Governance, Risk & Compliance

Not a good start to the year: Goodyear Tire fine and the FCPA lessons

The due diligence that companies must perform before acquiring overseas companies and the anti-bribery controls required of foreign subsidiaries came into clear focus this week when the U.S. Securities and Exchange Commission (SEC) sanctioned Goodyear Tire & Rubber Co. $16.2 million for alleged Foreign Corrupt Practices Act (FCPA) violations.

According to the SEC’s order released on Tuesday instituting an administrative settlement, Goodyear failed to prevent or detect more than $3.2 million in bribes from 2007 to 2011 due to inadequate FCPA compliance controls at its units located in sub-Saharan Africa. (more…)

Growth and investment – the unintended victims of financial crime regulation

Reuters/Kieran Doherty

As a global industry, financial services needs to do a better job of opening bank accounts for people, investors and businesses.

It is perhaps the starkest example of the unintended consequences of regulatory reform – certainly the most visible consequence to customers – that it is now so difficult to open the bank accounts which are the first step in international commerce for any growing business. What began as a challenge to money launderers is now posing a palpable threat to the world’s financial centres, and we can do it much better.

This century has seen a welcome international consensus to ensure the proceeds of crime cannot be rendered invisible simply by being transferred across borders. Banks are now the front line of defense against organized crime and it falls to all financial technology providers to support them in stamping out money laundering and criminal financing.

But this is to agree the end and not the means. It is one thing for policymakers to decree that something has to be done; it is quite another for businesses to carry out that decree. (more…)

Introducing the BoardLink iPhone app

Last week we announced the launch of a new iPhone app for our BoardLink service, a secure board workflow solution designed to further accommodate companies as they operate across borders and have increasingly mobile, global boards.

The BoardLink iPhone app provides boards of directors with access to company and business intelligence information through a secure mobile solution. Directors now are able to respond immediately to urgent action items such as board resolutions, draft documents with a digital signature enabling a digital audit trail, as well as respond to and send secure messages to fellow board members.

BoardlinkAvailable online and offline, the iPhone app is fully compatible with Apple’s iOS 7 and iOS 8 platforms, complementing the already existing iPad app. Documents are encrypted for review online and offline via the app and a calendar enables board members to manage their schedule efficiently through BoardLink.

Our recent board governance survey revealed increased cybersecurity risks to boardroom communications. Over 60% of organizations never or only occasionally encrypt Board communications, and only a quarter indicated they always do so. Cybersecurity information is the least-requested information by the board, with only 32% of boards frequently or very frequently requesting such information. As concerns around data security continue to rise, BoardLink reduces the risk of sending sensitive information over email or other non-secure channels.

Learn more about the evolving role of the global board.

Download the Boardlink iOS app.


IA Brief: Six steps to address U.S. SEC cybersecurity focus

IA Brief: Six steps to address U.S. SEC cybersecurity focus

Now that the Securities and Exchange Commission has formally named cybersecurity as a top exam priority, firms must prepare for the impending scrutiny.

The SEC’s annual list of investment adviser examination priorities for 2015, released January 13th, SEC labeled cybersecurity as a market wide risk. Last year’s exam priorities did not specifically point to cybersecurity, but merely highlighted investment adviser technology as an exam priority. (more…)

Basel committee tightens disclosure requirements for banks

Basel committee tightens disclosure requirements for banks

In an effort to streamline banks’ regulatory data through increased transparency, and make them more comparable and consistent across the board, the Basel Committee on Banking Supervision has publishedrevised standards on disclosures.

The standards, building on the committee’s June 2014 consultation document made the disclosure requirements more detailed. It also made changes for securitization exposures, credit risk exposures, and credit risk mitigation techniques. (more…)

Thomson Reuters Accelus Regulatory Intelligence

Thomson Reuters Accelus Regulatory Intelligence

Earlier this week we launched a new solution to help clients more efficiently respond to and navigate regulatory risks. Thomson Reuters Accelus Regulatory Intelligence (ARI) combines content with advanced technology to deliver an unmatched regulatory intelligence solution.

According to the results of our 2014 Cost of Compliance Survey, compliance professionals spend on average 10 hours per week collecting and analyzing regulatory developments from multiple sources. Through Thomson Reuters ARI, users have access to coverage from over 570 regulatory bodies, 1,000 rulebooks, content from news, analysis, regulatory events, and practical guidance. This content can be viewed at a global industry-wide scale or it can be filtered down to provide a more granular view that’s specific to an organization’s needs. It also provides automatic updates and advanced notifications on regulatory developments helping you anticipate and keep track of upcoming changes. With the solution’s reporting tool, users can customize and manage reports, including the ability to share across an organization.

With Thomson Reuters ARI, you can save both time and money that was previously spent doing manual searches and tracking. Start your free trial today and see exactly how much time you can save on a daily basis.

Eight products on FINRA examiners’ watch lists in 2015

Eight products on FINRA examiners' watch lists in 2015

The Financial Industry Regulatory Authority’s 2015 exam priorities letter named eight products that it plans to monitor for risks to investors.

FINRA said shoddy disclosure about the products has made investors vulnerable to major losses when conditions in the market change. (more…)

Back-tested performance – often misleading, but not off-limits with precautions

(Reporting by Julie DiMauro and Jason Wallace of Thomson Reuters Accelus)

In separate actions against a Massachusetts-based exchange-traded funds investment manager, the SEC warned advisers to be careful if they advertise their performance, and to pay particular attention to the distinctions between true actual performance, model performance and back-tested performance.

Both actions were filed on December 22 against F-Squared Investments and its former CEO, with the firm settling for $35 million in disgorgement and penalties and the case against the former CEO just getting underway in U.S. District Court. (more…)

Conduct Risk Report 2014/15

REUTERS/Lucas Jackson

Yesterday we announced the findings of our Conduct Risk Report 2014/15 which revealed that managing and mitigating conduct risk continues to be one of the highest regulatory priorities, yet financial services firms remain unclear about what conduct risk is and how to address it. This lack of clarity, coupled with recent regulatory actions, appear to be driving concern about personal liability consequences.

In 2013, we undertook the first industry-wide survey into conduct risk to understand how financial services firms worldwide were implementing and managing this relatively new regulatory concept. This report seeks to understand in more depth the practical actions that firms have taken and to determine what changes and progress firms have made during the 12 months since the previous survey. More than 200 compliance and risk practitioners from financial services firms were surveyed between September and October 2014. Responses were received from across Africa, the Americas, Asia, Australasia, Europe and the Middle East. They represented banks, brokers, insurers and asset managers. Firms were not only geographically widely spread but also represented a wide range of sizes, from the small to global conglomerates, and included the majority of global systemically important financial institutions (G-SIFIs).


SEFs 2015 outlook: industry sees more flexible execution rules; harmonization

REUTERS/Yuriko Nakao

Regulatory efforts to simplify existing swap mandate rules in order to reduce fragmentation between the U.S. and Europe are likely to dominate the focus of participants in the swaps execution facility (SEF) market in 2015.

Indeed, harmonization and cross-border issues appear to be at the top of the agenda for the International Swaps and Derivatives Association (ISDA). In several speeches since becoming head of the industry group last year, Scott O’Malia, a former commissioner at the Commodity Futures Trading Commission (CFTC), has made it clear that for him regulators need to ensure that cross-border oversight is based on risk and not geographic location. (more…)