Before turning to some old favorites, Brian and Tim cover some fresh new topics, including the first designations under, and tailored aims of, the new Ethiopia-related sanctions program and the Cambodia Business Advisory on High-Risk Investments and Interactions. Next, they discuss recent actions to combat Iran’s attempts to interfere in the 2020 U.S. presidential election and Russia’s latest provocations with respect to Ukraine and Europe’s energy supply. Finally, in the Lightning Round, Brian and Tim briefly consider a possible U.S. diplomatic boycott of the Beijing Olympics and the end of OFAC’s Burundi sanctions program.
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EMBARGOED! is not intended and cannot be relied on as legal advice; the content only reflects the thoughts and opinions of its hosts.
***Stay sanctions free.***
Day: December 3, 2021
Categories
What is the Kimberley Process?
The diamond trade’s Kimberley Process and the 2021 Plenary. Stop by to hear more.
Welcome to a special five-part podcast series on how to unlock the gold in your program, hosted by Tom Fox with guests Gio and Nick Gallo from ComplianceLine. One of the ongoing issues in compliance is to demonstrate the Return on Investment (ROI) in your compliance program. One way to do so is by demonstrating the extended value of compliance literally across your entire company. When overlaid with an ESG component, you can begin to see the gold in your compliance hills. In addition to showing how you can unlock the gold in your own compliance hills, Gio and Nick walk you through how demonstrate ROI for your internal budgeting process which can provide to you the financial resource to strengthen and improve your compliance program.
Join us for the full 5 episodes and learn to see your compliance program in an entirely new light. In this concluding Part 5, we consider investments strategies for the compliance professional in the short and long term.
Some of the highlights of this episode include:
· What is Beta Investment and how does volatility work into overall compliance investment strategies?
· What is volatility and how a compliance professional can harness it for a compliance investment strategy?
· How to think about your growth curve.
· Investments in compliance to drive employee engagement and lower turnover.
Resources
Gio Gallo on LinkedIn
Nick Gallo on LinkedIn
Legislation changes month to month, year to year, but over the last century, the changes have been astounding. Classroom Insiders is the exciting new podcast where Karen Woody and her students from Washington and Lee University explore the arc and evolution of insider trading law for the past 100 years.
In this pilot episode of Classroom Insiders, Karen interviews Ben Richie. Ben is currently a Student Honors Intern in the U.S. Securities and Exchange Commission. Previously, he worked as a Corporate Paralegal in the Greater New York City Area. Ben talks about the history of insider trading law, including the events that inspired its inception, and how it has evolved into what we know today.
“Insider trading laws started formulating in the late 19th century, though they looked very different to how they are now,” Ben says. Each state handled them individually, and they created a minority and majority rule. The majority rule, founded in treatise law, stated that insiders weren’t duty-bound in their private dealings with stockholders. The minority rule, developed in 1903, stated that insiders had a duty to disclose all material information to shareholders before trading on it.
Resources
Karen Woody on LinkedIn
Ben Richie on LinkedIn
Welcome to From the Editor’s Desk, a podcast where co-hosts Tom Fox and Dave Lefort, Editor in Chief at Compliance Week unpack some of the top stories which have appeared in Compliance Week over the past month, look at top compliance stories, talk some sports and generally try to solve the world’s problems.
In this month’s episode, we look back at top stories in CW from November including the final results from the CW survey ‘Inside the Mind of the CCO’. It includes a discussion of the gender gap in pay for compliance professionals, the role of compliance in ESG and the role of compliance in fighting cyber breaches. We discuss the Compliance Week 2022 Conference scheduled for May in DC and upcoming CW event on best practices to prevent a ransomware attack. We conclude with a look at some of the top sports stories including the MLB lock out by management, Michigan beating Ohio State and the storyline of a potential Brady v. Belichick Super Bowl.
Check out the CW articles on Inside the Mind of the CCO, here, here and here.
Early register for CW 2022 Conference here.
