Friday 29th May 2015
NEWS TICKER: THURSDAY, MAY 28TH: A deal struck by MEPs and Council of Ministers negotiators in the small hours of Thursday morning means the architecture of the Juncker plan to unlock €315bn public and private investments in the real economy in 2015-2017 can now be put to a European Parliament vote on June 24th and the investment programme can kick off in the summer. Parliament’s negotiators scaled back cuts in the EU’s “Horizon2020” research and innovation programme and Connecting Europe Facility (CEF – to link up Europe’s energy, transport and digital networks). They also ensured that the plan creates a stable financing mechanism to bridge the investment gap in Europe, by clarifying the investment guarantee fund’s governance structure and making it more accountable to representatives of EU citizens – Jamyra Gallmon, accused of stabbing DLA Piper associate David Messerschmitt to death in a robbery gone wrong, pleaded guilty to murder today in Washington, DC court, after reaching a plea deal with prosecutors - – European banking and financial market associations have been rushing to comment on Tuesday night’s vote in the European Parliament’s Economic and Monetary Affairs Committee (ECON), which was rejected by 30 votes to 29, claiming they remain deeply concerned over the EU Banking Structural Reform proposal (BSR) that seeks to break up the largest European banks. The outcome of the ECON vote shows that there is no consensus on what is right for big universal banks in Europe. Policy makers suggest that the BSR proposal could lead to a loss in European investment capacity equal to 5%, representing a decline of almost €100bn in capital expenditure on the long term; however there does not seem to be any consolidated document that might form the basis of consistent debate as a European Parliament spokesperson confirms that the original proposal has had so many amendments that it scarcely reflects the original thinking behind the document. Given that the vote is defeated, the EP will not consider re-opening the debate until June 11th this year, when the Parliament will decide on the requirements for either further amendments or complete redrafting, or even abandonment of the proposal - )-- Murex, the leading provider of integrated trading, risk management and processing solutions, says UniCredit, which has the largest presence of banks in Central and Eastern Europe, has gone live on Murex' MX.3 for UniCredit Bank Austria and eight other Central Eastern Europe banks - The interim financial report of Gefinor S.A. (ISIN LU 0010016714) for the period ended March 31st is available on the company website at www.gefinor.com from May 28th (today) - The Securities and Exchange Commission today announced that the next meeting of its Advisory Committee on Small and Emerging Companies will focus on public company disclosure effectiveness, intrastate crowdfunding, venture exchanges, and treatment of finders.“The agenda reflects the important scope of the advisory committee’s mandate,” says SEC Chair Mary Jo White. “Topics I am particularly interested in are the advisory committee’s views on disclosure effectiveness and initiatives that will inform our capital formation efforts.” At its upcoming meeting on June 3rd, the advisory committee also is expected to vote on a recommendation to the Commission regarding the “Section 4(a)(1½) exemption” sometimes used by shareholders to resell privately issued securities. This topic was initially discussed at the committee’s March 4 meeting.The meeting will be held at the SEC’s headquarters at 100 F Street, NE, Washington, DC, and is open to the public. It also will be webcast live on the SEC’s website, www.sec.gov, and will be archived on the website for later viewing.

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Regulatory Update

Protect Your Firm... And Your Personal Assets!

Monday, 30 July 2012 Written by 
Protect Your Firm... And Your Personal Assets! Hoping for a respite from regulatory change?  Think again.  Gathering forces may create a regulatory storm that is even more difficult than the one faced in the 2007-2009 financial crisis.  In this tempest, both the regulated and the regulators will have bull’s-eyes on their backs.  Regulators are likely to become more conservative in their analysis and more active.  It is therefore imperative to assess your firm now and prepare yourself to withstand regulatory inquiries.  You can also expect more scrutiny from investors who will seek to allocate funds only to those firms that they believe are fully complying with applicable laws and regulations. http://www.ftseglobalmarkets.com/

Hoping for a respite from regulatory change?  Think again.  Gathering forces may create a regulatory storm that is even more difficult than the one faced in the 2007-2009 financial crisis.  In this tempest, both the regulated and the regulators will have bull’s-eyes on their backs.  Regulators are likely to become more conservative in their analysis and more active.  It is therefore imperative to assess your firm now and prepare yourself to withstand regulatory inquiries.  You can also expect more scrutiny from investors who will seek to allocate funds only to those firms that they believe are fully complying with applicable laws and regulations.

What fuels this gathering storm?  Outright major misappropriations by the likes of Madoff and Peregrine's Wasendorf are part of the equation.  In addition, events such as the LIBOR-fixing scandal at Barclays, J.P. Morgan’s “London Whale” trading losses, and MF Global’s failure to segregate customer funds serve as cautionary examples.

These stories highlight that a firm’s assets, reputation, and in some cases, even the firm’s fundamental viability are at stake when things go awry.  As if that weren’t bad enough, senior executives face additional consequences.  In these and other similar incidents, personal assets can be at stake even when others are the primary wrongdoers.  



Think you are immune from these risks?  Think again.  Labaton Sucharow LLP, a plaintiff's law firm, recently published a unsettling study indicating that one in four financial industry professionals in the U.S. and U.K. believe wrongdoing is necessary for success.  If this study is credible, the message it sends to the general public is highly negative.  It speaks to senior management of alternative investment firms loud and clear: sometimes the best-intentioned executive may have an employee who hears an "unintended message" and veers off course.  Intended or not, the executive may ultimately bear responsibility. 

The first line of defense for an investment advisory firm and its executives is to build a culture in which the firm’s standards clearly and consistently meet all applicable regulatory and ethical expectations.  It is particularly important for firm leaders to reaffirm these standards and expectations during times of economic and operational stress, when legal and internal requirements may appear to conflict with business drivers (such as maximizing short-term results).  Employees must internalize that senior management will take the ethical route in order to maximize the long-term value of the firm—and expects them to do the same.

The second line of defense, at least in the U.S., is to develop a governance structure that satisfies the requirements specified in the U.S. Attorneys’ Manual.  This manual offers incentives to companies that adopt a comprehensive compliance and ethics program (and take certain actions upon the occurrence of alleged missteps).  A program that satisfies these requirements will contain elements in addition to those required by the SEC and CFTC.  Complying with the U.S. Attorneys’ Manual can be an invaluable safeguard that reduces the likelihood of an executive or his firm being charged with criminal violations.

The third line of defense is to undertake an honest self-assessment, and to consider the types of pressures that senior management and employees will encounter should the weakened state of the global economy continue.  Topics in the regulatory spotlight should be included in this assessment.  The intent here is to prepare for the possible pressures employees and senior management might face, thereby reducing the chance that hasty decisions are made in the heat of the moment. Ill-considered actions can carry serious penalties and act as a lightning rod for litigation by regulators, investors, and other third parties (such as credit providers).  Advance preparation will help your staff make faster and better decisions if the need should arise. 

You can't always remove that bull’s-eye on your back, but you can at least make the target less bright.

Deborah Prutzman

Deborah Prutzman is the founder and CEO of The Regulatory Fundamentals Group (RFG), a New York-based firm that designs and implements business and risk solutions for alternative asset managers and institutional investors. RFG's senior-led team employs a robust suite of tools, including practical alerts on new and potential industry developments and its powerful RFG Pathfinder® knowledge management platform which simplifies the challenges of operating in a regulated environment.  To learn more about The Regulatory Fundamentals Group call (212) 537-4058, email a representative at Information@RegFG.com or visit RegFG.com

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