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Daily Compliance News

March 31, 2023 – The Binance CCO Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition of Daily Compliance News:

· Binance CCO at the center of SEC charges. (WSJ)

· Ecuador President to face corruption charges. (FT)

· Tokyo Olympic corruption scandal is still causing Japan headaches. (NYT)

· West can help Ukraine rein in corruption. (Reuters)

Categories
Daily Compliance News

March 28, 2023 – The Textbook Edition

Welcome to the Daily Compliance News. Each day, Tom Fox, the Voice of Compliance, brings you compliance-related stories to start your day. Sit back, enjoy a cup of morning coffee, and listen to the Daily Compliance News. All from the Compliance Podcast Network. Each day we consider four stories from the business world, compliance, ethics, risk management, leadership, or general interest for the compliance professional.

Stories we are following in today’s edition of Daily Compliance News:

·       Venezuela cracks down on corruption. (Reuters)

·       CFTC sues Binance.  (Reuters)

·       Fed says SVB case of ‘textbook mismanagement.’ (NYT)

·       Pissed off from pay transparency. (FT)

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2 Gurus Talk Compliance

2 Gurus Talk Compliance – Episode 1

What happens when two top compliance commentators get together? They talk compliance, of course. Join Kristy Grant-Hart and Tom Fox for their new podcast, 2 Gurus Talk Compliance! But it is not simply Kristy and Tom talking about compliance. In this podcast series, Kristy and Tom also review other top commentators in compliance. In this podcast, we will consider all things compliance, corporate ethics, ESG, governance, and whatever else is on our minds and the minds of other experts in the field. Kristy and Tom explore all of these topics with expertise and wit.

In this inaugural episode, they discuss the latest compliance trends and news, including two Supreme Court cases that have implications for the compliance profession. They also cover the Department of Justice and whistleblower trends, taking a look at Miranda and Upjohn’s warnings and increasing numbers of whistleblower reports to the SEC. They also dive into an article from the Harvard Law School Forum on corporate governance and discuss the Illinois Biometric law. Join the conversation and discover the latest on compliance and regulations with 2 Gurus Talk Compliance.

Highlights Include

The Role of In-House Attorneys in Communication Between Outside Counsel and Businesses [00:05:17]

Supreme Court Decision on the Future of the CFPB [00:09:11]

Impact of the Colorado Draft Regulation on Artificial Intelligence Compliance Programs [00:13:23]

The Benefits of Automated Data Deletion [00:17:23]

A Miranda component to corporate Upjohn Warnings [00:21:25]

The Obligation of Society to Address Climate Change [00:25:33]

The Benefits of Self-Disclosure in the DOJ Justice System [00:29:18]

The Role of the Board in Overseeing Third Parties in High-Risk Countries [00:33:14]

The Impact of Whistleblowers on the SEC [00:40:54]

White Castle’s Violation of Illinois Biometric Law [00:45:05]

Notable Quotes

  1. The DOJ is urging a federal judge to sanction Google’s parent, Alphabet, for its practice of setting employee chats to auto delete despite promising to preserve records.”
  2. “It goes beyond the specifics of this law, something you and I have talked about for several years now, that the compliance function and the CCO is well perhaps the most well-suited corporate discipline to deal with these new initiatives because it’s the basic framework of compliance that you and I have worked with for 15 years.”
  3. “Most compliance programs just don’t have good frameworks for things like AI or for big data even though we’ve been using that word for a long time.”

Resources

  1. Boards and 3rd Party Risk Oversight
  2. CO Draft AI Rules for Insurance
  3. Miranda Warnings in Corp Investigation
  4. Current whistleblowing landscape
  5. Has the stature of the CCO changed? 
  6. Analysis of the DOJ’s update to the self-disclosure program
  7. Supreme Court considering defunding the CFTC
  8. Trends in state privacy law   
  9. Litigation holds and records retention/Google/DOJ  
  10. Individuals charged – first enforcement action 2023 

Connect with Kristy Grant-Hart on LinkedIn

Spark Consulting

Connect with Tom Fox on Linkedin

Categories
Daily Compliance News

October 17, 2022 the More Corruption in Soccer Edition

In today’s edition of Daily Compliance News:

  • The new head of the Fraud Section speaks to Law.com. (law.com)
  • Gensler backs CFTC’s authority over Stablecoin. (Reuters)
  • More Corruption in soccer. (ESPN)
  • Is Peter Thiel becoming Maltese? (NYT)
Categories
Daily Compliance News

August 8, 2022 the Morgan Stanley Settles edition

In today’s edition of Daily Compliance News:

  • Ex-PR gov arrested on corruption charges. (Bloomberg)
  • Morgan Stanley settles FTC, CFTC enforcement actions. (Reuters)
  • Top 10 least corrupt countries in Africa. (Business Insider)
  • OBG’s avoided forced birth states. (WaPo)
Categories
Daily Compliance News

