Day: October 2, 2019

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12 O’Clock High-a podcast on business leadership

Leadership Lessons from the Dutch Tulip Bubble of 1636-1637

In this special four-part podcast series, Richard Lummis and myself consider business leadership from a different angle, that of great economic disaster. This podcast series was inspired by the Great Courses series of lectures entitled, Crashes and Crisis: Lessons form a History of Financial Disasters, hosted by Professor Connel Fullenkamp. In this podcast series, we will consider the Dutch Tulip Bubble from the 1630s, the South Sea Bubble of 1720, the Mississippi Bubble of 1720 and the 1907 Panic. Today we begin with the Dutch Tulip Bubble.
Tulips had been imported into what became the United Provinces of Holland in the late 1500s from Turkey. They became quite fashionable with the smart set at the time (i.e. royalty and the aristocracy) and by the early 1630s prices in Holland were already quite high. Then two things happened to create the bubble of 1634-1637. First the small group of tightly knit Dutch traders who bought and sold tulips were overrun by speculators.
Second and perhaps more significantly, a type of formal futures market was created where contracts to buy bulbs at the end of the season were bought and sold, beginning in mid-1636. But this market was sanctioned or regulated as their trades were not made on formal Dutch exchanges. Different groups of traders began to meet together in taverns where they did not have to put much money down and the contracts were not legally enforceable. This significantly lessened any downside in not getting carried away in bidding.
Traders were required only to pay a 2.5% “wine money” fee, up to a maximum of three guilders per trade. Neither party paid an initial margin, nor a mark-to-market margin, and all contracts were with the individual counterparties rather than with the Exchange. The entire business was accomplished on the margins of Dutch economic life, not in the Exchange itself.
Categories
Across the Board

Mike Volkov on the Business Roundtable’s Statement on the Purpose of a Corporation

In this episode of Across the Board, I visit with Mike Volkov, founder and CEO of the Volkov Law Group. We take a deep dive into the Business Roundtable’s Statement on the Purpose of a Corporation and consider the Board’s role in moving towards the goals articulated in the Statement.
In August, the Business Roundtable announced the release of the Statement on the Purpose of a Corporation (The Statement). The new Statement was signed by 181 Chief Executive Officers (CEOs) who committed to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders. In full, it stated:
Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all. 
Businesses play a vital role in the economy by creating jobs, fostering innovation and providing essential goods and services. Businesses make and sell consumer products; manufacture equipment and vehicles; support the national defense; grow and produce food; provide health care; generate and deliver energy; and offer financial, communications and other services that underpin economic growth.
 While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders. We commit to: 

  • Delivering value to our customers. We will further the tradition of American companies leading the way in meeting or exceeding customer expectations.
  • Investing in our employees. This starts with compensating them fairly and providing important benefits. It also includes supporting them through training and education that help develop new skills for a rapidly changing world. We foster diversity and inclusion, dignity and respect.
  • Dealing fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions.
  • Supporting the communities in which we work. We respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.
  • Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

 Each of our stakeholders is essential. We commit to deliver value to all of them, for the future success of our companies, our communities and our country.
Resources
Mike Volkov’s 3-Part Blog post series on the Statement of the Purpose of a Corporation. Part 1, Part 2, Part 3
Tom Fox’s blog post on the Business Roundtable’s Statement on the Purpose of a Corporation, click here.

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Innovation in Compliance

Innovation in Compliance: Compliance in Finance 3 – Control


What does control mean when we’re talking about compliance in finance? And how do you maintain it? That’s what Tom Fox and Philip Fry are talking about in this third installment of the 5-part Compliance and Podcast series on Innovation in Compliance. In this context, control means the tools and strategies we employ to prevent non-compliant actions from taking place or being alerted to them when they do.
Listen to the episode:

Phil mentions that if at all possible it’s better to prevent non-compliance than find it after the fact – but that isn’t always a reality. He shares some examples of the different tools and strategies available to help manage the difficulties of controlling information capture, like taking a cohesive approach to validating the collection and quality of interaction data. What can be very time and resource-intensive when done manually, can be done quickly and accurately via automation.
Tom asks Phil to apply this kind of automation capability to organizations that have a variety of different communications systems in play, and Phil talks about the importance of having open standards and taking an open approach to developing solutions that help various systems co-exist.
Another way to build better control is by staying on top of changes within the workforce, and making sure that your roster of what needs to be monitored when is kept up to date. By being flexible, but strategically using the tools available, you can have greater control overall.
In tomorrow’s episode of this 5-part series, Phil and Tom will be getting into the important issue of sustainability – and what it means in the context of compliance in finance.
Resources
Philip Fry
Verint

Categories
Compliance Into the Weeds

Quad/Graphics FCPA Enforcement Action

Compliance into the Weeds is the only weekly podcast which takes a deep dive into a compliance related topic, literally going into the weeds to more fully explore a subject. Today we have a special live and in person podcast recording from Converge19. In this episode, Matt Kelly and I go into the weeds to explore the recent SEC enforcement action against Quad/Graphics and its Peruvian subsidiary. Matt comes in smoking on the egregious conduct of the company and the lack of criminal sanctions against the company.
Some of the highlights include:

  • How did the company garner credit for prompt disclosure when it knew about the conduct for 3 years?
  • Why have there been no criminal indictments against individuals?
  • How many sham vendors, invoices and payments does a company need to take notice?
  • Where was compliance?
  • Why is it the sham-ness of it all?

For additional reading see the following:
Matt’s blog post, Graphics Firm Draws $10 FCPA Settlement, on Radical Compliance.
Tom’s blog post, Quad/Graphics-the Sham-ness of it all, on the FCPA Compliance Report.