Congress is the number one destination for mining companies around the world looking to connect with Asian institutional, corporate and private investors.

It is the only event where a large diverse group of investors from major miners to Asian industrial conglomerates, sovereign wealth funds, private equity firms, hedge funds, family offices and many others gather to discuss investment strategies in the mining sector. No other event presents you with the largest group of investor speakers who are looking for investment, M&A, deals and partnerships. READ MORE...

Sarbanes Oxley Compliance

Global Ethics University — Tue, 24 Jan 2012 13:11:21 -0800

Understanding the Sarbanes-Oxley Act of 2002 and Sarbanes-Oxley Act Compliance for your Company

Sarbanes-Oxley act compliance can be somewhat confusing. To help you understand Sarbanes-Oxley and business a little better, you need to understand a little history about it. The U.S. federal Sarbanes-Oxley Act was created to protect investors by improving the accuracy and reliability of corporate disclosures. The act covers issues such as establishing a public company accounting oversight board, auditor independence, corporate responsibility and enhanced financial disclosure. It is officially called the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or SarbOx and was signed into law on July 30, 2002 by President George W. Bush. It was designed to review the dated legislative audit requirements, and is considered the most significant change to United States securities laws since the New Deal in the 1930's.

Sarbanes-Oxley and businesses work together to increase the overall integrity and ethics in business. The act came in the wake of a series of corporate financial scandals, including those affecting Enron, Tyco International, and WorldCom (now MCI ). The law is named after sponsors Senator Paul Sarbanes (D-MD) and Representative Michael G. Oxley (R-OH). It was approved by the House by a vote of 423-3 and by the Senate 99-0.

So, how does this affect your business? Part of Sarbanes-Oxley compliance includes ethics training. Sarbanes-Oxley seminars and Sarbanes-Oxley training has become a huge part of this. As of November 1, 2004, Federal Sentencing Guidelines require compliance and Sarbanes Oxley training for ALL employees. Although you don't have to provide specific kinds of Sarbanes-Oxley ethics training, Sarbanes-Oxley seminars should include a thorough coverage of your ethics and compliance policies. Amendments to the Federal Sentencing Guidelines were proposed which require all organizations to periodically provide Sarbanes-Oxley compliance and ethics training to all employees. As of November 1, 2004 these amendments are now law. Having a code of ethics is a very important part of this Act.

Every company, both big or small, should take note of the new Federal Sentencing Guidelines which require Sarbanes-Oxley training. Ethics for a Modern Workforce and help you stay in compliance. Sarbanes-Oxley seminars are easy, economical, and has a positive impact on employees. Global Ethics University can your Sarbanes-Oxley compliance portal and provide necessary Sarbanes-Oxley seminars. Take every precaution possible to abide by the new Federal Sentencing Guidelines and don't wait until a crisis occurs before you do something. Compliance portal Sarbanes-Oxley is a necessary element in providing the right kind of training.

While the Sarbanes-Oxley Act covers only publicly traded companies, the Federal Sentencing Guidelines apply to all organizations both publicly and privately held. Simply providing employees an ethics policy or code of conduct is not enough or just distributing a code of ethics or code of conduct for employees is not enough. Effective Sarbanes-Oxley compliance ethics training is required. Compliance and ethics programs must not simply be on paper, but they must be communicated to and used by employees. READ MORE...

Mention this promo code: wbc10 and receive 10% off your next Global Ethics University course

Case Study SOX IT Compliance

Danny Lieberman — Fri, 20 Jan 2012 15:46:48 -0800

We performed a Sarbanes-Oxley IT top down security assessment for a NASDAQ-traded advanced technology company.

The objectives for the study were to evaluate the internal and external threats that impact the company’s information assets.

Using the Business threat modeling (BTM) methodology, a practical threat analysis PTA threat model was constructed and a number of threat scenarios were analyzed.

Data was collected using structured interviews and network surveillance (with a Fidelis XPS appliance). Assets were valuated by the CFO and the IT security operations and technologies were valuated by the CIO.

The output of the study was a cost-effective, prioritized program of security controls.This program was presented and approved by the management board of the company- leading to an immediate cost savings of over $120,000/year in the information security budget.

The detailed threat model was provided to the client and is currently used to perform what-if analysis and track the data security implementation.

Download the data security case study and download the data security report to the management.

Conclusions: READ MORE...

FBI Sweep Targets Big Funds

JENNY STRASBURG, MICHAEL ROTHFELD and SUSAN PULLIAM — Thu, 19 Jan 2012 12:12:03 -0800

Federal prosecutors alleged that a "criminal club" in the hedge-fund world made tens of millions of dollars trafficking inside information, following up on a string of early morning arrests that involved employees of SAC Capital Advisors LP and other prominent financial firms.

In an expansion of a high-profile investigation into alleged insider trading, the Federal Bureau of Investigation arrested four people in New York, Boston and California, and the government unsealed charges against three others. All were charged criminally with securities fraud and conspiracy to commit securities fraud.

Court documents described enormous profits on allegedly illegal trades—including more than $50 million in gains alone by a single hedge fund, Level Global Investors LP, on trades in shares of computer maker Dell Inc., according to the government's criminal complaint.

Investigators alleged that a ring of traders and analysts at competing financial firms swapped information, resulting in a total of $61.8 million in illicit gains. That figure rivals the amount of illegal profits in trades overseen by Raj Rajaratnam, the Galleon Group founder convicted last year and sentenced to 11 years in prison, a record for insider trading.

The complaint, filed in a New York federal court, "describes a circle of friends who essentially formed a criminal club," said Manhattan U.S. Attorney Preet Bharara. "It was a club where everyone scratched everyone else's back." Wednesday's allegations mark a new chapter in an unprecedented era of insider-trading prosecutions. Since late 2009, the government has secured 56 guilty pleas or convictions out of 63 people charged with insider trading.

Many of the previous charges involved the use of "expert-network" firms, which connect analysts and traders with public-company employees and other consultants seeking payment for information.

The latest charges allege that fund managers cut out the middlemen by developing their own sources of technology-company information rather than relying on consultants, and shared it with each other for mutual benefit.

The FBI early Wednesday arrested Jon Horvath, a technology analyst with SAC's Sigma Capital Management division in Manhattan, marking the first time criminal insider-trading charges have been brought against a current employee of Stamford, Conn.-based SAC Capital. Mr. Horvath was released on a $750,000 bond and $50,000 in cash.

"Throughout a 10-year career as a respected investment analyst, Jon Horvath has conducted himself with honesty and integrity," said his lawyer, Steven Peikin. "He has done nothing wrong, and the charges brought against him today will be shown to be meritless."

The criminal complaint alleged that Mr. Horvath shared information he received from another analyst with the Sigma portfolio manager to whom he reported, referred to in the complaint as "portfolio manager 1."

According to people familiar with the matter, that portfolio manager is Michael Steinberg, who has worked at Sigma since 1997 and is a close associate of SAC founder Steven A. Cohen. An SAC spokesman said the firm is continuing to cooperate in the investigation and declined further comment. Mr. Steinberg declined to comment through the spokesman.

As part of the wide-ranging probe, the government has been investigating whether SAC, which manages $14 billion, used inside information in trading health-care companies, among others, including trades in an account overseen by Mr. Cohen, according to people familiar with the matter. Mr. Cohen declined to comment through a spokesman.

Also Wednesday morning, Anthony Chiasson, a former hedge-fund manager at Level Global Investors, surrendered in New York, after FBI agents earlier converged on his apartment on Manhattan's Upper East Side and left empty-handed because Mr. Chiasson wasn't home.

A half dozen FBI agents in dark coats met a little after 5:30 a.m. at a Starbucks coffee shop across from Mr. Chiasson's apartment building. They talked quietly near a wall of windows. "There is a service exit," one agent said of Mr. Chiasson's building. Minutes later, they walked silently out of the shop.

About a block away, the agents put on bullet-proof vests and, just before 6 a.m., walked swiftly back down the street to the glass double doors of Mr. Chiasson's building. They entered and talked with a security guard before entering an elevator, turning back to face the lobby and heading upstairs. A few minutes later, the agents left the building, and drove off.

Mr. Chiasson, wearing a white dress shirt and slacks later in court, was released on a $2.5 million bond, secured by half that amount in cash or property.

"He's not going anywhere because he didn't do anything wrong and he wants to get an opportunity to clear his name," Mr. Chiasson's lawyer, Gregory Morvillo, told a judge Wednesday, arguing that bail wasn't needed for him to show up to face the charges.

In Boston, agents arrested Todd Newman, a former portfolio manager with hedge-fund firm Diamondback Capital Management who oversaw technology investments. A lawyer for Mr. Newman didn't return calls for comment. Diamondback's founders sent investors a letter saying the firm had been "proactively assisting" the government in its investigations, and considered Wednesday's actions "an important step towards putting this matter behind us." A spokesman for Diamondback declined to comment beyond the letter.

Mr. Newman was ordered to post a $3 million bond as bail, secured by $1 million in assets.

A few hours later, in California, agents arrested Danny Kuo, a vice president and technology-fund manager with Whittier Trust Co. in South Pasadena. Mr. Kuo couldn't be reached for comment. Whittier Trust didn't respond to a request for comment

The government also unsealed criminal charges against Spyridon "Sam" Adondakis, a former Level Global analyst who worked under Mr. Chiasson; Jesse Tortora, an ex-Diamondback analyst under Mr. Newman; and Sandeep "Sandy" Goyal, who until this month was a technology analyst at mutual-fund company Neuberger Berman Group LLC.

Prosecutors said Mr. Goyal, who worked at Dell before becoming an investment analyst, obtained nonpublic information from Dell insiders ahead of public earnings announcements, and shared it with other defendants. Dell hasn't been accused of wrongdoing.

Messrs. Goyal, Tortora and Adondakis have entered guilty pleas and are cooperating with the government in hopes of receiving lighter sentences, the government said.

A spokesman for Neuberger Berman said, "This unethical behavior is contrary to the core values of our firm and the culture of compliance in which we operate." Neuberger hasn't been accused of wrongdoing.

Mr. Bharara, the Manhattan U.S. attorney, called Level Global's alleged $53 million profit from trading in Dell shares "an enormous bet" that "wasn't much of a gamble because the game was rigged."

Dell has cooperated in the investigation, and the allegations described would be "a clear violation of Dell's policy regarding disclosure of material, nonpublic information," a Dell spokesman said Wednesday.

Mr. Chiasson, 38, was co-founder of Level Global, one of several firms the FBI raided in November 2010 after a Wall Street Journal article disclosed details of a sweeping federal insider-trading probe.

Level Global managed about $4 billion in assets at the time of the raid, but it closed last year, citing the impact of the probe.The hedge fund was a client of Primary Global Research LLP, a Mountain View, Calif. expert-network firm that arranged phone calls between public-company employees moonlighting as consultants and hedge funds interested in their companies and industries.

Several employees and consultants for that expert firm have pleaded guilty or been convicted in the probe. A Primary Global spokesman declined to comment.

The Journal reported on Nov. 30, 2011, that investigators were pursuing charges against Mr. Chiasson, among other individuals who currently or previously worked at prominent investment firms, citing people familiar with the matter.

A parallel civil complaint from the Securities and Exchange Commission filed Wednesday alleged that all seven men, along with Diamondback and Level Global, engaged in a $78 million insider-trading scheme. READ MORE or subscribe to the Wall Street Journal

Write to Jenny Strasburg at jenny.strasburg@wsj.com and Michael Rothfeld at michael.rothfeld@wsj.com

Public companies are required to have a whistleblower policy and process in place for employees

WhistleBlower Security - Shannon Walker — Wed, 18 Jan 2012 15:50:51 -0800

WhistleBlower Security offers services to meet the US requirements of Sabanes Oxley and Canadian Multi-Lateral Instrument 52-110 which requires that public companies have a policy and procedure in place to deal with the receipt, retention and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and
(b) the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters.

With an easy to use system, WhistleBlower will ensure that you meet this requirement and also introduce a tool that employees will appreciate and feel safe to sue. READ MORE...

Trustee Sues Madoff Investors to Recover $1875 Million

JACQUELINE PALANK — Wed, 18 Jan 2012 09:33:34 -0800

The official recovering funds for Bernard Madoff's swindled investors is suing several international firms for a total of $187.5 million.

The four lawsuits, filed Thursday by trustee Irving Picard, are the latest of hundreds trying to recover money that Madoff fraudulently paid out to investors as part of the Ponzi scheme that landed him a 150-year prison sentence.

According to Mr. Picard, the defendants invested in two big Madoff feeder funds: Fairfield Sentry Ltd. and Kingate Global Fund Ltd. These funds reached out to investors around the world and funneled their money into Madoff's investment firm. When Mr. Madoff paid out returns, the money went back to these investors through the feeder funds.

The funds that went back weren't legitimate returns but other investors' money, which is why Mr Picard is seeking to claw back these funds.