June 13, 2022 the Wells Fargo Under Investigation (Again) Edition


In today’s edition of Daily Compliance News:

  • Senate bill to have CFTC regulate crypto. (WaPo)
  • Wells Fargo is under criminal investigation for fraudulent interviews. (NYT)
  • SEC begins an investigation into Goldman Sachs over ESG reporting. (WSJ)
  • Finance teams prepare for new ESG regs. (WSJ)
Categories
Everything Compliance

Episode 101, the Glencore Edition


Welcome to the only roundtable podcast in compliance as we celebrate our second century of shows. In 2021, Everything Compliance was honored by W3 as a top talk show in podcasting. In this episode, we have the quintet of Jonathan Marks, Karen Woody, Jonathan Armstrong, Tom Fox and Matt Kelly. In this episode, we take up the Glencore FCPA settlement. We conclude with our fan favorite Shout Outs and Rants.

1. Karen Woody takes a deep dive into the history of Glencore, from its founding by Marc Rich in the 1980s through the allegations of bribery, corruption and market manipulation which led to the FCPA and CFTC settlements.  Woody shouts out the US National and state parks systems which provide much needed green spaces for Americans.

2. Matt Kelly takes a deep dive into CCO certification issue and what it might mean for individual CCO criminal liability going forward.  Kelly has a dual shout out and rant. He shouts out to the Boston Celtics for having the greatest NBA Finals-Game 1 comeback to win the game. He rants about the DOJ failing to post the speech by AAG Kenneth Polite where he announced the new requirement for CCO certification.

3. Jonathan Marks explores the role of internal audit in contributing to the compliance failures and what IA can do to facilitate a culture change at the company. Marks also has a dual shout out and rant. He shouts out to the Philadelphia Phillies for firing manager Joe Girardi and rants about Glencore’s Press Release about their updated compliance which he rants “says nothing”.

4. Tom Fox considers the dual monitor aspect of the resolution and the requirements of the monitorships. Fox reads out the names of the students and teachers who were killed in the recent massacre in Uvalde,  TX.

5. Jonathan Armstrong explores the settlement from the UK perspective and considers, what if any charges against individuals that the UK-Serious Fraud Office might bring. Armstrong shouts out to the Queen’s Platinum Jubilee and Sir Andy Murray for speaking out against the murder of school children. Murray is a survivor of a similar event in Scotland.

The members of the Everything Compliance are:
•       Jay Rosen– Jay is Vice President, Business Development Corporate Monitoring at Affiliated Monitors. Rosen can be reached at JRosen@affiliatedmonitors.com
•       Karen Woody – One of the top academic experts on the SEC. Woody can be reached at kwoody@wlu.edu
•       Matt Kelly – Founder and CEO of Radical Compliance. Kelly can be reached at mkelly@radicalcompliance.com
•       Jonathan Armstrong –is our UK colleague, who is an experienced data privacy/data protection lawyer with Cordery in London. Armstrong can be reached at jonathan.armstrong@corderycompliance.com
•       Jonathan Marks is Partner, Firm Practice Leader – Global Forensic, Compliance & Integrity Services at Baker Tilly. Marks can be reached at jonathan.marks@bakertilly.com

The host and producer, ranter (and sometime panelist) of Everything Compliance is Tom Fox the Voice of Compliance. He can be reached at tfox@tfoxlaw.com. Everything Compliance is a part of the Compliance Podcast Network.

Categories
Daily Compliance News

June 3, 2022 the Clean Up Your Culture Edition


In today’s edition of Daily Compliance News:

  • Gemini crypto exchange sued by CFTC. (WSJ)
  • Senator tells Wells Fargo to fix its culture. (WSJ)
  • Corruption in emerging markets. (HBR)
  • House to investigate Saudi investment in Kushner firm. (NYT)
Categories
Blog

