Financial Regulatory Forum

Wells Fargo case highlights need to monitor employees with stressful performance goals

September 22, 2016
One of the more difficult tasks for compliance officers is to question employee success, even if those achievements come against almost insurmountable odds. The disclosure that Wells Fargo employees, in order to meet sales targets, signed up more than 2 million of its customers for new accounts and credit cards without their knowledge, is an example of employee performance that should be questioned even though the impulse is often to look the other way.

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INSIGHT: SEC delivering on promise to scrutinize private equity firms

September 15, 2016

By Todd Ehret, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – Private equity firms in the 1980’s and 1990’s gained a notorious image as corporate raiders thriving on leveraged buyouts and hostile takeovers funded by junk bonds. The industry spawned famous tales and movies about the deals and larger-than-life personalities. Nevertheless, the number of participants and total assets of approximately $30 billion of that era were miniscule compared to today’s private equity (PE) industry, which has finally come under greater regulatory oversight. (more…)

COMMENTARY: How to fix a broken system that fails flood victims

September 13, 2016

By Lawrence Hsieh, Practical Law for Thomson Reuters

(Thomson Reuters Regulatory Intelligence) – A homeowner’s insurance policy covers most disasters, but it won’t cover flood damage. Private insurers long ago deemed flood loss, which accounts for most disaster losses in the United States, as “too big to insure.” So people who live in a flood zone and have a federally-backed mortgage must purchase flood insurance through the National Flood Insurance Program (NFIP), which was established in 1968 to make flood insurance more affordable.

INSIGHT: U.S. insurance regulators pressured over universal life premium increases

September 8, 2016
By Lawrence Hsieh, Practical Law for Thomson Reuters  The post-crisis regulatory environment and ultra-low interest rates that ravaged bank proprietary trading desks have also hugely affected the insurance industry. This includes universal life insurance, which offers policyholders a cash value savings component earning tax-deferred interest on top of the death benefit. State insurance regulators face increasing pressure to stop insurers from raising premiums to offset their obligation to make guaranteed interest payments on the savings component at rates that were fixed during the high-interest rate “bubble” of the 1980s and 1990s.

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INSIGHT: In a regulatory era, small U.S. banks are getting some relief

September 8, 2016

(Thomson Reuters Regulatory Intelligence) – While the regulatory pendulum has swung toward the “more” side since since the advent of Dodd-Frank Act in 2010, a relatively new – and less noticeable — counter-trend has emerged toward addressing complaints by smaller banks of disproportionately heavy regulation. (more…)

SEC scrutinizing more sellers of F-Squared portfolios based on bad performance

August 31, 2016

By Richard Satran, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – After charging 13 firms for using discredited marketing claims from the now-defunct investment adviser F-Squared, the Securities and Exchange Commission said it is looking more broadly at other companies that used a portfolio strategy for exchange-traded funds (ETFs) whose claims of market-beating results were based on false data.

Whistleblowing practices and severance agreements — what works

August 30, 2016

By Julie DiMauro, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – Through their enforcement actions, policy initiatives and press releases, United States regulators are showing what effective whistleblowing practices look like, and why their importance is growing.

Behavioral compliance: how to stop ‘good people’ from doing bad things

August 16, 2016

(Thomson Reuters Regulatory Intelligence) – Behavioral compliance is a relatively new way of thinking in combating bad behavior on Wall Street and beyond. Born out of frustration with repeated cases of misconduct and individual wrongdoing, both banks and regulators are looking outside their traditional toolkit in trying to curb unethical behavior. The effort is part of the ongoing cultural reform battle, and evidence of creative ways of leveraging other disciplines to tackle the problem is growing, say experts. (more…)

Is FINRA doing enough to steer investors clear of bad brokers?

August 9, 2016

By Todd Ehret, Regulatory Intelligence

(Thomson Reuters Regulatory Intelligence) – A recent debate has emerged as to whether U.S. regulators and the securities industry have done enough to rid themselves of bad brokers. At the core of the argument are recent studies showing that the percentage of those engaged in misconduct is much higher than that claimed by the Financial Industry Regulatory Authority, and that such brokers are often able to move unimpeded from firm to firm. (more…)

International graft crackdown takes hold, FBI official says, citing Brazil

August 5, 2016

The Brazil corruption scandal hitting the highest level of government is seen by many as another sign that the $1 trillion-a-year drained from the global economy through graft is unstoppable. Federal Bureau of Investigation veteran William McMurry views it differently — the country’s high-level prosecutions of public officials show that law enforcement is cracking down on bribery in places where it has long been ignored as the cost of doing business.