For example, Mr. Picard is seeking nearly $77 million from Banco Itau Europa Luxembourg SA and Banco Itau Europa International. According to the lawsuit, much of the money—$70.6 million—came from the wealth-management firms' investments with Fairfield Sentry, while Kingate paid out the remainder.

Mr. Picard is seeking another $30.6 million from French bank Credit Agricole SA and its Credit Agricole (Suisse) unit, $16.3 million of which they received from Fairfield and the rest from Kingate.

Another defendant is Arden Asset Management Inc. and several affiliates, from whom Mr. Picard is seeking a total of $43.4 million. Of that, the investment firm received $12.6 million from Fairfield and $30.8 million from Kingate.

Finally, U.K. investment firm Grosvenor Investment Management Ltd. and its affiliates face a demand for the $36.5 million it received: $31.5 million from Fairfield and $5 million from Kingate.

Representatives of the four defendants couldn't immediately be reached for comment Friday.

The lawsuits were filed in the U.S. Bankruptcy Court in Manhattan, which is overseeing the liquidation of Mr. Madoff's investment firm, Bernard L. Madoff Investment Securities LLC. READ MORE or subscribe to the Wall Street Journal

Write to Jacqueline Palank at jacqueline.palank@dowjones.com

SEC Loses Inspector General Gains Whistleblower Official

Donna Mitchell — Wed, 18 Jan 2012 15:32:24 -0800

The SEC has appointed a former U.S. special agent, Jane A. Norberg, as its deputy chief of the Office of the Whistleblower.

More than 14 years ago, for the U.S. Secret Service, Norberg worked with confidential informants in planning, organizing and conducting investigations of federal crimes. Those offenses included bank fraud, counterfeiting of U.S. currency, and forgery of federal checks and bonds.

The Office of the Whistleblower is part of the enforcement division, and was established via the Dodd-Frank Wall Street Reform and Consumer Protection Act. Individuals who voluntarily provide original information to the SEC that leads to successful enforcement actions can earn rewards for their information.

“The whistleblower program is an important component of the SEC’s efforts to stop those who prey on investors and destroy the public’s trust in our capital markets,” Norberg said in a statement. “I am honored and excited to join the Commission staff and look forward to helping the agency build on the success achieved in the short time since the program was established.”

After her career as a special agent, Norberg was an associate at Shearman & Sterling, a law firm based in New York. She advised major public corporations on executive compensation disclosure, corporate governance issues and other securities law matters. READ MORE...

MF Global Probe Focuses on Back Office

AARON LUCCHETTI, JULIE STEINBERG and MIKE SPECTOR — Tue, 17 Jan 2012 10:24:54 -0800

Investigators on the hunt for an estimated $1.2 billion in customer money missing since MF Global Holdings Ltd. collapsed are zeroing in on the securities firm's back-office operations in Chicago, people familiar with the situation said.

One back-office employee has told people she disputes congressional testimony by Jon S. Corzine, MF Global's former chairman and chief executive, that she provided assurance that a $200 million transfer was proper, according to people familiar with the matter.

Civil and criminal regulators have "talked to a lot of people" in the Chicago office, which handled day-to-day movement of money for MF Global, including a $6 billion customer-segregated account that was tapped shortly before the company filed for bankruptcy-court protection Oct. 31, according to a person close to the investigation.

Some of the roughly 700 employees have been "approached by everyone and their mother" since regulators swept into the building two months ago, this person said. In contrast, federal prosecutors haven't interviewed Mr. Corzine, operations chief Bradley I. Abelow or Chief Financial Officer Henri J. Steenkamp, top executives who worked at the securities firm's headquarters in New York, according to people familiar with the matter. Messrs. Corzine, Abelow and Steenkamp haven't been accused of wrongdoing.

It isn't clear how much progress the Justice Department, two U.S. attorney's offices, Commodity Futures Trading Commission, Securities and Exchange Commission and other regulators have made as a result of the scrutiny in Chicago, ranging from accountants to controllers to treasury officials. Nestled between the Chicago Board of Trade and the elevated train in the city's financial district, the back office was responsible for making sure that customer futures accounts were handled properly. Another floor housed MF Global salesmen.

People close to the probe said investigators are pushing hard to determine which Chicago back-office employees knew about the movement of money in the days before MF Global tumbled into bankruptcy protection, who ordered certain money transfers and if anyone knew that the transfers would lead to a shortfall in the customer-segregated account.

As company officials tried in late October to overcome a customer exodus and demands for more collateral from counterparties, numerous MF Global employees in Chicago stayed at work around the clock, a person familiar with the situation said. Some workers, exhausted and nerve-wracked, broke down under the pressure and cried, this person said.

The back-office employee who has disputed Mr. Corzine's testimony is Assistant Treasurer Edith O'Brien. She has told people that she disagrees with Mr. Corzine's suggestion at a House subcommittee hearing in December that she provided assurance that a $200 million transfer to J.P. Morgan Chase & Co. three days before the bankruptcy-protection filing was proper, according to people familiar with the situation.

She has declined to be interviewed by a House subcommittee and the Justice Department and is seeking immunity from prosecution in exchange for cooperation, said people familiar with the matter. Ms. O'Brien, who couldn't be reached for comment, still works for a trustee now unwinding the company.

Mr. Corzine testified that he got "assurance…from our back-office people in Chicago," including Ms. O'Brien, that the transfer complied with all the relevant rules. The transfer was needed to cover an overdraft in an MF Global account at J.P. Morgan.

Mr. Corzine testified that he "contacted the firm's back office in Chicago and others and asked them to resolve this issue, which I understood they did." The former Goldman Sachs Group Inc. chairman, U.S. senator and New Jersey governor said the "back office in Chicago explicitly confirmed to me that the funds were properly transferred." At the same hearing, Mr. Corzine said Ms. O'Brien was the person he spoke to about the issue. A spokesman for Mr. Corzine said the former executive "stands by his testimony before Congress." Mr. Corzine has said he never directed anyone at MF Global to misuse customer funds. Ms. O'Brien hasn't been accused of wrongdoing.

It isn't clear exactly what Ms. O'Brien's role in the transfer was or why she has disputed Mr. Corzine's testimony. A letter sent from J.P. Morgan to MF Global the next day was addressed to her and began with "Dear Edith," according to a copy reviewed by The Wall Street Journal. The letter, from J.P. Morgan Managing Director Donna Dellosso, asked MF Global to "acknowledge and confirm that the transfer and withdrawal…out of such Customer Segregated Account…for the purpose of covering overdraft amounts in accounts with J.P. Morgan represented your actual interest in such funds" and were "made in accordance with the provisions" of U.S. commodities laws and rules.

At the bottom are two blanks where MF Global was supposed to indicate it "acknowledged and agreed" that the $200 million transfer was proper, according to the copy of the letter reviewed by the Journal. No one ever signed the letter, a person familiar with the matter said.

In addition to Ms. O'Brien, investigators have expressed interest in talking to Christy Vavra, who ran MF Global's treasury operations and helped handle the movement of customer money, according to a person familiar with the situation.

Another person of interest to investigators is Christine Serwinski, who worked with Ms. O'Brien in MF Global's Chicago office. Ms. Serwinski was the company's North American finance chief and ultimately reported to Mr. Steenkamp, the chief financial officer of MF Global. Mr. Corzine told lawmakers last month that Ms. Serwinski was "at the very top" of employees who oversaw customer funds, though she was on vacation for part of the week leading up to MF Global's bankruptcy filing. Ms. Vavra and Ms. Serwinski haven't been accused of wrongdoing.

At the time of MF Global's collapse, Ms. Serwinski had told friends that she planned to leave the securities firm in early 2012, according to people familiar with the matter. MF Global had begun working on a transition to bring in her successor, these people said. Ms. Serwinski and Ms. Vavra couldn't be reached for comment. READ MORE or subscribe to the Wall Street Journal

—Michael Rothfeld and Scott Patterson contributed to this article.

Write to Aaron Lucchetti at aaron.lucchetti@wsj.com, Julie Steinberg at julie.steinberg@dowjones.com and Mike Spector at mike.spector@wsj.com

SEC Inspector General Kotz leaving agency

By Sarah N. Lynch — Tue, 17 Jan 2012 13:55:42 -0800

(Reuters) - David Kotz, the tough internal watchdog at the U.S. Securities and Exchange Commission, is leaving the agency at the end of January, the SEC said on Tuesday.

Kotz, 45, joined the SEC in December 2007 after previously working as the inspector general of the Peace Corps.

He has made a name for himself as a prolific inspector general at the SEC, investigating everything from leasing and contracting to insider-trading and even pornography-watching by agency employees.

He has also faced some criticism from SEC employees who have complained his tactics have led to a culture of fear at the agency.

He plans to join Gryphon Strategies, a private investigative services firm where he will serve as a managing director in its Washington office. He will focus on conducting corporate fraud investigations and helping whistleblowers seeking to expose fraud, the SEC said.

"I am tremendously proud of the accomplishments of my office and the agency over the past four years," Kotz said in a statement. "The reports we have issued have not only been significant to the agency, Congress and the investing public, but they have also directly resulted in a transformation of many of the divisions and offices of the commission." READ MORE...

US charges Russian father and son with cyber fraud

Basil Katz; Editing by Greg McCune — Tue, 17 Jan 2012 14:07:13 -0800

(Reuters) - U.S. authorities on Tuesday unsealed criminal charges accusing a father and son team, both Russian citizens, of hacking into U.S. bank accounts and illegally snatching credit card numbers and stealing hundreds of thousands of dollars.

The criminal indictment, which was brought in Manhattan federal court in 2007 but made public on Tuesday, charges Vladimir Zdorovenin, and his son, Kirill Zdorovenin, with eight counts of fraud and one count of conspiracy.

The indictment was made public as Vladimir Zdorovenin, 54, was extradited from Switzerland to New York on Monday and will be presented before a federal magistrate judge later on Tuesday. He was arrested in Zurich, Switzerland in March.

Kirill Zdorovenin, remains at large, authorities said.

The indictment accuses the Russians of devising a variety of schemes in 2004 and 2005, including stealing credit card numbers and hacking into the brokerage and other accounts of their targets in the United States. READ MORE...

2011 Was a Banner Year for FCPA Enforcements and Trials

Shannon Green — Tue, 17 Jan 2012 14:20:46 -0800

It was another banner year for the Foreign Corrupt Practices Act, with the U.S. Securities and Exchange Commission and Justice Department trying more cases in 2011 than in any other year.

According to a year-end review released this week by Gibson, Dunn & Crutcher, enforcement actions also reached their second-highest level in the 34-year history of the act, with a total of 48. That number is down from an unprecedented 74 actions in 2010. (Last year’s statistics were skewed by a single large-scalesting operation.)

Enforcement numbers were lagging at the mid-year point, says John Chesley, an associate in Gibson Dunn’s Washington office and a co-author of the report. It’s significant, he says, that by year’s end, “the numbers were right up there.”

The government is dedicating significant resources to enforcing the FCPA. And that has lawyers and their corporate clients scrounging to predict which direction the law will take next. READ MORE...

Angola End Silence on Missing Funds

Human Rights Watch — Tue, 17 Jan 2012 14:25:56 -0800

Clarify US$32 Billion Accounting Gap

(Washington, DC) – The government of Angola should publicly disclose its efforts to trace tens of billions of dollars in missing public funds apparently connected to the state oil company, Sonangol, Human Rights Watch said today in an open letter to the country’s finance minister.

In December 2011, the International Monetary Fund reported that there was an unexplained US$32 billion discrepancy in the Angolan government’s accounts from 2007 through 2010.

“The Angolan government can’t account for tens of billions of dollars in public funds, and it needs to explain what happened to that money,” said Arvind Ganesan, business and human rights director at Human Rights Watch. “The people of Angola have a right to know.” READ MORE...

ExTrader David Slaine Helped Lead to Rajaratnam US Says

Bloomberg - Bob Van Voris — Tue, 17 Jan 2012 14:48:13 -0800

(Updates with excerpt from letter in third paragraph.)

Jan. 9 (Bloomberg) -- David Slaine, a former Galleon Group LLC employee who pleaded guilty to criminal charges, was crucial to the prosecution of Zvi Goffer’s insider-trading ring and helped lead investigators to Raj Rajaratnam and Primary Global Research LLC, U.S. prosecutors said.

Slaine wore a wire to record dozens of conversations with Goffer and others, helping to spur what became the biggest probe of insider trading at hedge funds, prosecutors from the office of U.S. Attorney Preet Bharara in Manhattan said today in a letter to U.S. District Judge Richard Sullivan. Calling Slaine’s cooperation “nothing short of extraordinary,” the government asked for leniency when he’s sentenced.

“Evidence gathered by Slaine played a role in, among other things, the successful prosecution of Raj Rajaratnam and his co- conspirators, as well as the defendants in the Primary Global Research case,” according to the letter. “His assistance was the launching point for many successful and ongoing criminal investigations of multiple insider trading networks.”

Slaine, who pleaded guilty to conspiracy and securities fraud in December 2009, testified at the trial of Goffer, his brother Emanuel Goffer and Michael Kimelman that he cooperated with federal agents for about 2 1/2 years to try to avoid prison. READ MORE...

