Monthly Archives: March 2012

Whistleblower activity for SEC violations on the rise

The U.S. Senate reports that more than half of all uncovered frauds have originated from whistleblower tips. Since the SEC’s Office of the Whistleblower was launched in August 2011, officials have been dealing with close to 100 tips per day. And this number is expected to double in the coming years with Dodd-Frank’s provisions for monetary incentives and protection from retaliation.

While coming to grips with the complexities of Dodd-Frank, many companies and financial institutions are heightening their efforts to mitigate the potential liability from whistleblowing. Developing and evaluating existing risk management and compliance programs is now a priority. The programs established under the 2002 Sarbanes-Oxley Act may not be effective in this new regulatory environment, and may need to be modified or strengthened, with an emphasis on internal communications and investigations of possible violations. When determining if and how much leniency to grant an entity, the SEC notes that “the promptness with which entities voluntarily self-report their misconduct…is an important factor.”

According to a recent study published by the Association of Certified Fraud Examiners and the Institute of Internal Auditors, fraudulent acts by employees and outsiders rise during periods of economic stress. Crime experts say that fraud and other misconduct are committed primarily because of three factors, referred to as the Fraud Triangle, and involve financial pressure, opportunity, and rationalization. In these still challenging times, businesses of all types and sizes need to tighten their internal controls and be proactive in preventing wrongful acts. Allocating budgets for compliance programs which include compelling due diligence with a focus on background investigations, will provide a high return on the investment and ultimately protect the bottom line.
March 2nd, 2012|Dodd-Frank, Violations|

The White House casts “Consumer Privacy Bill of Rights”

Over two years in the making, and backed by online ad powerhouses such as AOL, Microsoft, Yahoo, and even Google, the Bill of Rights announcement on February 22, 2012 pulls together consumer privacy initiatives of both the Federal Trade Commission (FTC) and the Commerce department. Intended to lead to new legislation that fills the gaps of current U.S. privacy laws, the bill promotes a set of standards for the fair handling of private information based on a set of principles that date back to the early 1970s known as the Fair Information Practices.
The Consumer Privacy Bill of Rights applies to personal information, which means any data, including aggregations of data that is identifiable to a specific individual, and to a specific computer or other device. According to the Administration, this bill will establish codes of conduct and call for strong enforcement, ultimately increasing interoperability between the U.S. consumer data privacy framework and that of its international partners. Below are the bill’s highlights.
  • Individual control. Consumers have a right to exercise control over what personal data companies collect from them and how they use it.
  • Transparency. Consumers have a right to easily understandable and accessible information about privacy and security practices.
  • Respect for context. Consumers have a right to expect that companies will collect, use, and disclose personal data in ways that are consistent with the context in which consumers provide the data.
  • Security. Consumers have a right to a secure and responsible handling of personal data.
  • Access and accuracy. Consumers have a right to access and correct personal data in usable formats, in a manner that is appropriate to the sensitivity of the data and the risk of adverse consequences to consumers if the data is inaccurate.
  • Focused collection. Consumers have a right to reasonable limits on the personal data that companies collect and retain.
  • Accountability. Consumers have a right to have personal data handled by companies with appropriate measures in place to ensure that they adhere to the Consumer Privacy Bill of Rights.
March 2nd, 2012|Legislation|
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