Trust Digest 48 (May 6, 2014)

The Trust Agenda
As the global economic recovery gathers momentum, optimism among CEOs is increasing. The postrecession period challenged many companies, and their chief executives focused their attention on survival. But they are now switching into growth mode. This drive for growth is shaped by fundamental external forces that are transforming business and society. The impact of these trends is radically changing society’s expectations of business. And the extent to which a business behaves in line with these expectations determines how trustworthy it is perceived to be. Trust is pivotal because it is the basis of every human relationship, every transaction, and every market. Trustworthiness is the foundation of a business’s “license to operate” in any region or industry.
Key Words: Trust, Leadership
Trust Issues: Responsibility, Ethics, Competence

Holder: No Banks 'Too Big to Jail'
Attorney General Eric Holder declared Monday that no banks are too big to be prosecuted if they engage in criminal activity, while another law enforcement official said a pair of cases against major banks may culminate in guilty pleas in the near future. "There is no such thing as 'too big to jail," Holder declared in a weekly video message. "No individual or company, no matter how large or how profitable, is above the law."
Key Words: Banks, Regulation
Trust Issues: Accountability, Integrity

Seeking Guilty Pleas From Corporations While Limiting the Fallout
When it comes to bringing criminal charges against corporations, prosecutors have been gun-shy, fearing the dreaded “Arthur Andersen effect.” The effect, named for the accounting firm that went out of business in 2002 after its conviction for obstruction of justice, has prosecutors concerned that demanding a guilty plea from a large company could cause it to be dissolved, leading to job losses and disruption in the market. Now that the Justice Department is said to be poised to bring criminal charges against two international banks, the issue is back in the spotlight.
Key Words: Banks, Regulation
Trust Issues: Accountability, Integrity

Balancing the Ethics of Risk Management
Being ethical in the world of business, risk management and compliance can be quite a challenge. It is an on-going battle for all companies regardless of which sector they run in. Arguably, legal or compliance abuses are the lesser of worries compared to establishing a culture of honesty and integrity.
Key Words: Leadership, Culture
Trust Issues: Communication, Competence

In Justices’ Votes, Free Speech Often Means ‘Speech I Agree With’
In cases raising First Amendment claims, a new study found, Justice Scalia voted to uphold the free speech rights of conservative speakers at more than triple the rate of liberal ones. In 161 cases from 1986, when he joined the court, to 2011, he voted in favor of conservative speakers 65 percent of the time and liberal ones 21 percent. He is not alone. “While liberal justices are over all more supportive of free speech claims than conservative justices,” the study found, “the votes of both liberal and conservative justices tend to reflect their preferences toward the ideological groupings of the speaker.”
Key Words: Supreme Court, Free Speech
Trust Issues: Integrity, Responsibility

Target CEO Steinhafel to Step Down Following Data Breach
Target Corp. (TGT), struggling to recover from slumping sales and a holiday-season hacker attack that struck tens of millions of customers, replaced Gregg Steinhafel as chairman and chief executive officer. John Mulligan, Target’s chief financial officer, is serving as interim CEO while the company seeks a permanent new leader, according to a statement today. Board member Roxanne Austin, a former DirecTV executive, will be interim chairwoman.
Key Words: Target, Information Security
Trust Issues: Responsibility, Accountability, Competence

Here's How Much Money Target's CEO Will Be Leaving With In The Wake Of The Company's Huge Data Breach
Target's CEO Gregg Steinhafel is out. "Today we are announcing that, after extensive discussions, the board and Gregg Steinhafel have decided that now is the right time for new leadership at Target," said the company in a statement. "Effective immediately, Gregg will step down from his positions as Chairman of the Target board of directors, president and CEO." Steinhafel won't be walking away empty-handed.
Key Words: Target, Information Security, Executive Pay
Trust Issues: Accountability, Competence, Ethics

