Dogging the EU Tax Dodgers

profit shifting, European Commission, EC, tax avoidance, multinationals, profit shifting

New Regulations Might Put an End to Profit Shifting

In 2011, the European Commission proposed new regulations to close continental tax loopholes under which multinationals were able to save millions of dollars in taxes simply by re-allocating revenues and expenses to the country with the most favorable tax regime circumstances for that quarter or that year.

Put another way, corporate multinationals were engaging in tax avoidance—all a matter of semantics, you might say. But after five years of haggling over the specifics, the EC seems to have finally reached a consensus among member states on a new European-wide tax code. It’s still in the proposal stage, but the likelihood of passage makes it prudent for corporate governance officials to gear up for the changes.

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“No Risk” FINTECH Compliance

FINTECH, Consumer Financial Protection Bureau, CFPB, Project Catalyst, bad actors, no action letters

Now, FINTECH can develop products without fear of non-compliance

As the twenty-first century continues to celebrate its “Sweet Sixteen” year, one of the presents being unwrapped is FINTECH—that catch-all of financial technology that is designed to “rebel” against traditional financial services providers and open up a whole new array of ways to access, invest, and play with money. But while the start-ups that dominate this millennial scene sometimes think they can just take the car keys and roar off, financial regulators have taken a more parental view of the whole thing and have cautioned the young drivers to go slowly. Now, a compromise has been reached whereby FINTECH can engage in adolescent experimentation—without the risk of getting grounded.

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Employee? Or Independent Contractor?

Employers need to check their compliance with labor laws when labeling independent contractors

Not Every Worker Can be Termed an Independent Contractor

Classifying actual employees as independent contractors has long been a human resources tactic to hold down a company’s expenses related to payroll taxes, unemployment insurance, overtime pay, worker’s compensation, and various employee-benefits packages. But as recent cases have demonstrated, the judicial system is increasingly taking a dim view of employers who misclassify their employees as independent contractors, and the compliance risk for the employer may no longer be worth it.

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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.

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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.

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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.

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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.

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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.

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The Cost of “Sox” 2016

"Sox" Reporting Requirements are Costly, but also Benefit Organizations

“Sox” Reporting Requirements are Costly, But Good for Organizations

In July 2002, Congress passed the Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act (in the Senate) and the Corporate and Auditing Accountability and Responsibility Act (in the House), but commonly dubbed “SOX” for short. The legislation came on the heels of highly publicized corporate and accounting scandals—among them the Enron and WorldCom scandals—in which unholy unions were found to exist between corporate executives who committed less than forthright public disclosures and even outright fraud and the big CPA firms that aided, abetted, and shielded them.

The complex web of overstating assets, understating expenses, and misdirecting funds among a myriad of corporate subsidiaries and affiliates had become so sophisticated that even armies of government regulators were caught off guard—until the various houses of corporate cards collapsed. But the presumption that compliance with SOX would be straightforward and even a boon to corporate auditors has proven to be a questionable proposition.

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18 Months Till IASB Deadline—Are You Prepared?

Meeting the New Standard IFRS 9 is Stressing Institutions

Meeting the New Standard IFRS 9 is Stressing Institutions

Ever wonder what keeps all financial institutions around the globe—and the accounting for their sundry financial instruments—operating according to the same reporting standard? The London-based International Accounting Standards Board (IASB) founded in 2001 comprises fourteen board members from around the globe and sets International Financial Reporting Standards (IFRS) intended to bring “transparency, accountability and efficiency to financial markets around the world,” according to the IASB website (

A prime goal of the independent public interest organization is to establish governance and due process regimes designed to keep global financial accounting standards free of special interest influence. Two years ago, it formulated an IFRS rule to address an irony of the 2008 global financial depression: while banking institutions worldwide might have had prior notice of pending problematic balance sheets, according to the accounting rules then in existence, only actual losses already suffered could be accounted for. IFRS 9 intends to change that.

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