SEC Charges Top Hedge Fund Manager with Insider Trading

A veteran billionaire hedge fund manager and his top-ranked hedge fund have been charged by the Securities and Exchange Commission (SEC) with serious insider trading charges.

Hedge Fund Manager Insider Trading

Insider Information about a Pipeline Company Led to SEC Charges

The allegations stem from a 2010 purchase of shares in a pipeline company that the fund allegedly bought only after receiving information that the struggling company was about to sell its natural gas processing facility. The filing of charges by the SEC is not proof of wrongdoing, and the hedge fund manager vehemently denies the charges. Nevertheless, the filing is bound to adversely affect the multibillion dollar fund.

Continue reading

Safer Swaps

Safer Swaps

New SEC Guidelines Regulate Security-Based Swaps

SWAPS, those sophisticated types of derivatives in which two parties agree to exchange (or “swap”) cash flows of their respective financial instruments, have been the subject of regulators’ rule-making talk for at least the past six years.

As a significant “point of blame” for the Great Recession of 2008, the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated that the Securities and Exchange Commission (SEC) enact rules and regulations for the trading of these problem-child derivatives. Last month, the SEC announced new guidelines to regulate security-based swaps.

Continue reading

Dark Pools Continue to Make a Big Splash

dark pools HFTs, dark pools liquidity

Dark Pools are Essentially Unregulated

Imagine a private country club of trading platforms where huge block trades are conducted every nano-second, yet they operate outside the main exchanges and are essentially unregulated. That basically describes “dark pools”—trading venues where the price and volume of all orders are hidden from public scrutiny. Sounds unfair? Financial regulators periodically issue statements calling for greater oversight of dark pools, but so far they seem to operate with impunity. Will dark pools continue to make a big splash?

Continue reading

TRID—One Year On

 TRID, Truth-In-Lending, TILA,

TRID Gives Truth-in-Lending to Mortgage Borrowers

Next month will mark the first anniversary of TRID—the TILA-RESPA Integrated Disclosure. The acronym is certainly welcome as opposed to saying “Truth-In-Lending Act—Real Estate Settlement Practices Act” each time we need the document. But how is the new, integrated disclosure of closing costs faring in the real world of real estate compliance? Practitioners largely favor the change, but already there are calls for revisions.

Continue reading

Know Your KPIs

Collect KPI's That are Most Relevant to Your Business

Collect KPI’s That are Most Relevant to Your Business

Key Performance Indicators (KPIs) are those masses of data that everyone from your IT department to your chief compliance officer to your outside consultant collects in order to be in a position to report on the health of your business, to advise and predict how you can do better, and perhaps most important of all, to gauge how much risk your company can afford to take. But sometimes, the data collected are so much more than is manageable by readers that the reports go unread, the data end up being unused, and the health of the company is not evaluated until a crisis arises and answers—which were in front of the managers and stakeholders all along—are demanded. But which KPIs are most relevant to your business? Let us examine a few of the possibilities.

Continue reading

G20: Preparing for the Asian Century

G20, Hangzhou, the Asian Century, Compliance, BRICS Bloc, Xi Jinping

The Next Economic Powerhouse will be Asia

The nineteenth century was Britain’s time to dominate the world economically and politically, and the twentieth century was dubbed “The American Century.” That leaves us wondering: which nation will outshine the others in the twenty-first century. For over a decade, economic and political talking heads have predicted that world dominance in the twenty-first century will be achieved not by a single nation, but rather by a geopolitical region, namely, Asia. Depending upon which source you rely on, China has outpaced the United States and Europe to be crowned the world’s number one fastest growing economy—according to the World Bank—while India holds the number one spot according to World Economic Forum figures. Either way, between the two of them, the next economic powerhouse will be Asia, and the ramifications for companies doing business there and differences in notions of regulatory compliance are not insignificant.

Continue reading

A Compliance Failure That’s Hard to Swallow

A Compliance Failure Led to Flint's Use of Corroded Water Pipes

A Compliance Failure Led to Flint’s Use of Corroded Water Pipes

Quick! Name one hundred things your chief compliance officer needs to be mindful of. Did you name currency trades? Oil and gas drilling? Disposal of industrial waste? Fair employment laws? Foreign corrupt practices? Consumer lending? And, water? Forgot about that last one? Apparently, so did compliance officials in Flint, Michigan. The long-term water contamination crisis that was finally acknowledged by government officials last fall underscores the fact that regulatory compliance is not just the purview of private industry. And, regulatory failures don’t just cause financial damage—they can also cause environmental and health catastrophes.

Continue reading

Whatever Happened to the Volcker Rule?

Will the Volcker Rule force banks to divest their savings from certain funds?

Can the Volcker Rule force banks to divest their savings from certain funds?

An important provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is section 619, commonly referred to as the Volcker rule. Following the financial crisis of 2008, industry experts determined that a significant contributing factor of the great recession was the practice of unreasonable risk-taking by big financial institutions. In order to curb such risk, the Volcker rule, by which banking institutions were required to divest ownership in certain investment funds, was implemented. However, after industry leaders warned of a new financial crisis should they be required to suddenly make such divestiture—and filed a lawsuit to underscore their opposition to the tight divestment timeline—the Federal Reserve extended parts of the Volcker rule’s implementation to July 2015. Now, the Federal Reserve has announced a new “final” date for enforcing the rest of the rule.

Continue reading

New York Fines Taiwan-Based Bank

Ignoring Anti-Money  Laundering Laws Cost This Bank $180 Million

Ignoring Anti-Money Laundering Laws Is Costly

New York’s Department of Financial Services (DFS) has imposed a whopping $180 million fine on a Taiwan-based bank because of alleged violations of New York’s strict anti-money laundering (AML) laws. Although the fine may be a drop in the bucket for the $103 billion institution, the AML deficiencies included a practically nonexistent AML compliance program and an attitude characterized as a “flagrant disregard” of AML laws. The serious flaws came to light in the course of DFS’ investigations into the recent Panama offshore banking scandal uncovered as a result of the Mossack Fonseca law firm leaks.

Continue reading

Pool Operators Ordered to Pay $10 Million in Fraud Case

CFTC Penalties for Defrauding Investors in Commodity Pool Scam

Defrauding Investors in Commodity Pool Scam Led to CFTC Penalties

A South Carolina couple has been ordered to pay restitution and penalties totaling over $10 million because of alleged fraud in the operation of a commodity pool investment scheme. The Commodity Futures Trading Commission (CFTC) announced that a summary judgment order has been entered by a district court judge against the husband and wife pool operators after they were charged with misappropriation of commodity pool participant funds and failure to register as commodity pool operators. Various other charges were brought against them, and in addition, the husband has been indicted on criminal charges.

Continue reading