Event 23rd Annual ACFE Fraud Conference and Exhibition

The Association of Certified Fraud Examiners — Tue, 17 Jan 2012 15:32:51 -0800

Conference Overview - June 17-22, 2012, Gaylord Palms Resort and Convention Center, Orlando, FL.

The 23rd Annual ACFE Fraud Conference and Exhibition is the can't miss event for anyone involved in the prevention, deterrence or detection of fraud. From the informative and inspiring sessions to the multiple networking opportunities, you'll walk away with the skills, connections and resources you need to take your fraud investigations to the next level.

Leading Speakers
The ACFE Annual Fraud Conference traditionally hosts the foremost experts in the anti-fraud field. These leaders in their fields share their insights and address the key anti-fraud issues relevant to you. Previous conference speakers include: John Walsh, Michael Chertoff, Harry Markopolos, Senator George Mitchell, Senator Paul Sarbanes, the Honorable Michael Oxley, Ben Stein, Rudy Giuliani, and many others.

Keynote speakers for the 23^rd Annual Conference include: Michael Woodford, MBE, Former Olympus Corp. CEO and Whistleblower, Pamela Meyer, CFE
Best-selling author of Liespotting, Diana B. Henriques, Senior Financial Writer, The New York Times, Mark Whitacre, Convicted Fraudster.

READ MORE...

Draghi hails tentative stabilisation

Financial Times - Mahathir Mohamad — Thu, 12 Jan 2012 17:36:11 -0800

Shannon Walker, President of WhistleBlower Security blogs: A very interesting op-ed piece written by Mahathir Mohamad, the former Prime Minister of Malaysia. This really makes one stop and ponder the future of the financial markets and the ultimate recovery and restructuring that needs to occur in Europe and the US.

West needs to go back to capitalist basics

The Malays have a saying which inter alia means that when you lose your way, go back to the beginning and start again. I believe that everyone has lost their way in handling the current financial crisis. The west in particular needs to rethink some essentials.

The world is still Eurocentric: how Europe handles the financial crisis is of universal importance. But I have serious doubts about Europeans’ "infallibility". I particularly dislike their double standards. Centuries of hegemony have convinced them they know best what is good for the world: their values are to be accepted as universal; Asian values are deemed irrelevant. READ MORE...

SEC changes settlement language for some cases

Aruna Viswanatha and Sarah N. Lynch — Mon, 09 Jan 2012 10:33:03 -0800

(Reuters) - U.S. securities regulators said on Friday that defendants can no longer settle civil cases using "neither admit nor deny" language if they have already admitted to wrongdoing in parallel criminal cases.

The policy change, announced by Securities and Exchange Commission Enforcement Director Robert Khuzami on Friday, applies only to instances where a defendant has already admitted to violating criminal laws.

It comes just over a month after a federal judge in New York rejected a proposed $285 million settlement between the SEC and Citigroup, in part because the bank had not admitted to wrongdoing. However, in that case, no parallel criminal charges have been filed.

It seemed "unnecessary" for the SEC to include its traditional "neither admit nor deny" approach if a defendant had already been criminally convicted of the same conduct, Khuzami said. READ MORE...

Key Findings from the Global Integrity Report

The Global Integrity Report — Mon, 09 Jan 2012 11:29:39 -0800

The Global Integrity Report is a tool for understanding governance and anti-corruption mechanisms at the national level. Written by local researchers and journalists, the Report is characterized by an innovative, award-winning research methodology; a robust peer review process; and start-to-finish transparency. READ MORE...

Public AntiCorruption Initiatives Russia Country Profile

Public Anti Corruption Initiatives — Mon, 09 Jan 2012 11:42:59 -0800

Legislation: President Medvedev submitted a draft anti-corruption bill On Counteraction to Corruption to the State Duma in October 2008, as part of the National Anti-Corruption Plan (see below) and Russia's international obligations stemming from the United Nations Convention against Corruption and the Council of Europe Criminal Law Convention on Corruption, to which Russia is a party. Russia is also a member to the Council of Europe Group of States Against Corruption (GRECO), but according to a May 2011 article by Moscow Times, Russia has only carried out about one-third of the 26 anti-corruption obligations required by GRECO. In May 2011, Russia joined the OECD Working Group on Bribery in International Business Transactions which is a necessary step for acceding to the OECD Anti-Bribery Convention. The anti-corruption package, the Anti-Corruption Legislation, was passed by the Duma in its third reading and adopted on 30 December 2008, coming into force on 10 January 2009 and consists of three principle laws and numerous amendments. The new anti-corruption laws gave, for the first time in Russia, a wide definition of corruption which criminalises corruption in the form of active and passive bribery, abuse of office, commercial bribery, trading in influence both in public and private sectors and corruption by agents. The anti-corruption package has widened the definition of commercial bribery in the Criminal Code to include non-commercial organisations in the scope of the law and has slightly raised the penalty for the infringement. READ MORE...

4th Russia and CIS Summit on AntiCorruption

AmericanConference.com — Mon, 09 Jan 2012 11:55:05 -0800

4th Russia and CIS Summit on Anti-Corruption

Tuesday, March 20 to Wednesday, March 21, 2012
Hotel Lotte Moscow, Moscow

Исполнение антикоррупционного законодательства коренным образом меняет подход глобальных корпораций к ведению бизнеса. Не отстает ли Ваша клмпания в данном вопросе? Посещение ключевого регионального мероприятия, посвященного антикоррупционному комплаенсу, позволит Вам быть в курсе последних вопросов, связанных с требованиями по соблюдению законодательства.

Присоединяйтесь к Вашим коллегам-делегатам “ключевого для России и СНГ события по антикоррупционному комплаенсу». Вам будет предоставлена уникальная возможность для общения с лидерами и перенятия передового опыта. Вот уже в 4-й раз, Саммит России и СНГ по Антикорруации, проводимый Американским Институтом Конференций, предоставит Вам комплексную практическую информацию о глобальных вызовах, связанных с соблюдением антикоррупционного законодательства, а также с выявлением схем взяточничества и смягчением Ваших комплаенс-рисков. Подробнее

Ожидается, что мероприятие будет распродано задолго до начала.
Зарегистрируйтесь сегодня, позвонив 1-416-926-8200 в США, +44 20 7878 6888 в Европе, или онлайн www.AmericanConference.com/anticorruptionRUS.

Conference expected to sell out. Register for this exclusive event today by calling 1-416-926-8200 in the US, or +44 20 7878 6888 in Europe; or register online at www.AmericanConference.com/anticorruptionRUS.

Russia strengthens anticorruption law

Julius Melnitzer — Mon, 09 Jan 2012 12:14:06 -0800

The Russian legislature has strengthened Russia’s existing anti-bribery law. The amendments, effective last May, expand the law to include bribery of foreign government officials by Russian nationals, create a new offence of acting as an intermediary for bribery, and impose fines up to 100 times the value of the bribe.

Sidley Austin LLP has more in its Anti-Corruption Quarterly.

Mining Exploration in Russian Federation and Kazakhstan Investment Climate Advantages and Technology Transfer

Canada Eurasia Russia Business Association — Mon, 09 Jan 2012 12:25:40 -0800

The conference is organized in collaboration with Altynalmas Gold on the margins of Association of Mining Exploration BC Round up on January 23rd in Vancouver. The objective of this event is to update Canadian mining interests on the significant opportunities in the mining sectors of the Republic of Kazakhstan and Russian Federation, and where possible - facilitate investment, technology transfer, and offer a venue for the exchange of perspectives and experience.

The conference is taking place on January 23rd from 2 to 7PM at Shangri-La Hotel Vancouver. READ MORE...

Fraud and Asset Tracing Gulf

C5 Group Inc. — Mon, 09 Jan 2012 12:42:17 -0800

Do you have the expertise and contacts in the area needed to capitalise?

Sunday, January 22 to Tuesday, January 24, 2012

Al Murooj Rotana Hotel, Dubai

As the global economy continues to emerge from a period of significant decline, the Gulf States are rebuilding business practices and establishing a solid foundation to encourage growth in the region. However, fraudulent activity is still being discovered and major international cases are unearthing the proceeds of crime, hidden in increasingly complex locations and structures and practitioners from all corners of the globe are being instructed by clients, to gather the evidence, trace and recover the assets. READ MORE...

What Companies Should Expect from the SEC in the New Year

CFO.com - Howard E. Berkenblit — Tue, 10 Jan 2012 13:05:42 -0800

New disclosure requirements and new demands on companies top the securities regulator's 2012 agenda.

Companies looking ahead at their 2012 agenda need to also consider an outside party’s to-do list that may have an impact on their business strategy. New rules the Securities and Exchange Commission plans to tackle this year fall into one of three areas: Dodd-Frank Act to-do items, proposals the SEC had temporarily tabled and will revisit, and new legislation that could help smaller companies extricate themselves from some burdensome reforms.

While many question whether the Dodd-Frank Act is actually the agent of change it set out to be, the first 18 months of its implementation have been relatively anticlimactic for nonfinancial companies and their management. One reason is the continued delay of some of the rules. The commission recently updated its schedule for when the regulator expects to propose and finalize rules, giving itself more time. Although the SEC finalized its say-on-pay rules in time for last year’s proxy season and established a new whistle-blower program last summer, the regulator still has several provisions to go that will affect the following issues at companies. READ MORE...

From Whistleblower to RICO Claimant

Thomas Fox - FCPA Compliance and Ethics Blog — Fri, 06 Jan 2012 11:11:20 -0800

The holiday season is past and many of us have returned to work. However, if you are a Chief Compliance Officer (CCO) there is a gift that you may wish to give yourself, it is "The Whistleblower’s Handbook – A Step-by-Step Guide to Doing What’s Right and Protecting Yourself" authored by Stephen Martin Kohn, Executive Director of the National Whistleblowers Center. I do not suggest that CCO’s purchase this volume for their own protection, although the former Chief Executive Officer (CEO) of Olympus might have been able to use it before he was fired by the Olympus Board last October. No, I suggest that CCOs purchase this because many others in your company may well do so and it is the best single volume collection of all laws, rights and obligations related to whistle-blowing that I have come across.

I thought about Kohn’s book when I came across a couple of whistleblower related items last month. The first one was an article in the December 28, 2011 edition of the Wall Street Journal (WSJ), entitled "Internal BNY Mellon Documents Show Panic" by Jean Eaglesham and Michael Siconolfi. In the article they report on some of the emails and other documentary evidence that whistleblower Grant Wilson was able to obtain during the two year period that he was operating "as a government informant" while employed by Bank of New York Mellon (BNY). The WSJ obtained this evidence through an open-records request. Wilson was part of a group which brought a series of whistleblower lawsuits against BNY, which have led to several states, and the Manhattan US attorney, filing civil suits against BNY. Eaglesham and Siconolfi also reported that "the bank’s [BNY] foreign-exchange traders grew concerned about a leaker" and in an earlier WSJ article, entitled "Secret Informant Surfaces in BNY Currency Probe", reporter Carrick Mollenkamp stated "BNY Mellon sought to discover the insider’s identity and to fight the lawsuits." READ MORE...

Investigating a Compliance Failure

Tracy L. Coenen — Thu, 05 Jan 2012 10:40:45 -0800

How to determine the right mix of expertise for a fraud investigation.

It's every CFO's worst nightmare. Despite your best efforts, your company’s compliance program has failed. There are credible reports of fraud and corruption inside the company, and an initial analysis of the situation confirms a problem. An internal investigation is necessary to determine the magnitude of the fraud, the parties involved, and the company’s financial and reputational exposure under government regulations.

How should you proceed? These investigations are often high stakes, so it is important to do things the right way from the start. In-house counsel should be involved in any situation involving allegations or evidence of fraud. Once executives have sufficient reason to believe the allegations are credible, they should involve outside counsel as well. Executives' responsibilities don’t end there: they can help find the proper consultants to investigate the fraud, influence the fee schedule of the outside work, and keep the investigators informed. Most important, executives can see to it that employees cooperate with the investigators and provide access to all relevant data and documents. READ MORE...

Life Partners Sued by SEC

By MARK MAREMONT and LESLIE SCISM — Thu, 05 Jan 2012 12:46:21 -0800

The Securities and Exchange Commission sued Life Partners Holdings Inc. and three top executives, alleging a years-long disclosure and accounting fraud that involved misleading financial statements and backdated documents shown to auditors.

The agency also charged Chief Executive Brian D. Pardo and General Counsel R. Scott Peden with insider trading, alleging they sold shares at artificially inflated prices while knowing the company's profits were unsustainable. Mr. Pardo, the SEC alleges, sold stock worth $11.5 million between 2007 and 2009.

Life Partners, of Waco, Texas, is a major player in the secondary market for life insurance, in which investors buy the right to receive death benefits. The original policyholder gets a lump sum upfront, while the investors continue to pay premiums, betting they will eventually collect more than they spend.

