Governance, Risk & Compliance

“Right to Try” Investigational Drugs

Pills

The outbreak of Ebola in West Africa and the widely-publicized plight of two Americans spotlights access to investigational drugs. Investigational drugs are those drugs that have not completed the mandatory Food and Drug Administration (“FDA”) approval process.

The two Americans, who were infected with Ebola while working as missionaries in Liberia, were given an investigational drug called ZMapp. ZMapp, made by U.S. biotech company Mapp Biopharmaceutical, has shown positive results in animal testing but its safety and effectiveness in humans has not been determined because Mapp Biopharmaceutical has not begun the FDA clinical trial process.

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Circuit Split Leaves Future Efficacy of the Affordable Care Act Uncertain

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The acrimonious political and legal battles surrounding the Affordable Care Act (ACA) continue. Two opposite federal decisions were issued a few weeks ago on whether the ACA allows federal tax credit subsidies to be issued to individuals purchasing insurance in states that exclusively utilize the federal exchange. The ACA was dealt a blow in one case and a victory in another.

On July 22, 2014, the DC Circuit US Court of Appeals determined in Halbig v. Burwell that the Internal Revenue Service’s (IRS’s) interpretation of Section 36B of the Internal Revenue Code, which said that individuals may receive tax credit subsidies from the federal government for insurance purchased in states with their own exchange or those that opted to utilize the federal exchange, was inconsistent with the ACA. It held that 36B, in light of the statutory text (“established by the State”) and legislative history of the ACA, only allows subsidies for insurance purchased through state exchanges.

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U.S. regulators ease credit risk rules on guarantees for banks using advanced approach

 REUTERS/Stefan Wermuth
Three major U.S. regulatory agencies have eased requirements under the advanced approach risk-based capital rules by removing a key requirement concerning guarantees provided by counterparties eligible for recognition as credit risk mitigants.The final rule , agreed by the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Deposit Insurance Corporation, modified the definition of “eligible guarantee” for purposes of the advanced approach risk-based capital rules by removing the requirement that an eligible guarantee be provided by an “eligible guarantor” for all exposures other than securitization exposures. (more…)

Effective training a weak link in many compliance programs – survey

REUTERS/Andrea Comas

By Emmanuel Olaoye and Stuart Gittleman of Compliance Complete

Firms, especially those in the financial services sector, have improved their compliance and ethics training programs but are still being challenged in measuring their programs’ effectiveness, two researchers told Thomson Reuters Compliance Complete on Wednesday.

And the people driving the programs, often in chief compliance officer or roles of similar function, are still being challenged by limited resources and difficulties in making a business case for the firm’s investment, said the researchers, Mary Bennett and Ingrid Freeden of Navex Global. (more…)

EXCLUSIVE: Private sector struggles to comply with new, sector-focused U.S. sanctions on Russia

New and more narrowly targeted U.S. financial sanctions against Russia have created headaches for Wall Street as banks and securities firms struggle to comply, industry sources said. The European Union is weighing similar measures.

The so-called “Sectoral Sanctions Identifications List,” or SSI List, is the first of its kind and was announced by President Barack Obama on July 16.  (more…)

Internal audit & the four Cs: Culture, conduct, corporate governance and customer outcomes

The Four Cs are C-Suite issues that internal auditors ignore at their own peril.

Corporate governance and culture have moved into the mainstream as a result of the financial crisis, and as the global recovery takes hold, governments and regulators are keen to ensure lessons are learned. It is clear, however, that despite the increasing profile of corporate governance with regulators, shareholders and customers, and the effect it has on the health and reputation of firms, it is still an area in which many internal auditors lack a high level of involvement. (more…)

New York state proposes regulatory framework for virtual currencies

Jim Urquhart

The New York State Department of Financial Services (DFS) is seeking public comment on a proposed “BitLicense” regulatory framework for New York virtual currency businesses, DFS Superintendent Benjamin M. Lawsky said Thursday.

The proposed framework – the first on a state-wide basis in the country – will require licensees to have strong compliance and supervisory policies and procedures. (more…)

Canadian banking outlook downgraded over ‘bail-in’ move, adding to recent financial stability concerns

In yet another worrying sign for Canada’s financial sector, Moody’s Investors Service has lowered its outlook for the Canadian banking system from “stable” to “negative” over uncertainty about government willingness to bail out banks during a crisis. It follows a pair of recent warnings issued by the Bank of Canada (BOC) and the Bank for International Settlements (BIS), both of which highlighted the growing risk of stress posed by runaway consumer debt and property prices.Moody’s negative outlook reflected the rating agency’s pessimism over Canada’s plan to implement a “bail-in” regime that would avoid taxpayer-funded bank bailouts by shifting some of the burden to bondholders. It would allow banks to convert some of their debt into to equity during a crisis.  (more…)

BNP’s misuse of ‘satellite banks’ may portend future enforcement over ‘nested’ correspondent accounts

BNP's misuse of 'satellite banks' may portend future enforcement over 'nested' correspondent accounts

One of the methods used by BNP Paribas to help the government of Sudan send and receive billions of dollars worth of oil-related payments is of growing to concern to the U.S. Justice Department, and U.S. banks should consider acting to avoid unwitting involvement in such transactions, sources familiar with the matter said.

Records in BNP’s nearly $9 billion settlement with U.S. authorities on Monday indicate that a compliance officer at the bank had warned in 2005 that the method it was using improperly circumvented U.S. sanctions. (more…)

Closely-held corporations exempt from ACA contraception mandate

© Gary Blakeley - Fotolia.com

In a much-anticipated decision, the U.S. Supreme Court ruled on June 30, that for-profit closely held corporations are covered under the Religious Freedom Restoration Act of 1993 (RFRA). The RFRA prohibits the government from “substantially burden[ing] a person’s exercise of religion even if the burden results from a rule of general applicability.” The RFRA provides an exception when the burden is in furtherance of a compelling governmental interest and is the least restrictive means of furthering that compelling interest.

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