Richard Lummis and Tom Fox continue their four-part series on leadership lessons from George Washington. We will look at lessons from Washington’s colonial and frontier period, focusing on the French and Indian War, leadership lessons from Washington’s generalship of the Continental Army, his leadership in both the Continental Congress and Constitutional Convention and we will end with leadership lessons from both terms of Washington’s presidency. In this third episode, we consider the leadership lessons demonstrated by Washington at the Continental Congress and Constitutional Convention.
Highlights of this podcast include:
- Introduction into Washington’s generalship of the Continental Army.
- Why silence and listening can be so powerful.
- Call for strong union in Constitutional Congress.
- How did Washington’s leadership in the Constitutional Convention influence the creation of the Chief Executive role?
Hanukkah comes early this year. As the Rosen household begins its annual celebration, Tom and Jay are back to look at some of the week’s top compliance and ethics stories this week in the Happy Hanukkah edition.
Stories
1. Preparing for dawn raid in the era of hybrid work? Andrew Reeves and Annie Birch in FCPA Blog.
2. When you fight corruption, it fights back. Rick Messick in GAB.
3. Why does Walmart want to keep an exec quiet about its compliance program? Dick Cassin explores in the FCPA Blog.
4. Board effectiveness survey. Paul DiNicola and Leah Malone in the Harvard Law School Forum on Corporate Governance.
5. New OECD ABC suggestions. Nicola Bonucci and Nat Edmonds in the FCPA Blog.
6. Graybeards and Youngbloods working together. Carrie Root in CCI.
7. Trust in companies ‘shockingly’ low? Lawrence Heim in PracticalESG.
8. Are senior level compliance positions becoming harder to find and fill? Matt Kelly explores in Radical Compliance.
9. Role of PwC in Tesla/JPMorgan dispute. Francine McKenna explores in The Dig (sub req’d).
10. How will tech change the work landscape in 2022? Check out this pod with Mrs. Monitor (AKA Rebecca Rosen) on Freshbrewed Tech.
Podcasts and Events
11. How can you show ROI from your internal investment in compliance? Nick and Gio Gallo join Tom Fox in the most unusual pod series, Mining the Gold in Compliance. Part 1 – ROI on Compliance. Purchase Decisions. Part 2 – Extending Compliance Value Across an Organization. Part 3 – Compliance and ESG Investments. Part 4 – Finance and Investing Models for Compliance. Part 5 – Investment Strategies for the Compliance Professional.
12. Are you exasperated? Then check, F*ing Argentina. In this podcast series co-hosts Tom Fox and Gregg Greenberg, author of F*ing Argentina explore the current American psyche of being overworked, over leveraged, overtired and overwhelmed. Find out about modern America’s exasperation with well…exasperation. In Episode 11, a birthday party battle through text messages.
13. In November on The Compliance Life, I visited with Wendy Badger, CCO at Tennant. In Part 1, she detailed her academic career and early professional life. In Part 2, changing ladders to advance your career. In Part 3, Wendy moved into the CCO Chair. In Part 4, Wendy talked about having courage in your career choices and compliance into the future. Next week, we begin the December series with Matt Silverman, Director of Trade Compliance at VIAVI.
14. The Compliance Podcast Network welcomes Professor Karen Woody and her new podcast, Once Upon a Trading Law: The History of Insider Trading. In this most unique pod, Karen interviews some of her student to tell the history of insider trading. Check out Episode 1, which looks at the beginnings of insider trading.
15. Join Tom, Mike Volkov, Carrie Penman, Dr. Pat Harned and Skip Lowney (an all-star panel if there ever was one) for the ECI webinar on the intersection of compliance and E&C programs. Wednesday, December 15, from 2-3:30 ET. Registration and information here.
Tom Fox is the Voice of Compliance and can be reached at tfox@tfoxlaw.com. Jay Rosen is Mr. Monitor and can be reached at jrosen@affiliatedmonitors.com.
Welcome to the final entry in our special five-part blog post series on how to unlock the gold in your program. I have visited with Gio Gallo and Nick Gallo, Co-CEO’s of ComplianceLine, LLC, the series sponsor. In this concluding Part 5, we consider investment strategies for the compliance professional.