Mr. Pardo, who also is chairman, said in a statement, "It is very disappointing that the SEC has chosen to pursue litigation over issues that we believe have no merit and financial presentation issues that we do not believe are material." He said the company intends to "vigorously defend ourselves against these meritless claims." READ MORE...

What to Put on Your Risk Radar Screen

Wed, 04 Jan 2012 14:00:47 -0800

Here’s a top 10 list of risk “hotspots” to worry about in 2012.

IT security, global expansion, and excess cash top the list of 10 risks companies should be particularly concerned about in 2012, according to the Corporate Executive Board (CEB).

The research firm comes up with a list of so-called risk hotspots every year, based on discussions with clients, surveys, and observations about what's going on in the corporate world. The CEB offers its tally as a starting point for senior executives to use with their boards and internal-audit teams to discuss how their company should do risk assessments in the coming year.

For the latest list, the first two items make intuitive sense. Companies have been on a long-term track to mitigate the risk of outside sources attacking their technology systems, as the means for carrying out such damage continue to proliferate. "Companies are trying very hard to eliminate vulnerabilities in their systems that may impact financial performance," says Kate Guerra, senior director of research at the CEB. READ MORE...

Overachieving Fraud Wolves in Sheeps Clothing

Jeffrey Horner, CFE, CRCMP — Tue, 03 Jan 2012 10:37:22 -0800

Targeting Top-Performing Employees Gaming the Bonus System

Follow this CFE consultant as he uncovers top collection reps at a business call center who inflated their performances for more money and job advancement. Lesson? Do not always follow the money.

Sometimes we find fraudulent activity occurring in the most unsuspecting places. What started out as a routine examination into a tip from an anonymous call-center employee who was concerned with the large number of suspicious credit card payments a few fellow employees were processing, turned out to be the discovery of a whole new area of call center fraud operating right under the noses of management, compliance, internal audit, quality assurance and even fraud committee members.

A call center environment can foster many credit card processing scams. The most popular is for call center agents to retain credit card account numbers, expiration dates and security codes for themselves or to sell to fraudsters. We also see this scam in restaurants and other retail industries. Fortunately, in this case, the employee who called the hotline supplied the locations and names of the suspicious employees and claimed that the number of payments they processed was far beyond the norm.

As an outside consultant, I first had to become familiar with the work of the business unit and the group in which the suspected employees worked. That unit handles inbound and outbound phone calls with customers who are past due on delinquent accounts. The collectors, who use defined call scripts, process payments through a number of payment options for consumers, including mailing payments, self-performed Internet payments, check by phone, automatic account debit and, naturally, credit card and debit card payments processed over the phone. The company provides exceptional training services for the employees and monitors their work so they comply with company policies, procedures and applicable federal, state and even some local statutes. An automated account management system documents all work, and the company records all phone calls. READ MORE...

Digital Currencies MoneyLaundering Bogeyman or Real Concern

The Fraud Examiner - By Jacob Parks, J.D. — Wed, 21 Dec 2011 14:29:00 -0800

Recently, there has been some rustling from lawmakers and others that indicates a serious money-laundering threat might be upon us:decentralized digital currencies.

In June of this year, U.S. senators Charles Schumer and Joe Manchin appealed to the Department of Justice to do something about what they perceived to be a major money laundering threat. They pointed to a website called Silk Road, where people could anonymously purchase illegal items, such as drugs. The site’s payment mechanism of choice? Bitcoins -- units of a peer-to-peer digital currency that enable people to make payments over the internet almost instantly and without going through a bank or government. Schumer and Manchin urged for the shutdown of the illicit site and identified Bitcoin as a vehicle for money laundering.

But what are digital currencies, and should you lose sleep over them? READ MORE...

Why and How to StressTest Done right stress testing helps companies imagine the worst and prepare accordingly

Nicolas Kunghehian — Tue, 20 Dec 2011 10:58:21 -0800

In recent years, stress testing has become more important, fueled by regulatory requirements and the weakened economic environment. Indeed, many companies are undertaking stress testing for more than just regulatory compliance; a growing number are integrating the process into business-planning and strategy-setting procedures. But stress testing has a long way to go before it becomes a fully embedded risk-management practice.

Stress testing is an important component of risk management. It defines a plausible scenario that could have important consequences for a company. Doing this exercise helps determine an adequate solution should the crisis scenario happen. Let us try to define one of the other benefits: a CFO is constantly under pressure to find new funding sources. To reach this goal, investors must be convinced of a company’s stability. Stress tests can be a very useful tool to restore or maintain confidence in a company. A CFO will never be keen to disclose too much information; however, presenting different outcomes of a stressed scenario will provide valuable transparency.

Imagine a company publishing various crisis scenarios (for example, default of a European country, an increase in oil prices, or movements in currency exchange rates) and their potential impact on its operations, finances, or both. Of course, there may be a negative outcome overall. But the CFO has the opportunity to prove that the company will survive and face relatively low losses. Investors invest only if they have enough clear information to assess the risk of an investment appropriately — and a stress test could tip the scale in the capital-seeking company’s favor.

Having a comprehensive stress-testing framework requires greater collaboration between the CFO and the business lines. Scenarios for stress testing are best developed with the participation of multiple teams. The objective of this collaboration is to generate scenarios that are both plausible and relevant. For example, before opening an office in a new country, a CFO needs the help of people who know the specifics of the area; that is, the evolution of salaries, the trend in real estate prices, and data on currency exchange rates. READ MORE...

Retailers must prepare for fraud this Christmas

Michael Norton, Managing Director of PayPoint.net — Mon, 19 Dec 2011 15:24:59 -0800

As the online retail industry continues to go from strength to strength it is expected that consumers will do more shopping than ever online this Christmas, with a study by the Centre for Retail Research forecasting a 17% increase in sales in the last six weeks of the year. Currently £1 in every £10 is thought to be spent through e-commerce, and this could grow further as mobile and social media commerce start to take off. However, are retailers ready to take advantage of the new opportunities available during the festive season?

Last year it was estimated that £67 million worth of fraud took place at Christmas, and despite measures being put in place by retailers to try to combat this, it is thought 2011’s figure will be just as high. According to the PayPoint.net study, ‘Gangsters’ Paradise or Shoppers’ Delight?’ the expected impact of e-commerce fraud on the UK economy means it will rise by 18%, from £165.2 million in 2011 to £195.3 million in 2015. Shopping on a mobile phone or a favourite social media site is the next big thing in e-commerce, but criminals are likely to capitalise on poor awareness of the risks by consumers and retailers alike. READ MORE...

Thousands to be stripped of Canadian citizenship in historic fraud sweep

Postmedia News — Thu, 15 Dec 2011 09:07:32 -0800

OTTAWA — The federal government is set to crack down on 4,700 more people believed to have obtained citizenship or permanent resident status illegally in what’s being dubbed the biggest citizenship fraud sweep in Canadian history.

Immigration Minister Jason Kenney is expected to make the announcement that “Canadian citizenship is not for sale” on Friday.

He will unveil the details in Montreal where Nizar Zakka — an immigration consultant suspected of fraud — was arrested in 2009. Zakka is suspected of providing would-be Lebanese immigrants with false evidence — indicating that they were living in Quebec when they were not — to support their cases for permanent residency. READ MORE...

Fraud alert Police dont say seasons thievings for nothing

dawn walton - globe and mail — Thu, 15 Dec 2011 09:11:30 -0800

This is the most wonderful time of the year – for fraudsters.

As Canadians go in-store and online to shop for their friends and family, they expose themselves in greater numbers, and through repeated purchases in chaotic environments, to identity theft.

“The busiest retail season of the year has already begun and with an increase in financial transaction comes an increase in opportunities for fraud artists,” according to the RCMP.

No wonder police call this “season’s thievings” and advise shoppers to be a Scrooge with their personal information.

The cost of fraud is stunning.

According to the Canadian Anti-Fraud Centre, fraud offences now cost the country between $10-billion and $30-billion a year, making it as profitable as the illegal drug trade. And almost 80 per cent of these offences are the work of organized crime, police say. According to the RCMP, debit card fraud rang in at $119-million last year, while credit card scams added up to almost $366-million. READ MORE...

3 of 4 Americans Would Blow Whistle on Wrongdoing Law Firms Survey Finds

Mark Hansen — Thu, 15 Dec 2011 09:20:30 -0800

Three out of four Americans say they would blow the whistle on wrongdoers in the workplace under the protections and incentives now being offered by the government, a new poll shows.

According to the poll, released Monday, 78 percent of those surveyed said they would report wrongdoing on the job as long as they could do so anonymously, without retaliation, and collect a monetary reward, Thomson Reuters reports.

The survey also found that 68 percent of those polled did not know the new whistle-blower program launched by the Securities and Exchange Commission four months ago even existed.

Under the program, tipsters who provide original and useful information about securities law violations can now earn up to 30 percent of the total penalty the SEC collects from a company. The new program, part of the Dodd-Frank financial regulatory law, allows whistle-blowers to remain anonymous. It also prohibits employers from retaliating against employees who report wrongdoing.

The telephone poll of 1,007 households was commissioned by the Labaton Sucharow law firm, which established a whistle-blower practice this summer.

The poll also found that more than one-third of those surveyed claimed to have firsthand knowledge of wrongdoing in the workplace. People with more education were more likely to become whistle-blowers, the poll showed, suggesting that more senior employees were privy to the kind of misconduct that could trigger a government enforcement action. READ MORE...

What to Put on Your Risk Radar Screen

Sarah Johnson — Tue, 13 Dec 2011 14:23:42 -0800

IT security, global expansion, and excess cash top the list of 10 risks companies should be particularly concerned about in 2012, according to the Corporate Executive Board (CEB).

As for expansion, setting up stakes in emerging markets — an increasingly common practice by U.S. companies — with new employees and new regulations obviously creates potential problematic areas, such as an increased likelihood of fraud prevention and internal controls falling apart between U.S. headquarters and far-flung operations. READ MORE...

FAIRs ten questions re appointment of toothless whistleblower watchdog for 7year term

FAIR — Mon, 12 Dec 2011 13:44:52 -0800

Mario Dion, the Prime Minister’s choice for Public Sector Integrity Commissioner will testify before a parliamentary committee on Tuesday. This will be almost the final step in installing a whistleblower watchdog who has demonstrated over the past year that he can be equally ineffective as his disgraced predecessor.

FAIR is calling for proper scrutiny of this appointment before any decisions are made by Parliament. There are many serious questions that must answered before any decision is made: here are 10 for starters.

1) Why did Prime Minister Harper fail to consult with opposition leaders before making his choice?

Besides being common courtesy in the appointment of an officer of Parliament, such consultation is required by the law that created this position (see subsection 39(1) of the Public Servants Disclosure Protection Act).

2) Why did Dion decide to apply for this job after saying it would be a conflict of interest to do so?

Mr. Dion told several people in a face-to-face meeting (including David Hutton of FAIR, Allan Cutler of Canadians for Accountability, and Duff Conacher of Democracy Watch) that he was not going to apply for the full-time Integrity Commissioner position because he did not want to have the conflict of interest while he was Interim Commissioner – of trying to please the Prime Minister and Cabinet so they would appoint him as full-time Commissioner. We agreed.

Why is this conflict of interest suddenly no longer an issue when Mr. Dion’s performance over the past year indeed seems designed to please the PM? READ MORE...

Does Canada Have a Problem with Occupational Fraud

By the Certified General Accountants Association of Canada — Tue, 06 Dec 2011 15:54:56 -0800

Many of us have at one time or another been curiously drawn to the subject of occupational fraud. Whether observed in our own work environments or exposed through broader media, we often find ourselves perplexed by the apparent ease with which an otherwise responsible organization can be financially violated by its own agents or employees. The simple fact of the matter of it is that we generally have confidence in the folks that work shoulder to shoulder in achieving the wellbeing of a collective venture. And that is received as a positive condition.

As history has shown us, there can however be the occasional breach or abuse of the confidence placed in people. That is not to say that all individuals are necessarily capable or willing to resort to occupational fraud; but rather that businesses need be mindful of the prospect of occupational fraud and of the relative unpredictability of the potential or eventual aggressor.

Recognizing that individual occupational frauds are more often than not dwarfed by larger more discernable frauds and scandals, The Certified General Accountants Association of Canada (CGA-Canada) considers it timely to direct some attention to the inherent opportunity for occupational fraud within the domestic environment. Moreover, it is conceivable that in the current economic landscape of slow growth and deleveraging, the propensity for occupational fraud may in fact intensify. READ MORE...

DoddFrank without the Dodd and the Frank

Sarah Johnson - CFO.com — Wed, 30 Nov 2011 16:18:53 -0800

Dodd and Frank: These names have been muttered under the breath of compliance officers on a frequent basis for over a year now, but the lawmakers won't be in a position of influential power when the many details of the Dodd-Frank Wall Street Reform and Consumer Protection Act continue to be ironed out. Sen. Christopher Dodd stepped away from Congress within six months of the 2010 law's passage, and now Rep. Barney Frank has just one year left in his term. Earlier this week, Frank announced he would not seek reelection in 2012.

