What constitutes disclosure?

“Is Your ETF Conflicted?,” The Wall Street Journal, March 12, 2019.  JP Morgan discloses conflicts between itself and people buying into one of its funds in a 47-page brochure brochure.

Yes, knowing about conflicts your investment adviser may have is a good thing – it’s useful information.  But maybe you should know anyway, as “Any large financial company has business ties that present conflicts ranging from who underwrites their bonds to where they route their trades.”

The disclosure could read, “We get more fees based how many of the included investments we manage; we may manage all of them.”

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Filed under Theme One: Information, Theme Three: Compliance

Cheaters

“KPMG Ex-Partner Convicted In ‘Steal the Exam’ Scandal,” The Wall Street Journal, March 12, 2019.   Headline says it all.

Another Governance post, although Information and Compliance are implicated as well.  “KPMG’s former national managing partner for audit quality and professional practice” convicted.  Heisted government information to find out which audits the Public Company Accounting Oversight Board were going to look at in depth.  Worked with an employee of PCAOB.

What does it say when a managing partner at a big-name accounting firm is stealing information in the course of the company’s business?  Insufficient information controls at the PCAOB or KPMG? Both?

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Filed under Theme One: Information, Theme Three: Compliance, Theme Two: Governance

Non-disclosure

“Firms to Pay $125 Million to Clients Over Fee-Disclosure Practices,” The Wall Street Journal, March 12, 2019.  Clients “steered” to higher-priced mutual funds without disclosure.

Gosh.  Investment advisers (including our close friend, Wells Fargo) don’t tell their customers about a cheaper alternative.  Had the customers asked, would the advisers have lied?  The essence of a lot of business transactions is different levels of information between the buyer and the seller, but aren’t advisers paid to find the best deal for you?

Certainly, Information.  But with a touch of Governance (don’t they have the duty to tell you?).  And maybe Compliance (that’s why they paid a refund).  And Use/non-use (they knew, but failed to tell you).

But why didn’t the advisers get fined?

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Filed under Theme Four: Use, Theme One: Information, Theme Three: Compliance, Theme Two: Governance

On the down low

This blog features several posts over the past year about how companies and other organizations have handled sexual harassment at the top of the shop.  That focus was mainly on the Governance point, and the culture that organizations perpetuate if they allow behavior that is contrary to the organization’s stated or assumed ethics/compliance policy.

Here is another one, but focusing on how one company allegedly try to keep this information confidential.

“Google Agreed to Pay $135 Million to Two Executives Accused of Sexual Harassment,” The Wall Street Journal, March 11, 2019.  Senior executives left a number of years ago after harassment allegations, and got paid bundles.

What does it say about the culture of an organization where a senior executive gets “retired” for sexually harassing an employee, but still gets a multi-million dollar payout?  And the company says nothing about “the incident”?  What does it say to the employee who was harassed, and to all other employees?  Can you really keep this information secret, even internally?  Isn’t there a rumor mill at Google?  And now it comes out that there were several “select past cases.”

Why was Google hiding this?

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Filed under Theme One: Information, Theme Two: Governance

Use/non-use

“China Grounds All Boeing 737 MAX 8 Jets After Ethiopian Airlines Crash,” The Wall Street Journal, March 11, 2019.  Second crash of the new Boeing jet leads to grounding in some countries.

This blog has from time to time focused a bit on how information is used and not used.  I have also changed the categories that I am using to tag posts, with the Big Three: Information, Governance, and Compliance.  I have now added (back in) a category for Use, which is often an aspect of Information.

Compare and contract how China and the US have used the Information (two crashes of a new passenger jet in 6 months).  China quickly grounded flights; the US is taking (took) a while to do the same (this post is written March 18, 2019, after the US grounding).  While there may well be other concerns (such as, where does Boeing manufacture its jets, as opposed to where the competing Airbus is made), it does highlight how information is used.  And had the planes not been grounded, and there were a third crash, what would that say about the non-use of information?

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Filed under Theme Four: Use, Theme One: Information

Privacy from whom?

“When Mark Zuckerberg Said Privacy, He Didn’t Mean Privacy From Facebook,” The Wall Street Journal, March 9, 2019. Are there different meanings of privacy?

If I can keep my information away from everyone else, that’s privacy.  If I can keep it away from everyone but Facebook (and its app developers), that’s not.

So, is it my obligation/responsibility to provide the necessary Governance for my Information, and not share it with people I don’t want to have it?  Can I do that if Facebook infects other apps I want to use?  How can I tell?

Is there a solution that doesn’t require (a) becoming a digital hermit or (b) an Act of Congress?

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Filed under Theme One: Information, Theme Two: Governance

Falsity, squared

“Jussie Smollett Indicted by Grand Jury on 16 Counts for Filing False Report,” The Wall Street Journal, March 9, 2019.  Charges of a hate crime hoax.

To preserve the integrity of the criminal justice system, there are prohibitions against filing false police reports and lying to the police.  Is that the case here?  That’s one combination of Governance, Information, and Compliance.

What is the role (responsibility?)  of the press in checking out stories before publishing?  What level of due diligence is required before you print a story?  Is there a sliding scale, with more (or less?) due diligence required the more sensational the story?  Is that another combination of Governance, Information, and Compliance?

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Filed under Theme One: Information, Theme Three: Compliance, Theme Two: Governance