The High-Stakes Fight Over How to Measure CEO Pay
The 848-page Dodd-Frank Wall Street Reform and Consumer Protection Act dedicates 149 words to framing a new disclosure about “pay versus performance” at public companies. Boards and management must deliver “a clear description” to shareholders of “the relationship between executive compensation actually paid and the financial performance of the issuer,” the law states. Salvaged by Congress and the president from the greatest financial crisis since the Great Depression, the promise remains empty four years later. Nearly one-quarter of the Dodd-Frank law’s 398 rule-making requirements haven’t been proposed by federal regulators yet, according to the Davis Polk law firm’s Regulatory Tracker on financial reforms, including the expanded disclosure on performance and executive pay.
Key Words: Executive Pay, Dodd-Frank
Trust Issues: Accountability, Transparency, Ethics

Poderopedia to Increase Transparency in South America's Most Corrupt Country
How a wealthy Chilean politician is making sure his son isn't punished to the full extent of the law for manslaughter after he hit and killed a pedestrian while driving drunk. Exposing the chairman of the Senate Energy Committee who also leases land to energy companies. Fact checking the 2013 presidential debates and live-tweeting the results. These are just a few of the stories made possible by Poderopedia, a platform on which journalists use public information and investigative reporting to build profiles of major political and financial players, and then map their familial ties, business connections, and other potential conflicts of interest. The second chapter of Poderopedia will launch in Venezuela tomorrow, on World Press Freedom Day, and another chapter will launch in Colombia before June. Poderopedia is finally on its way to world domination.
Key Words: Venezuela, Corruption
Trust Issues: Transparency, Accountability

FTC Told to Disclose the Data Security Standards it Uses for Breach Enforcement
Computerworld - The Federal Trade Commission (FTC) can be compelled to disclose details of the data security standards it uses to pursue enforcement action against companies that suffer data breaches, the agency's chief administrative law judge ruled Thursday. The decision came in response to a motion filed by LabMD, a now-defunct medical laboratory that has been charged by the FTC with unfair trade practices for exposing sensitive information belonging to 10,000 patients in 2010.
Key Words: Regulation, Information Security
Trust Issues: Accountability, Transparency

New Penny Stock Listing Rules Require Executive Certifications
Chief executives and chief financial officers of some U.S.-listed penny stock companies are set to start signing off on their corporate information, signaling a corporate governance upgrade for some of the nation’s tiniest companies. Due to new listing standards implemented by OTC Markets’ Venture Stage Marketplace this week, the companies, which include early and development-stage firms, will be required to have their executives certify annually that their results are up-to-date in order to stay listed on that exchange. Those companies will also need to trade at a minimum of $0.01 per share, and make more information available to investors.
Key Words: Penny Stocks, Regulation
Trust Issues: Transparency

Dodd-Frank’s Missed Opportunity: A Road Map for a More Effective Regulatory Architecture
The United States needs a financial regulatory system that is both effective and efficient, and one that will not be a significant contributor to the next crisis. This paper proposes a new structure for the United States financial regulatory system. To some, this may seem unnecessary after the 2010 passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which made significant changes to the U.S. regulatory architecture following the financial crisis. In fact, Dodd-Frank focused more on expanding regulatory authority than making the overall structure more efficient or eliminating overlapping jurisdictions. As one analysis put it, Dodd-Frank “will do little to streamline the fractured financial regulatory framework.” In short, it was a missed opportunity.
Key Words: Dodd-Frank, Regulations, Reform
Trust Issues: Accountability, Transparency, Competence

SEC Charges Ohio-Based Investment Adviser and President for Fraudulently Hiding Account Shortfall
The Securities and Exchange Commission today announced fraud charges and an asset freeze against a Columbus, Ohio-based investment advisory firm and its president for repeatedly hiding a shortfall of more than $700,000 in client assets.
Key Words: Investing, Fraud, SEC
Trust Issues: Transparency, Ethics, Integrity, Accountability

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