The news comes as attempts to gut or reform the financial reform law are rampant. They range from the extreme (such as a complete rewind) to tweaks of certain provisions, quiet talks between lobbyists and regulators, and pleading letters (see the latest Chamber of Commerce's criticism of an SEC proposal).

Frank has scoffed at the notion that his departure could weaken the law. In a recent talk with reporters, he suggested that the ship to make any significant dent has long sailed. "Once [Dodd-Frank] is fully implemented -- I think it will be another year -- it is much harder for people to get rid of, because I think it will be popular," The New York Times quoted him as saying on Tuesday. [READ MORE...]

QA Pam Verick On International Fraud Awareness

Samuel Rubenfeld — Thu, 01 Dec 2011 15:09:21 -0800

This week is International Fraud Awareness Week. In this Q/A, Pam Verick, the director and solution leader of fraud risk management for Protiviti, discusses fraud, how Occupy Wall Street amplified the visibility of it and what the company is hearing from its clients about it. The conversation has been edited lightly for clarity.

Describe the prevalence of fraud in our financial system and our economy more broadly.

I think fraud and misconduct are serious issues that detract from the health and stability of our economy when you think of the importance of transparency of our system, and the viability of our markets here in the U.S. and abroad. The issue is, when you trust that markets are stable and that they are safe from issues of corruption and financial abuse, investors are more willing to take risk.

What, if anything, is the Occupy Wall Street movement doing to amplify the visibility of fraud in our economy?

I think they are contributing to fraud awareness, especially as it relates to transparency and corporate governance matters. Consider that their issues seem to be around making sure that trust is put back into the markets and corporate well-being. Another takeaway I’ve had is [they care about] accountability and when you consider transparency and accountability, it does raise issues of ethical behavior and the importance of corporate values.

When you consider International Fraud Awareness week, I think it’s been a great reason to talk to organizations about corruption and fraud, and what organizations are doing to deal with these issues.

It’s given us a great reason to talk to organizations about the programs they’re developing about fraud, misconduct and corruption. We’ve had the chance to talk to several organizations about what they’re doing with their finance teams to increase their detection capabilities, including the tools they’re using to increase awareness to help mitigate fraud risk. READ MORE...

Internal Auditor Chartered Accountant Sarbanes Oxley ACA

Networx (2001) Ltd — Thu, 01 Dec 2011 15:17:38 -0800

Internal Auditor / Chartered Accountant / Sarbanes Oxley / ACA
Peterlee
Salary range between £31,173 - £38,966

Our client represents the largest and most respected family of products and services in earth-moving industries across the world. Their products and services deliver superior quality and long term value, helping to accelerate the success of their customers worldwide.

They now have a brilliant opportunity for a Control Coordinator to join their Internal Audit function within the company. You will act as the Financial Risk Management Coordinator of the site, providing accounting control and procedures to ensure compliance with all Sarbanes Oxley, UK & US GAAP guidelines. Your main duties will be to perform internal control audits, as well as guaranteeing assets are protected and all procedures are documented. You will work closely with the Business Resource Manager maintain all site approval controls and provide sound knowledge and advice on Sarbanes Oxley procedures.

Their ideal candidate will be educated to degree level or equivalent. A Chartered accountant, with an ACA qualification, and experience in large firm audits, you need to also have excellent communication skills. Good computer literacy is a must, as well as the ability to work well within a team. Sarbanes Oxley knowledge would be advantageous.

Keywords:
Internal auditor / Sarbanes Oxley consultant / Regulatory reporting manager / QA leader / auditor / Operations auditor / Accountant / Sarbanes Oxley
Accountant / ACA / Chartered accountant / Financial risk management / Sarbanes Oxley Auditor / Financial assistant / Financial services Accountant / ACA Chartered accountant

Important Note:
After forwarding your CV for this position, you will receive an email from networx that requires action in order for us to submit your details. APPLY NOW or READ MORE

In tough economy employee theft climbs to epidemic proportions experts say

Laylan Copelin — Mon, 28 Nov 2011 10:14:28 -0800

Evidence against a young bookkeeper was in the photos she brought to work: her frequent Vegas trips, the $1,000 exotic puppy and $18,000 in house renovations.

She didn't need photographic proof of her sudden breast augmentation surgery.

All on a $20,000 annual salary.

Finally, her boss became suspicious when she bought a Mercedes — with cash.

"This woman did everything but come to work with a sign on her back saying, 'I'm stealing your money,'\u2009" said James Ratley, president and CEO of the Association of Certified Fraud Examiners, an Austin-based organization with more than 50,000 members worldwide.

Not every dishonest employee, of course, flaunts his or her clandestine wealth as much as the young bookkeeper. Ratley said fraud by employees is more widespread than employers realize.

It is difficult to gauge the losses, but a 2010 survey of fraud examiners estimates that businesses lose as much as 5 percent of their revenues to various forms of fraud by employees, from bookkeepers to CEOs. A 2010 survey by the National Retail Federation put employee fraud ahead of shoplifting as the primary cause for retailers' losses.

"Fraud has grown to epidemic proportions," Ratley said. "It is so pervasive, it can no longer be ignored." [READ MORE...]

Will South Africas secrecy bill become law

By Milton Nkosi - BBC News, Johannesburg — Mon, 28 Nov 2011 10:21:58 -0800

The demonstrations may be much smaller in South Africa, but the fury about a threat to national democracy seems as heated as that of the clamouring crowds in Egypt's Tahrir Square.

The anger follows the passing in Cape Town's parliament of the Protection of State Information Bill, because of its alleged threat to freedom of speech.

Uncharacteristically the parliamentary opposition united in its fight against the legislation proposed by the governing African National Congress, but it was passed by 229 votes to 107, with two abstentions.

In its current version, there are tough sentences of up to 25 years for anyone possessing classified government documents, with no defence of acting in the public interest.

Civil society organisations and all media houses are up in arms demanding that a "public interest" clause be included in what has been dubbed the "secrecy bill". They argue this would allow the media to uncover corruption.

Fortunately for those opposing the bill there is still some respite.

Parliamentary procedure requires the bill to be taken to the upper house of the legislature - the National Council of Provinces, previously known as the Senate.

Lobbying is already under way for it to be sent back to the lower house for the public interest clause to be inserted.

Even if it goes through the upper house, all is not lost.

There is still an opportunity for review as it can be challenged at the Constitutional Court, the highest court in the land - meaning it could be amended before becoming law. [READ MORE...]

Critics condemn new South African secrecy law

Alex Duval Smith - Cape Town — Wed, 23 Nov 2011 08:57:22 -0800

South African MPs yesterday passed a secrecy law that critics say harks back to apartheid legislation, criminalises investigative journalism and could be used to conceal corruption.

The rushed passage of the controversial Protection of Information Bill – despite a pledge two months ago that it would be put to broader consultation – raised questions about the possible political motivation behind it.

Black-clad demonstrators gathered outside parliament and two South African Nobel laureates criticised the pending legislation. The former Anglican archbishop Desmond Tutu said it was "insulting to all South Africans to be asked to stomach legislation that could be used to outlaw whistle-blowing and investigative journalism".

The Nobel prize-winning author Nadine Gord- imer said the bill was "totally against" freedom. The legislation allows any government agency to apply for the classification of information that is "valuable" to the state. However, the bill does not include a public interest clause and criminalises the possession and distribution of state secrets.

As a result, critics say journalists and whistle-blowers could face up to 25 years' imprisonment for breaches.

Amnesty International called the bill "fatally flawed" and Human Rights Watch said it "was a blow to freedom".

The ruling African National Congress said the new law – passed with a vote of 229 in favour and 107 against – is essential for deterring spies. The party said the bill was intended to replace outdated apartheid-era legislation and to "balance the presumption of secrecy with a presumption of openness".

However, the legislation comes at a time when the ANC's probity is being questioned by a robust civil society. READ ARTICLE

Finance and utility companies more likely to have women on boards

Shannon Walker — Tue, 22 Nov 2011 14:23:54 -0800

Shannon Walker, President of WhistleBlower Security: Women are most likely to be on charitable boards followed by finance and utility. Women are least represented on mining and gas boards. This article is interesting in itself, but the really interesting piece is the study referenced in the report by the Catalyst Group that found the more women that are on a board, the more likely a company is to engage in corporate philanthropy or social responsibility policies. This speaks volumes to the importance of creating diverse boards that include women in order to promote a higher quality of business environment and integrity within the workplace. READ MORE...

Assignment Indias Whistleblowers

BBC — Fri, 18 Nov 2011 16:07:25 -0800

Rupa Jha investigates how local-level campaigners against corruption in India face threats and violence - despite promises that the government will stamp out graft. She tells the stories of two whistleblowers in two different states who faced ferocious intimidation after they tried to challenge powerful individuals on the take. LISTEN NOW

ExOlympus Boss to Meet Japanese Police

Shannon Walker — Thu, 17 Nov 2011 11:20:41 -0800

Shannon Walker, President of WhistleBlower Security: Yet another huge corporate scandal – former Olympus President was fired when he questioned the Chair and two other executives regarding a couple of deals: READ MORE...

Government insiders doubtless prefer the lack of controls

Shannon Walker — Thu, 17 Nov 2011 12:14:37 -0800

Shannon Walker, President of WhistleBlower Security: After BC taxpayers footed the bill to the tune of $6 million dollars after two BC Liberals pleaded guilty in the BC Rail case, Auditor-General Doyle is investigating the policies or lack there of, of civil servants being supported by the Province in their legal battles. When the BC Rail case came to an end, I was incensed by the fact that this case had dragged on for years only ending with the guilty pleas and a $6 million dollar bill for the people of BC.

This is a prime example of where government practices need to be overhauled. These “special indemnities” which began during the NDP era to assist then-Premier Clark in his own legal circus, are an abusive, murky practice that needs to stop now. Very disappointing on so many levels that this practice has been allowed to continue. I hope Christy Clark’s government steps up and actually starts creating some best practice governance policies that could restore some faith in government. READ MORE...

SEC Reports Record Year for Fraud Enforcements Expects More in 2012

Sue Reisinger - Corporate Counsel — Thu, 17 Nov 2011 15:21:57 -0800

The Securities and Exchange Commission last week reported a record number of enforcement actions for the 2011 fiscal year, and this week released its first annual Whistleblower Program report [PDF], which suggests that record is sure to be broken next year as the tips pour in.

That's the prediction of Jordan Thomas, a former senior attorney at the SEC who played a leading role in drafting both the whistleblower provisions of the Dodd-Frank Act of 2010, as well as the rules to implement it that went into effect in August.

In the program's first seven weeks, the report said the SEC received 334 tips, a number that Thomas called "impressive." The report covers only this fiscal year, which ended September 30. READ MORE...

Fighting Fraud Is Still Personal

CFO.com - Sarah Johnson — Mon, 14 Nov 2011 11:56:28 -0800

Three ways to mitigate your risk of payments fraud that need a human touch.

It’s a fine line between legitimate payments and fraud. The possibility always exists that customers are not who or what they seem. Questioning an actual, loyal customer could, in some instances, hurt a company’s reputation and coffers more than the loss of a missing payment.

This dilemma is a daily one for Colleen Lindow, a senior director overseeing transaction risk at PayPal. Lindow says her biggest challenge is balancing customers’ experiences with mitigating the online-payment company’s risk of fraud. “It’s important that when customers try to pay that they can,” she said at the Association for Financial Professionals’s (AFP) annual conference in Boston earlier this week. If the risk-management processes and tools she uses backfire and a real customer is unable to use PayPal, she may get a call from senior managers asking what went wrong. [READ MORE...]

Forensic Accounting Fullday Seminar on 25November 2011 @ DomaineLes Pailles

Sunil Bahri - Kaizensox Consulting — Mon, 14 Nov 2011 14:11:44 -0800

Full-day seminar by:

Sunil Bahri, FCA, FCS, ACSI & SOX Certified, CEO of Kaizensox Consulting (Dubai/Vancouver)

Mayur Joshi, B.Com, CA, CFAP, CBFA, CFE, Principal consultant of Riskpro Consulting Pvt. Ltd. (India)

•Redefining the thought environment for managing fraud risk, fraud control and fraud investigation practices
•This is not a Witch Hunt! : Minimizing damage while carrying out internal investigation
•Fraud Investigation in virtual world without borders
•Internal Controls –Role and importance in forensic examination
•Forensic Audit –Investigating and evidence collection from documents
•Research on fraud –Global Corruption Trends
•Corporate Governance in Control Theory
•Case studies and panel discussions

Fees @ Rs 11,500 per participant (Tea breaks, Lunch & Course Materials included)
Special rate for groups of 3 or more and for participants not eligible for HRDC refund.