Glencore Resolution: Part III – The Commodity Price Manipulation Case

Last week, the Attorney General and a host of other Department of Justice (DOJ) officials announced the settlement of a massive Foreign Corrupt Practices Act (FCPA) and market manipulation case against Glencore plc (Glencore). Over the next several blog posts, I will be reviewing the matter and mining it for lessons learned for the compliance community. Today, in Part III, we take a detour into the Commodity Price Manipulation Case and see how this matter should be studied by compliance professional.
In this case separate and apart from the FCPA enforcement action, Glencore admitted to a muti-year scheme to manipulate fuel oil prices at two of the busiest commercial shipping ports in the United States. Under the terms of the Commodities Future Trading Commission (CFTC) resolution, the company will pay a criminal fine of $341,221,682 and criminal forfeiture of $144,417,203. Under the terms of the Plea Agreement, the DOJ will credit over $242 million in payments that the company makes to the CFTC.
According to the CFTC Press Release, Glencore’s manipulative and fraudulent conduct—including conduct relating to foreign corruption—defrauded its counterparties, harmed other market participants, and undermined the integrity of the US and global physical and derivatives oil markets. Platts physical oil benchmarks, including those that were the subject of Glencore’s manipulative conduct, serve as price benchmarks for end-users and market participants, and are incorporated as reference prices for the settlement of numerous derivatives. (For a copy of the CFTC Order, see link in the CFTC Press Release.)
According to the CFTC Order, Glencore had a global commodity trading business, which included trading in fuel oil. Between approximately January 2011 and August 2019, Glencore conspired to manipulate two benchmark price assessments published by S&P Global Platts (Platts) for fuel oil products, specifically intermediate fuel oil 380 CST at the Port of Los Angeles (Los Angeles Fuel) and RMG 380 fuel oil at the Port of Houston (US Gulf Coast Fuel Oil). The Port of Los Angeles is the busiest shipping port in the US by container volume. The Port of Houston is the largest US port on the Gulf Coast and the busiest port in the US by foreign waterborne tonnage.
As part of the conspiracy, Glencore employees sought to unlawfully enrich themselves and the company, by increasing profits and reducing costs on contracts to buy and sell physical fuel oil, as well as certain derivative positions the company held. The price terms of the physical contracts and derivative positions were set by reference to daily benchmark price assessments published by Platts—either Los Angeles Fuel or US Gulf Coast Fuel Oil—on a certain day or days plus or minus a fixed premium. On these pricing days, Glencore employees submitted orders to buy and sell (bids and offers) to Platts during the daily trading “window” for the Platts price assessments with the intent to artificially push the price assessment up or down.
In an example from the CFTC Order, if Glencore had a contract to buy fuel oil, employees submitted offers during the Platts “window” for the express purpose of pushing down the price assessment and hence the price of the fuel oil that Glencore purchased. The bids and offers were not submitted to Platts for any legitimate economic reason by company employees, but rather for the purpose of artificially affecting the relevant Platts price assessment so that the benchmark price, and hence the price of fuel oil that the company bought from, and sold to, another party, did not reflect legitimate forces of supply and demand.
Between approximately September 2012 and August 2016, Glencore Ltd employees conspired to manipulate the price of fuel oil bought from, and sold to, a corrupt counterparty (Company A) through private, bilateral contracts, by manipulating the Platts price assessment for Los Angeles Fuel. Between approximately January 2014 and February 2016, Glencore engaged in a “joint venture” with Company A, which involved buying fuel oil from Company A at prices artificially depressed by Glencore’s manipulation of the Platts Los Angeles Fuel benchmark. Finally, between approximately January 2011 and August 2019, company employees conspired to manipulate the price of fuel oil bought and sold through private, bilateral contracts, as well as derivative positions, by manipulating the Platts price assessment for US Gulf Coast Fuel Oil.
The CFTC also noted Glencore was involved in market manipulation through illegally obtaining confidential information by improperly obtained nonpublic information from employees and agents of the state-owned enterprises (SOEs), including Pemex in Mexico. This information was material to Glencore’s business and trading. Pemex agents who had access to confidential information and owed a duty to Pemex under Mexican law and Pemex internal policies to keep the information confidential—disclosed nonpublic information, “including information material to Glencore’s transactions with the SOE or to related physical and derivatives trading, to Glencore. Glencore traders in knowing possession of the confidential information then entered into related physical transactions and derivatives transactions.”
Finally, as we noted in yesterday’s recitation of the FCPA allegations, Glencore made corrupt payments to employees and agents working at SOEs in Brazil, Cameroon, Nigeria, and Venezuela. Glencore or its affiliates made the corrupt payments in exchange for improper preferential treatment and access to trades with the SOEs. Glencore’s conduct was designed to increase Glencore’s profits from certain physical and derivatives trading in oil markets around the world, including US physical and derivatives markets. Glencore also engaged in this corrupt conduct in connection with derivatives such as swaps and futures contracts subject to the rules of Commission-registered entities.
Tomorrow we will consider the settlement.

Categories
Compliance Into the Weeds

Compliance into the Weeds: On the Naughty List-JPMorgan $200 Settlement

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, Matt and Tom take a deep dive into the JPMorgan settlement with the SEC and CFTC for faulty electronic record-keeping. Some of the issues we consider are:

·      Why does Matt ‘almost feel bad’ for JPMorgan?
·      There was a paucity of facts. So why is the fine so high?
·      Is it a ‘Compliance Consultant’ or a Monitor?
·      The remediation agreed to by JPMorgan.
·      Lessons learned for the compliance professional and ephemeral communications.
·      Focus on consistent and even-handed discipline for JPMorgan employees going forward.
Resources
Matt in Radical Compliance
Tom in the FCPA Compliance and Ethics Blog