We began with the basic concept in investing that the greater the risk, properly managed, the greater the potential return. From there, we turned to how would an investor type, whether it be a Private Equity (PE), Venture Capitalist (VC) or others, think through managing risk. What sort of models would they use? How could those models assist compliance professionals to manage risk? With proper risk management, this can create a huge return on your compliance investment.
Nick explained this is the relationship between risk and return and not the just existence of whether there is a risk at all. He stated, “The amount of risk that someone is willing to take on is generally tied to the return that they expect or the return that they think is possible.” For the compliance professionals this is “trying to give some new colors to paint with new words”. It allows you to speak finance language a little bit more. Finally, for someone with a legal training (like myself) he added, “even if you don’t actually understand all these concepts, at least appear to understand them, high enough level to be talking across the table.” It really boils down to a question of risk and return.
We considered the two big categories of investments in the alternative space (i.e., non-public and non-banking). The first is private equity investing and second is venture capital investing. A typical private equity investor is going to try to make a bunch of bets. They are going to try to have a positive return on virtually all of those bets, the standard deviation, the volatility or the range of outcomes are going to be particular and are going to be relatively more dialed in around what the upside is. This allows them to protect their downside by buying good businesses that are probably proven to some level. While there obviously is downside, hopefully there will be protection. Another way to look at is they are going to be running a bunch of different plays on those investments or on that portfolio so there is relatively a high confidence interval on a dialed in investment outcome with the possibility for some big pops.
On the other side of the fence, is venture capital investing, which tends to have a much wider standard deviation of return. Here investors take on companies at an earlier stage. Gio said, “Maybe they are not proven yet. Maybe they are not cashflow positive. Maybe they have not even found their legs or their market.” Here maybe one out of 10 investments pan out, although of course, if you hit big it can be a home run or even a grand slam.
Both of these examples are important because they demonstrate the lens through which a finance professional will look at a potential compliance program investment. There is actually a wide range of how a finance person is going to think about risk. It is not simply “is there a risk or not? Because the answer is there’s always risk.” Even if you can find the safest investment there is always some risk present.
The final concept to overlay on top of this is beta, which Nick explained “is essentially the extent to which a particular investment moves with the broader market. You can use this as a concept to talk about an investment in your ethics and compliance space, or we can boil it down to talk about the stability of an investment relative to the market. And some things will have a positive beta or a negative beta or a high beta or a low beta or whatever, but the market goes up 5% and your investment goes up 5% with it. The market goes down 5% and it goes down 5% with it has a beta of one. If the market goes up 5% and your investment goes up 10% and it goes down 5% and then the investment goes down 10%, it is more volatile and it’s swinging more violently with market moves and has a beta of, in this case, two.”
This allows a compliance profession to think about broad compliance investments in a similar framework. Your compliance investment may have “a beta of zero. This could generate positive returns for your bottom line, irrespective of what our business does. Whether our business is going up or it’s going down, these investments that we, as an ethics compliance department, want to make are going to reinforce our culture and you are going to drop dollars to our bottom line, irrespective of what’s happening with the top line.”
You can take that same concept further by positing a negative beta or a zero-beta investment. It is important to remember that when you speak to a finance professional you are “not just a risk person, you are speaking to a risk and return person.” This means they will understand that a compliance investment will perform particularly well in a down market. Nick concluded, “if you are making ethics and compliance investments or taking steps within your program or getting budget released to actualize your program, that actually releases the magic in the workforce by driving higher employee engagement and lowering turnover.” These are two areas that directly impact the bottom line regardless of what might be happening at the top line of the organization, “regardless of what headwinds the organization might be approaching or hitting.”
These concepts were all obviously new to me, but the Brothers Gallo are really on to something here. By using these approaches to talk to finance professional in their terms and approaching your budget from the finance perspective, you have a real opportunity to garner budget dollars to invest in your compliance program. By using the strategies of compounding and extending out the value of compliance throughout the organization, you can then demonstrate the return on that investment.
Check out the full podcast series this blog post series is based upon.
Episode 1
Episode 2
Episode 3
Episode 4
Episode 5