25November 2011 @ DomaineLes Pailles

READ MORE..full brochure

Get In Touch
Tel : 427 2190info@ispi-lhc.org
Fax : 427 8890www.ispi-lhc.org

Risk Management & Whistleblowing November 23 & 24 2011

KaizenSox Consulting — Mon, 14 Nov 2011 14:37:26 -0800

A two-day interactive workshop by Sunil Bahri, FCA, FCS, ACSI & SOX Certified, CEO of Kaizensox Consulting (Dubai / Vancouver)

Based on hands-on, practical approach with panel discussions, case studies and your own take-away action plan!!! Who should attend: Senior Executives and Management, Auditors, Accountants, Risk & Compliance Officers, Consultants

Date: Wednesday 23rd & Thursday 24th November 2011 Venue: Clos St Louis, Domaine Les Pailles. Fees: Rs 18,000 per participant (Lunch, Refreshments and Course Materials included) Special rate applies for Groups and for participants not eligible for HRDC refund. Early bird registration: deadline Friday 14 Oct 2011 REGISTER NOW / MORE INFO: 427 2190 427 8890 info@ispi-lhc.org. Visit our website www.ispi-lhc.org for the Course Outline, Programme & Registration Form.

About the ISPI
ISPI has been founded on a powerful vision of achieving sustainable performance through knowledge to create a better society and to improve the quality of life. The ISPI aims at creating national and regional capacity by servicing the Indian Ocean and African regions. We offer Capacity Building Programmes and Consultancy Services in all areas of human development, transformation of institutional set ups, governance and sustainability, regional economic integration and development.

Understanding Risk
Risk Management Activities
Assessing Risk
Responding to Risks
Resourcing Controls
Reaction Planning
Reporting and Monitoring
Reviewing and Evaluating the Framework

Understanding whistleblowing
Legal provisions
Role of Ombudsman
Whistleblower Protection and Fraud Detection
Impact of whistleblowing on the company
Application of whistleblowing
Entrench whistleblowing as part of good governance

Date: Wednesday 23rd & Thursday 24th November 2011
Venue: Clos St Louis, Domaine Les Pailles

Fees: Rs 18,000 per participant (Lunch, Refreshments and Course Materials included) Special rate applies for Groups and for participants not eligible for HRDC refund. Early bird registration: deadline Friday 14 Oct 2011 REGISTER NOW / MORE INFO: 427 2190 427 8890 info@ispi-lhc.org Visit our website www.ispi-lhc.org for the Course Outline, Programme & Registration Form.

READ MORE...full brochure

Driving Excellence in Corporate Governance through Strategic Change & Leadership

KaizenSox Consulting — Mon, 14 Nov 2011 14:52:23 -0800

MASTERCLASS for DIRECTORS
December 5 - 6, 2011 | Le Meridian Hotel Dubai | U.A.E

Why attend Master class?

Explosion of stakeholder aspirations
Issues emerging from nongovernance
Global cry for Board Room reforms
Increasing accountability for directors
Negative social impacts of busines
Deterioration of shareholder value
Changing standards of governance
Absense of a holistic approach

Who Should Attend?

Directors and aspiring directors
Family business owners
Strategic decision makers
Chief Executives & Managing Directors
Board level senior managers
Strategic decision makers
Secretaries to the Board
Corporate Governance Executives

READ FULL BROCHURE

Leadership Lessons Influential Women in Business

Business In Vancouver — Thu, 10 Nov 2011 09:54:26 -0800

Date: November 23, 2011
Location: Marriott Vancouver Pinnacle Downtown - 1128 West Hastings Street
Time: 9:00am - 1:30pm
Price: Subscriber $85 (includes lunch)
Non-subscribers $95 (includes lunch)

On November 23, Business in Vancouver and the Professional Women's Network Business will present the 3rd annual Leadership Lessons from Influential Women in Business. This half day forum will begin at 9am and consist of interactive panel discussions with some of BC's most influential business women; networking time and lunch.

Discussion moderators and panelists include:
Tracy Theemes
Cybele Negris
Frieda Granot
Elise Rees
Evaleen Jaager Roy
Wanda Costuros
Tracy McVicar
Barbara Rae
Cynthia Roney

[READ MORE...]

Why Increased Scrutiny May Be Good for Business

Shannon Walker — Wed, 09 Nov 2011 14:17:27 -0800

Shannon Walker, President of WhistleBlower Security writes: This is a good article by Theodore Roosevelt Malloch, a research professor at Yale University and the author of Doing Virtuous Business (Nelson 2011). It highlights the importance of a strong board with independent directors is so increasingly necessary these days. [READ MORE...]

Upcoming Scholarship Applications Event The US Taxpayers Against Fraud Education Fund

taf.org — Fri, 04 Nov 2011 11:31:15 -0700

The US TAXPAYERS AGAINST FRAUD EDUCATION FUND is presenting "Bootcamps" on the IRS and SEC Whistleblower Programs. The programs are November 15 and 16 at the Embassy Row Hotel in Washington D.C. Although the agendas are fairly technical, they are offering a limited number of scholarships (i.e. fee-waiver) for students who are interested in attending. A link to the application and the agendas can be found here: [READ MORE...]

Applications will be considered on a rolling basis and must be submitted by November 4, 2011. Please email your completed application responses to Cleveland Lawrence at clawrence@taf.org.

Course Ethical Decision Making Skills

Global Ethics University — Mon, 31 Oct 2011 15:36:42 -0700

Global Ethics University is a division of Character Training Inc. (CTI). CTI has been producing quality business ethics training products since 1999. It was founded by author and educator Mark S. Putnam to support company compliance initiatives with positive, character-connected training programs.What makes CTI different from other ethics-training providers is that it takes the word character seriously. All of CTI's materials have a character focus that is reflected in our slogan, Connecting Character and Compliance - Making Ethics Meaningful. That is our mission and our passion.

Mention this promo code: wbc10 and receive 10% off your next Global Ethics University course

Course No: ETH101

Instructor: Mark S. Putnam, M.Ed.

Description:
This is a foundational course that prepares employees for the various ethical dilemmas they face on the job from situational dilemmas to full-blown ethical crises.

Objective:

• Understand a working definition of business ethics and apply to everyday situations.
• Know the different kinds of workplace ethical dilemmas and identify their sources.
• Develop a problem-solving approach to ethics problems.
• Understand the role that the conscience plays in human character and moral decision-making.
• Know the keys and principles to become an ethically balanced person.
• Know how to approach and solve a situational ethical dilemma.
• Know how to solve a critical dilemma.
• Learn ethical tests and strategies to help solve problems.
• Understand the different kinds of rationalization that are used to justify bad behavior.
• Learn communication strategies to deal with an ethical crisis.

Required Reading: "Absolutes and Ethical Relativism in the Workplace" by Mark S. Putnam
"Ethical Balance" by Mark S. Putnam
"The Anatomy of an Ethical Decision" by Mark S. Putnam

Price: $49.00Length: 2 hr 0 min - Mention this promo code: wbc10 and receive 10% off your next Global Ethics University course

FBI Gangs turning to whitecollar crimes

MSNBC — Fri, 28 Oct 2011 15:57:14 -0700

WASHINGTON — The Federal Bureau of Investigation on Friday estimated there are some 1.4 million gang members in the United States and they are turning to white-collar crimes as more lucrative enterprises.

Gangs like the Bloods and the Crips are engaging in crimes such as identity theft, counterfeiting, selling stolen goods and even bank, credit card and mortgage fraud, said a new FBI gangs threat assessment.

"We've seen it, but we've seen them doing it even more now and we attribute to the fact that the likelihood of being caught is less, the sentences once you are caught are less, and the actual monetary gain is much higher," said Diedre Butler, a unit chief at the National Gang Intelligence Center.

In 2009, the FBI estimated there were 1 million gang members. It attributes some of the 40 percent increase since then to more comprehensive reporting by law enforcement agencies.

Agency officials said they were unable to determine exactly how many new gang members there were now since the last estimate, but that such membership was indeed on the rise.

Gangs are using social media such as Facebook and YouTube to recruit members and communicate, as well as posting photos of their lifestyle to present a tough image, the assessment said.

"It may stoke the curiosity of someone in the community and so that is kind of a recruitment tool because now people may see this video and think that's kind of sort of cool," said Calvin Shivers, a section chief in the FBI's gang unit. [READ MORE...]

Whistleblower Rules Give Companies Less Time to React

CFO.com - Sarah Johnson — Wed, 26 Oct 2011 15:49:06 -0700

A new SEC program shrinks the amount of time companies will want to spend on internal investigations.

A new whistle-blower program that went into effect earlier this month may pressure companies into accelerating internal investigations that are prompted by employee tips.

By sticking to a tighter time frame, companies could give regulators the impression that corporate officials — and not a whistle-blower — were on top of a potential problem from the beginning. That impression could help companies gain leniency with regulators and be looked upon favorably by the investing public. "It shows the [Securities and Exchange Commission] you take the allegations seriously, and it allows you to spin the allegations in a manner that is most positive for the company," says Lisa Noller, a partner at law firm Foley & Lardner.

The need for a deadline comes from the SEC's whistle-blower program, which awards cash bounties to witnesses of securities fraud. Critics of the rules have said they encourage employees to bypass their own compliance departments and go directly to the SEC with concerns. In fact, the commission will still consider a fraud informant as a whistle-blower if 120 days elapse between the time the informant reports a problem through internal means (such as to the audit committee or chief compliance officer) and the time the SEC gets wind of it from that source. [READ MORE...]

Brand Experience Agency ABT looks at internal communications

ABT — Tue, 25 Oct 2011 15:02:19 -0700

Leading brand experience agency ABT presents an interview with Marketing Manager, Howard Downer. He reveals that not everyone understands or appreciates the importance of internal communications. VIEW VIDEO

Shannon Walker Presents in Vancouver on October 25th 2011

Shannon Walker — Mon, 24 Oct 2011 09:38:18 -0700

October 24 & 25, 2011, Vancouver | 14th Communications Performance Measurement

Topic Brief

In order to facilitate internal communications continuous improvement, this session will discuss a number of methods that measure employee engagement, satisfaction and alignment with the organization’s vision, values and strategic goals. Read More...

Bio

Shannon Walker is President and CEO of WhistleBlower Security, a firm which offers confidential ethic hotline services. Read More...

Course Highlights

Understanding the measurement framework
Ensuring a successful communications audit
Using media relations ratings points
Measuring the impact of social media
Measuring stakeholder and employee communication strategies
Improving your change communication strategy
Coaching and assessing managers on their communication role

Read More...

Workshop

Approaches to Media Tracking and MeasurementA consistent approach to media is essential to ensure that the flow of information is open and organized in both directions, making media tracking and analysis, which highlights the effectiveness of your communications plans, media strategies and PR campaigns, essential. This session will look at how to use media tracking and analysis to fine-tune your plans and respond to emerging issues and crises.

Tracking media interaction

Tracking tools that assist this approach
A consistent approach to data collection
Beyond media tracking and analysis: building a library of media interaction and clippings that may be instantly retrieved

Participating Organizations

2Q Creations Corp. Best Buy Ltd. Blenz Coffee CA School of Business District of North Vancouver Hill & Knowlton MediaMiser Reputations Southern Arc Minerals TELUS Customer Solutions UBC College for Interdisciplinary Studies Vector Aerospace Corporation WhistleBlower Security WorkSafeBC

Event's Topics

Creating an Effective Communications Measurement Framework
Getting Value for Money
Measuring Internal Communications
Measuring the Impact of Social Media
Impact of Communications on Your Organization's Reputation
Measuring the Ability of Management to Communicate Effectively
Obtaining Buy-in From Senior Management
Developing a Results-Oriented Communications Audit
Practical measurement tools for communication & social media

Read More...

Can you afford not to have an ethics hotline?

AntiFraud Resources by ACFE

ACFE — Mon, 24 Oct 2011 11:19:17 -0700

Profile of a Fraudster (PowerPoint)
ACFE research helps identify common traits and behavioral red flags among those who perpetrate fraud. Presented in a short and insightful presentation for any audience.

Sign up as an Official Supporter of International Fraud Awareness Week, and download these ACFE resources to share with employees, colleagues, clients and the public. The following files are provided free-of-charge in an effort to promote fraud awareness and prevention. [READ MORE...]

This Week is Dedicated to Fraud Awareness Detection and Prevention

ACFE — Mon, 24 Oct 2011 11:26:35 -0700

This Week is Dedicated to Fraud Awareness, Detection and Prevention

Organizations around the world lose an estimated five percent of their annual revenues to fraud, according to a survey of fraud experts conducted by the Association of Certified Fraud Examiners (ACFE). It is against this backdrop that the ACFE urges organizations worldwide to participate in International Fraud Awareness Week, November 6-12, 2011 to help cast a spotlight on this urgent problem. [READ MORE...]

Legislators Oppose IRS Proposal To Make Banks Put Foreign Tax Law Above US Law

Daniel J. Mitchell, Contributor — Thu, 20 Oct 2011 11:49:33 -0700

Earlier this year, President Obama’s IRS proposed a regulation that would force banks in America to report any interest they pay to accounts owned by non-resident aliens (that’s the technical term for foreigners who don’t live in the U.S.).

What made this regulation so bizarre, however, is that Congress specifically has exempted these account from taxation for the rather obvious reason that they want to attract this mobile capital to the American economy. Indeed, Congress repeatedly has ratified this policy ever since it was first implemented 90 years ago.

So why, you may be asking, would the IRS propose such a regulation? After all, why impose a regulatory burden on a weakened banking sector when it has nothing to do with enforcing American tax law? [READ MORE...]

FOR IMMEDIATE RELEASE Merit Systems Protection Board Approves Stay for FDA Whistleblower

National Whistleblowers Center — Wed, 19 Oct 2011 09:34:09 -0700

FOR IMMEDIATE RELEASE

Merit Systems Protection Board Approves Stay for FDA Whistleblower
Relief Ordered for FDA "Reulatory Review Officer" Fired for Blowing the Whistle on Unsafe Breast Cance Detection Device

Washington, D.C. October 19, 2010. The Merit Systems Protection Board (MSPB) allowed a stay <http://capwiz.com/whistleblowers/utr/1/BPSZQQWBBE/EMOAQQWOFG/7469830326> requested by the U.S. Office of Special Counsel on behalf of a Food and Drug Administration (FDA) whistleblower, Paul T. Hardy. Under the provisions of the Whistleblower Protection Act, this stay should result in Hardy's immediate reinstatement into federal service after his managers at the FDA orchestrated his termination on October 9, 2011.

The Office of Special Counsel (OSC) requested a stay of Hardy's termination <http://capwiz.com/whistleblowers/utr/1/BPSZQQWBBE/NCPVQQWOFH/7469830326> on October 7, 2011 because it had "reasonable grounds to believe that Mr. Hardy" was subjected to retaliation by the FDA in "violation" of the Whistleblower Protection Act.

The OSC explained that Mr. Hardy's "disclosures raised issues related to exposing the general population to unwarranted radiation exposure and ineffective cancer screening devices." The OSC stated that Hardy's whistleblowing "evidenced a substantial and specific danger to public health and safety" and "it is appropriate to afford Mr. Hardy whistleblower protection so as to favor the disclosure and correction of improper acts by management officials of HHS/FDA."

Stephen M. Kohn, Executive Director of the National Whistleblowers Center and one of Mr. Hardy's attorneys, stated as follows: The Office of Special Counsel did the right thing. They stood up and demanded due process for Paul T. Hardy. The FDA's practice of firing whistleblowers who resist industry pressure to approve hazardous drugs and devices must stop. The OSC's request to stay these abusive practices is a critical first step in fixing the retaliatory culture that pervades upper management at the FDA. We hope that OSC will continue its investigation into the FDA and order relief for the other whistleblowers who lost their jobs after they exposed substantial and specific dangers to public health and safety. The National Whistleblowers Center is calling on the American public <http://capwiz.com/whistleblowers/utr/1/BPSZQQWBBE/HDZNQQWOFI/7469830326> to demand that the FDA and Public Health Service stop retaliating against whistleblowers.

National Whistleblowers Center
3238 P Street NW
Washington, D.C. 20007
http://www.whistleblowers.org

FOR MORE INFORMATION, CONTACT:
Lindsey M. Williams (202) 342-1903
lmw@whistleblowers.org

Links:
OSC Motion for Stay
MSPB Order Granting Stay
NWC Action Alert ***

And Now We Know Why Nobody Took Madoff Whistleblower Harry Markopolos Seriously

Julia La Roche — Tue, 18 Oct 2011 11:11:25 -0700

Fraud investigator Harry Markopolos, who was also the whistleblower in Bernie Madoff's infamous $65 billion ponzi scheme, has cried fraud on Bank of New York Mellon.

The thing to remember about Markopolos is that he tried in vain to prove that Madoff was a fraud, and nobody took him seriously.

His latest comments give a hint to that.

In a recent interview with King World News, he said the bank is in some serious trouble. [READ MORE...]

Seminar on Fraud Prevention November 11 2011 Tampa FL

Association of Certified Fraud Examiners — Tue, 18 Oct 2011 16:00:57 -0700

Virtually every entity suffers from fraud, though management might not know it. With fraud costing entities an estimated 5 percent of their annual revenues, organizations lacking proactive fraud prevention measures are the most at risk. This one-day, instructor-led course will show you why traditional internal controls can be ineffective in preventing many frauds and how to combat fraud more effectively and economically.

Discover what you can do to protect your company from fraud. Learn about management’s responsibilities for preventing fraud and effective internal controls to aid in this effort. This course will take you further into leading techniques to manage the risk of fraud and cut its ongoing cost for all types of entities. [READ MORE...]

Shannon Walker presents Measuring Internal Communications

Shannon Walker — Thu, 04 Aug 2011 11:25:35 -0700

October 24 & 25, 2011, Vancouver | 14th Communications Performance Measurement

Topic Brief

Bio

Shannon Walker is President and CEO of WhistleBlower Security, a firm which offers confidential ethic hotline services. Read More...

Course Highlights

Understanding the measurement framework
Ensuring a successful communications audit
Using media relations ratings points
Measuring the impact of social media
Measuring stakeholder and employee communication strategies
Improving your change communication strategy
Coaching and assessing managers on their communication role

Read More...

Workshop

Tracking media interaction

Tracking tools that assist this approach
A consistent approach to data collection
Beyond media tracking and analysis: building a library of media interaction and clippings that may be instantly retrieved

Participating Organizations

Event's Topics

Creating an Effective Communications Measurement Framework
Getting Value for Money
Measuring Internal Communications
Measuring the Impact of Social Media
Impact of Communications on Your Organization's Reputation
Measuring the Ability of Management to Communicate Effectively
Obtaining Buy-in From Senior Management
Developing a Results-Oriented Communications Audit
Practical measurement tools for communication & social media

Read More...

Can you afford not to have an ethics hotline?

Away with you Raj Rajaratnams insider trading

Business and management - Schumpeter — Mon, 17 Oct 2011 10:21:51 -0700

NOBODY likes a know-it-all. But that’s exactly what Raj Rajaratnam, the former boss of the hedge fund Galleon, was. He made it his business to know about corporate events before they happened, tapping his wide network of tipsters and coworkers for details, and then buying or selling short the stocks. In May he was found guilty of 14 counts of securities fraud and conspiracy. Today a judge sentenced him to 11 years in jail.

That is the longest sentence ever handed out for insider trading. Previously, the record was ten years—held by another Galleon employee, Zvi Goffer, and Hafiz Muhammad Zubair Naseem, a former Credit Suisse banker sentenced in 2008. Government prosecutors alleged that Mr Rajaratnam “is arguably the most egregious insider trader to face sentencing in a federal courthouse in the United States.” It’s the biggest insider-trading ring that regulators have ever uncovered, involving at least 20 people and $72m in gains and losses avoided.

The government was hoping to see Mr Rajaratnam go to jail for at least 20 years, but his team of well-paid defence lawyers fought fiercely to reduce the sentence he was handed, apparently to some success. They stressed that significant jail-time would be “tantamount to murder” for the 54-year-old Mr Rajaratnam, since he has advanced diabetes. They also said the generous cheques he wrote to charities in New York and his native Sri Lanka should be taken into account. The judge was sympathetic to these points, and factored them into his sentence—a lesson, perhaps, to anyone considering insider trading that they give away much of their gains. [READ MORE...]

Shannon Walker presents Measuring Internal Communications

Shannon Walker — Mon, 17 Oct 2011 15:51:23 -0700

October 24 & 25, 2011, Vancouver | 14th Communications Performance Measurement

Topic Brief

Bio

Shannon Walker is President and CEO of WhistleBlower Security, a firm which offers confidential ethic hotline services. Read More...

Course Highlights

Understanding the measurement framework
Ensuring a successful communications audit
Using media relations ratings points
Measuring the impact of social media
Measuring stakeholder and employee communication strategies
Improving your change communication strategy
Coaching and assessing managers on their communication role

Read More...

Workshop

Tracking media interaction

Tracking tools that assist this approach
A consistent approach to data collection
Beyond media tracking and analysis: building a library of media interaction and clippings that may be instantly retrieved

Participating Organizations

Event's Topics

Creating an Effective Communications Measurement Framework
Getting Value for Money
Measuring Internal Communications
Measuring the Impact of Social Media
Impact of Communications on Your Organization's Reputation
Measuring the Ability of Management to Communicate Effectively
Obtaining Buy-in From Senior Management
Developing a Results-Oriented Communications Audit
Practical measurement tools for communication & social media

Read More...

Can you afford not to have an ethics hotline?

Are We Just Going Through the Motions for Compliance

Dawn Lomer — Thu, 13 Oct 2011 09:05:02 -0700

Without a strong tone from the top, simple survival takes first priority in today’s tough economic climate

Getting companies to embrace ethics and compliance as a valuable addition to corporate best practices isn’t an easy task. Many owners of mid-sized and even larger companies see it as just another hoop to jump through, another unjustified expense.

But times are changing, and as more scandals and corresponding sanctions come to light, companies will be forced to take ethics and compliance seriously. At least that’s what Shannon Walker is counting on. As president of the Vancouver-based Whistleblower Security, a company that specializes in providing global ethics hotlines for companies, Walker sees the current ambivalence towards compliance as a sign of the times. It’s low on a company’s list of priorities, especially in Canada, she says.

A Matter of Priorities

In tough economic times, companies are focused more on staying in business than best practices. “People are thinking about survival, what happens in 2012, what happens with the Eurozone, what happens with the US,” says Walker.

She cites the lack of sanctions for companies that don’t have comprehensive compliance programs that include whistleblower policies as a barrier and sees a lot of business owners who simply make things look good on paper.

“And if there are any discussions about it, they can say ‘I’ve got a 1-800 line to my lawyer on the website’,” she says. “But to me that’s… not a comprehensive compliance program, it’s doing the very minimal to get around the regulations.”

For a company that sets up hotlines for multinationals in foreign countries, challenges are just part of doing business. There are language issues, difficulties with using local phone lines in rural areas and lack of education about telephone use. But the biggest challenge can be just getting companies to see that they need an ethics hotline in the first place.

Tone at the Top

In some companies it’s far down on their priority list, she says. “I don’t think it resonates with staff. If you don’t have tone at the top, it’s an uphill battle.”

Companies may go through the motions, she says, but it’s not enough. Education, training and encouragement are lacking. “They can sign up so they have their due diligence checklist sheet filled up, but they’re not utilizing the service,” says Walker. “They’re not promoting the service, and there’s no enforcement.”

Walker feels that companies will embrace ethics and compliance, but that it may take time, up to 10 years, in fact.

“I think it’s still in its infancy as a department and as a concept within our organizations. Over the next 7 to 10 years I hope people really do embrace it as part of best practices and it becomes a viable department,” she says.

“Five years ago when we started, it was so new,” says Walker. “Now every week there’s something new about whistleblowing. And with all the big scandals, it becomes more and more apparent how important it is, and especially with what’s going on in the Asia market,” she says, adding that Asia is going to be a huge business development opportunity for those in the business of compliance.

With China in the hot seat over recent fraud allegations at publicly traded companies, compliance is bound to be an important discussion point for anyone considering doing business with or in China in the near future. Closer to home, as news of corporate misconduct breaks on a weekly basis, it’s bound to get more attention here too.

This Article can be found at i-Sight Blog

Quebec exfamily minister charged with fraud

The Canadian Press - CBC — Wed, 12 Oct 2011 09:17:51 -0700

CBC.ca: A former family minister in Premier Jean Charest's Quebec cabinet has been slapped with three criminal charges in the latest ethics embarrassment to befall the government.

Tony Tomassi faces charges of fraud and breach of trust. They stem from accusations that he accepted material rewards from a company that had received government money.

Last year, he was forced to resign amid accusations that he had been using a credit card supplied to him by a private security firm — a firm that had received millions in government grants. [READ MORE...]

Boardroom Gender Diversity Sought by UK Regulators New Rules

Erik Larson - Business Week — Wed, 12 Oct 2011 09:28:37 -0700

Business Week: Oct. 11 (Bloomberg) -- Britain’s accounting regulator is changing reporting rules for companies listed on the country’s stock exchanges in a “flexible” effort to increase boardroom gender diversity without using legal requirements.

Amendments to the Financial Reporting Council’s corporate governance rules will require companies to report each year what steps have been taken to implement their boardroom diversity policies and explain failures to comply, the watchdog said today in a statement. The new provisions will apply to financial years beginning on Oct. 1, 2012. [READ MORE...]

Legislative failure hits war on corruption

Dylan Welch - Sydney Morning Herald — Wed, 12 Oct 2011 09:36:54 -0700

The Sydney Morning Herald: A new system to target federal public service corruption is being hampered by the failure of the government to create whistleblower legislation, despite universal recognition that the system is ineffective and needs reform.

The Commonwealth Ombudsman, Allan Asher, said the absence of legislation made it difficult to plan ahead.

''Everybody had expected that by now there would be a bill around to be talking about - there's a bit of a hole at the table,'' Mr Asher said. [READ MORE...]

Corporate governance the boards role

Business Option - By FLOR G. TARRIELA — Thu, 06 Oct 2011 11:17:23 -0700

MANILA, Philippines — I finally attended the 5-day Professional Directors Program (PDP) of the Institute of Corporate Directors. Among my classmates were retired military officers (Gen. Ramon Farolan, Diosdado Domingo and Cardozo Luna of Apslai, Romeo Lustestica), government officials (SSS Commissioner Malonzo Ibarra, DAR USEC Tony Parungao), and big business (Solomon Hermosura of Ayala, Jasmine Oporto of Aboitiz Equity, Jose Ejercito of Unilever Korea, Rey Bacarro of Ascent Associates) among others. Discussions were even livelier as former SEC Chairman Fe Barin was our classmate.

What are some principles of corporate governance? These are independence, fairness, accountability, transparency, ethics long term sustainability, social responsibility.

What is the Role of the Board? [READ MORE...]

When Your Compliance Program Fails

Tracy L. Coenen - CFO.com — Thu, 06 Oct 2011 16:07:57 -0700

CFO.com: You think your company has a robust compliance program to prevent financial-statement fraud, asset misappropriation, Foreign Corrupt Practices Act violations, and other financial frauds. There are checks and balances in place, with lawyers, internal auditors, executives, and the board of directors keeping an eye on things.

Still, the unthinkable happens. Reports of a major internal fraud surface, and the scheme may involve several members of middle or upper management. The information - received through an employee's whisper, an internal hotline, or the rumor mill - has enough substance to be deemed credible, yet not enough to know exactly who is involved, how wide-reaching the fraud may be, the amount of money stolen, or the exposure to government action and penalties. [READ MORE...]

Scam victim upset over inattention by credit union

Kathy Tomlinson, CBC News — Wed, 05 Oct 2011 10:40:55 -0700

A young B.C. woman says an oversight by tellers at Canada's largest credit union helped scammers steal $5,000 from her.

Amanda Peacock, 20, was fresh out of college this summer and looking for a job when she fell victim to a widespread hoax, known as the "secret shopper scam."

"I lost all of my money … to some scam artist that's probably spending it on bad things," said Peacock. "It is the worst feeling to be robbed like that."

Peacock responded to a job ad on Craigslist and was "hired" by a company calling itself Canpro Market Development, which claimed to be a market research company from St. John's, N.L. The RCMP calls the company "bogus."

A young B.C. woman says an oversight by tellers at Canada's largest credit union helped scammers steal $5,000 from her.

Amanda Peacock, 20, was fresh out of college this summer and looking for a job when she fell victim to a widespread hoax, known as the "secret shopper scam."

"I lost all of my money … to some scam artist that's probably spending it on bad things," said Peacock. "It is the worst feeling to be robbed like that."

Protect your Employees

Even After SarbanesOxley US Whistleblowers Face Dilemma

Greg Flakus | Houston — Tue, 04 Oct 2011 10:49:04 -0700

Ten years ago corporate America was in turmoil, wracked by financial scandals at companies like Enron and WorldCom that drastically eroded public confidence in U.S. commerce. Congress reacted by passing the Sarbanes-Oxley Act, a law that forced change in corporate accounting practices and imposed stiff penalties on company officials who retaliate against whistleblowers.

But according to Gordon Massie, who blew the whistle over wrongdoing at multinational insurance conglomerate American International Group (AIG), corporate situations are complicated and even legal experts do not always agree on what constitutes fraud. [READ MORE...]

No More Executive Bonuses!

HENRY MINTZBERG — Tue, 04 Oct 2011 15:47:44 -0700

The problem isn't that they are poorly designed. The problem is that they exist.

These days, it seems, there is no shortage of recommendations for fixing the way bonuses are paid to executives at big public companies. Well, I have my own recommendation: Scrap the whole thing. Don't pay any bonuses. Nothing.

This may sound extreme. But when you look at the way the compensation game is played—and the assumptions that are made by those who want to reform it—you can come to no other conclusion. The system simply can't be fixed. Executive bonuses—especially in the form of stock and option grants—represent the most prominent form of legal corruption that has been undermining our large corporations and bringing down the global economy. Get rid of them and we will all be better off for it.

The failings of the current system—and the executives who live by it—are painfully obvious. Although these executives like to think of themselves as leaders, when it comes to their pay practices, many of them haven't been demonstrating leadership at all. Instead they've been acting like gamblers—except that the games they play are hopelessly rigged in their favor.

First, they play with other people's money—the stockholders', not to mention the livelihoods of their employees and the sustainability of their institutions. [READ MORE...]

Corporate Social Responsibility Needs New Dimensions

Guy de Fontgalland — Mon, 03 Oct 2011 15:51:11 -0700

The FINANCIAL -- Bill Gates, Microsoft ’s Guru, and Warren Buffet, a multi-billionaire, combined to create the world’s largest private fund of over 150 billion USD to aid much needed social reconstruction across some 100 countries through projects ranging from cancer research to clean water, from libraries to clinics for the poor.

In India, the Tata Group led the way in providing housing for their 2.5 million employees, hospitals, schools and temples. The Indian who peddled a bicycle distributing washing powder in two-rupee sachets to those who could not afford to buy bigger packets and went on to build a fortune in detergents, gifted 25 million USD to establish Nirma University in Ahmedabad. In Georgia, the quiet billionaire philanthropist Bidzina Ivanishvili actively promotes multiple projects in aid of social and economic development. From Victoria’s Secret in the United States to John Keels in Sri Lanka, there is now a certain momentum in accelerating the gift of giving and sharing across thousands of corporations. CSR, the acronym for Corporate Social Responsibility is founded on the principle that people at large are the ultimate stakeholders of any business and that profits could be shared with them. [READ MORE...]

Ethics Helpline - Get a Quote

Why it pays to have a Nervous Nelly on your staff

susan pinker - Globe and Mail — Mon, 03 Oct 2011 16:05:36 -0700

Oswald Gruebel, who recently resigned as chief executive of Swiss banking giant UBS, was the latest casualty in a string of outrageous trading scandals at European banks. “I am responsible for everything that happens at the bank, but if you ask me whether I feel guilty, I would say no,” Mr. Gruebel said after it was discovered that a 31-year-old UBS employee allegedly cost the bank $2.3-billion (U.S.) in rogue trades over the past three years. This follows on the tail of French trader Jérôme Kerviel, who must repay the $6.8-billion he stole from Société Générale in 2008; and earlier rogue traders, Nick Leeson and John Rusnak, who racked up losses to U.K. banks in the hundreds of millions. These young bucks were slapped with prison terms, as the UBS trader may well be. But the question remains: How do bogus trades of this magnitude remain undetected for so long? [READ MORE...]

High Tide From Gadhafi Denials To Fueling Violence

Samuel Rubenfeld — Mon, 03 Oct 2011 16:12:51 -0700

A roundup of corruption-related news from Dow Jones and other sources.

Bribery:

Royal Dutch Shell entered into contracts with militant gangs in Nigeria that led to exacerbating violence there, and paid the Nigerian military to put down protests of its business in the country, court documents cited by the watchdog group Platform allege. The company disputes the report, defended its human rights record and questioned the evidence of report. (Guardian, Guardian)

A court in southern Poland has delayed until Nov. 16 a trial in which some former employees of Royal Philips Electronics NV are among defendants accused of bribing hospital directors. (Dow Jones Newswires)

Welcome to the fourth quarter of 2011. The FCPA Blog and FCPAProfessor each have enforcement reviews for the third quarter.

Tom Fox started a series of posts about the Transparency International Guidance on anti-bribery due diligence for mergers and acquisitions. Thebriberyact.com looks at how the SFO’s tough talk on “ethical investing” can affect the venture capital and private equity industries.

What is the role of the regional office in the SEC’s FCPA unit? (Law360 sub req) [READ MORE...]

Protect your company and your employees with an anonymous whistleblower helpline

SEC finds apparent failures at credit rating agencies

BBC — Fri, 30 Sep 2011 11:18:38 -0700

The Securities and Exchange Commission (SEC) has discovered "apparent failures" at 10 credit rating agencies.

It said it was concerned that the agencies - including Standard & Poor's (S&P) and Moody's - were not making timely and accurate disclosures or managing conflicts of interest. The SEC said it expected the agencies to "address the concerns". Credit rating agencies have been criticised for their role in the financial crisis that started in 2007. This is because a root cause of the crisis was the bad US mortgage debt that was resold around the world, debt that was given top credit ratings by the agencies. The agencies were accused of having conflicts of interest, because they were paid by the banks that sold the debt. [READ MORE...]

Isn't it time for your organization to implement an Ethics Hotline?

China tech stocks dive on threat of US fraud probe

BBC News - China — Fri, 30 Sep 2011 13:44:26 -0700

Chinese internet stocks have dived in New York trading after the US Justice Department said it was considering launching a fraud investigation.

The news was disclosed by Robert Khuzami, director of enforcement at the US financial services regulator. Youku, which models itself on web video firm Youtube, was among the hardest hit, falling 18%. Chinese search engine firm Baidu fell 9%, rival portal site Sohu lost 5.3%, and messaging firm Sina dipped 9.5%. The fraud concerns have arisen after accounting irregularities emerged at a number of Chinese firms whose shares are traded in the US. "There are parts of the justice department that are actively engaged in this area," said Mr Khuzami, when asked by the Reuters news agency whether criminal cases were being prepared. He also confirmed that other federal prosecutors are involved in the investigation, but did not identify them, nor which Chinese companies and auditors are being looked into. [READ MORE...]

Ethics Helpline - Get a Quote for Service Today!

Bill Seeks to Ease SarbanesOxley for Small Firms

Angus Loten — Thu, 29 Sep 2011 10:47:00 -0700

Shannon Walker, WhistleBlower Security, blogs: A good step forward in attempting to support smaller firms by defraying some of the onerous costs dictated by SOX. Although SOX has introduced much needed vigilance in the public markets, for smaller companies, it is a huge barrier to growth. Hopefully, this bill will move forward.

Wall Street Journal: In a bid to lower barriers to capital for fast-growth companies, House legislation unveiled last week would allow small businesses to opt out of costly internal-control measures under the Sarbanes-Oxley Act for up to 10 years after going public. READ MORE...

Private Bank Compliance Executive for Core Compliance New York NY

Sarbanes Oxley Compliance Professionals Association (SOXCPA) — Thu, 29 Sep 2011 11:04:04 -0700

Sarbanes Oxley Compliance Professionals Association (SOXCPA), blogs: Client is a top-tier old-line private bank and diversified financial services firm. The company seeks an experienced Senior Compliance Manager for Core Compliance functions.

The position is very diversified and covers many responsibilities within the Compliance Department.

The Compliance Executive will support the Chief Compliance Officer, advise the firm’s lines of business as to compliance with applicable laws and regulations, and monitor business activity and employee conduct to identify potential violation of laws, rules, regulations, policies, procedures and industry standards.
READ MORE

Ethics watchdog sees potential conflict in MacKays vacation venue

Jane Taber — Thu, 29 Sep 2011 15:37:23 -0700

The Globe and Mail: The Ethics Commissioner says Peter MacKay could be in contravention of the conflict of interest code after spending part of his vacation at a fishing camp owned by the chairman of a Crown corporation.

Mary Dawson told an all-party Commons committee Thursday morning there "could be some contraventions” after she was directly asked by Newfoundland and Labrador Liberal MP Scott Andrews about the Defence Minister’s vacation venue. READ MORE...

Charest hints Quebec corruption inquiry could happen after all

Montreal� The Canadian Press — Wed, 28 Sep 2011 14:50:15 -0700

After two years of brushing off the idea of an inquiry into corruption in Quebec, Premier Jean Charest hinted Wednesday that there might be one after all. The premier has repeatedly resisted calls for an inquiry into ties between the Mafia and other crime groups, the construction industry, crooked civil servants, and political parties. But Mr. Charest informed the legislature Wednesday that he will consider a proposal by the province’s anti-collusion watchdog. That proposal from Jacques Duchesneau is for a two-phase inquiry: the first part would be held behind closed doors, where witnesses would testify about cases of corruption.

The second step – to be held in public – would hear witnesses propose solutions to the problem. Mr. Duchesneau says the inquiry should be run by three judges selected by the legislature. He says that approach is based on a common practice in Australia. [READ MORE...]

Observations on the Evolving Role of the Auditor

Center for Audit Quality — Wed, 28 Sep 2011 14:58:30 -0700

Summary of Stakeholder Discussions

The issues are complex and difficult to resolve in isolation. The "what, whys, and hows" related to changing the role of the auditor has to be considered within the context of the overall financial reporting system, including the important roles of the audit committee (which oversees a company’s financial reporting and the auditor) and company management (which has primary responsibility for financial reporting). Regulatory frameworks and oversight schemes for financial reporting and public company auditors are also key elements of that context.

The Center for Audit Quality (CAQ) and the public company auditing profession support responsible changes to the auditor’s reporting model and the role of the auditor. Accordingly, the CAQ is facilitating robust discussion on the issue by all stakeholders—including those who contribute to the financial reporting process and those who use financial reports. [READ MORE...]