The Toll of Noncompliance

Noncompliance banking

New York, New York, September 13, 2013 – It’s no secret that many large US brokerage houses have come under scrutiny in the aftermath of the great recession, along with many of the practices that are blamed for bringing about the economic decline. As regulators continue to sort through the financial rubble and investigate these firms with a punitive eye, legal related expenses continue to amass at staggering levels.

 

According to today’s Wall Street Journal, in the past five years JP Morgan alone has run up a whopping tab of over $18 billion in legal related expenses. (Note: That’s $ billions – not $ millions). Facing at least seven separate investigations in areas ranging from trading oversight to mortgage bond sales to overseas hiring practices, the company continues to negotiate settlements with several different agencies, which still could lead to another $600 million in penalties. Bank of America and Citigroup, reported in the same article, face the same dilemma. In 2008 – 2012, each incurred legal related expenses  of $16.1 billion and $7.2  billion respectively. (WSJ: “Embattled JP Morgan Bulks Up Oversight,” Sept. 13, 2013).

 

In addition, with the SEC and FINRA now ratcheting up their regulations, it has become painfully clear to the financial industry that regulatory compliance is no longer a peripheral consideration, and measures must be taken to mitigate risk. To that end, according to the Journal, JP Morgan “plans to spend an additional $4 billion and commit 5,000 extra employees this year to clean up its risk and compliance problems, according to people close to the bank.” Without doubt, all financial firms are following suit, and corporate compliance departments are being granted greater autonomy and authority.

 

And contrary to the belief of many, “compliance” usually touches every employee in a company – not just its executives. For that matter, as an example, it may be easier and less conspicuous for a financial executive’s admin assistant to illegally divulge insider information than it is for an executive. For this reason and others, compliance policies need to be ubiquitous across the organization, clearly defined, well communicated, and enforceable, with the necessary resources in place to administer them. To be compliant comes at a cost, but in the final analysis, the investment may save a company from unexpected  fines, law suits and damage of reputation, which significantly out way the investment.

About MobileGuard

 

MobileGuard is the leading provider of mobile communications management solutions, and ensures compliance with all relevant regulatory bodies. MobileGuard’s patented solutions provide the monitoring, capturing, logging, archiving, and supervision of all communications on company mobile devices. MobileGuard’s mobile communication compliance solutions are provided as either a hosted platform or in the customer’s environment. To learn more, please visit www.MobileGuard.com.

Email: press@MobileGuard.com
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Website: www.MobileGuard.com

Text Messages Provide a Wealth of Documentation for Litigators

Unlike emails, text messages have a limited lifespan, in that they cease to exist after a period of time.  Since the use of text messaging is increasing, it is inevitable that there will be an increase in lawsuits involving text messages.  In the financial services sector, text messages are seen as a form of electronic communication and need to be treated like emails with regard to the preservation, review, and approval of messages.  It is only a matter of time before all industries are held to this high of a standard.

According to Winchester and Maines writing for The New York Law Journal, “…the party who fails to take appropriate steps to preserve text data and content may face sanctions of spoliation if it can be shown that this information should have been considered reasonably likely to be important at the time it existed.”[i] The strategy of senior executives should be that of preserving corporate profits by mitigating the amount of exposure they have with regard to text messaging.

As citizens we have the right to review what our elected officials are discussing via emails.  However, government officials have been able to skirt the public disclosure laws by conducting communications through text messaging.  According to a reporter, Erica Barnett, she was unable to obtain the text messages for a Seattle City Council member even though the text messages are subject to the same disclosure laws as emails.[ii] Corporations are responsible for ensuring that all electronic communication can be made readily available to regulators, so why shouldn’t our elected officials be held to such high standards?

In 2010, after inquiries made by taxpayers and the media, some senior city officials and five City Council Members of Bell, CA were involved in a pervasive scandal that swindled millions from the tax payers of Bell.  These individuals were paying themselves high salaries and embezzling city funds and they currently face criminal charges.  As a result, the state of California wants to put the city in receivership, but the city cannot come to agreement with the state.  The State Deputy Attorney General, Jim Hines, stated, “Our main goal has been to ensure accountability and transparency in city management until new elections can be held and to do so without imposing high costs…”[iii] If municipalities were required to have a text messaging compliance software package, our elected officials might think twice before conducting fraudulent activities.

Mobile compliance solutions such as TextGuard’s SMS mobile compliance software allow for the collection and filtering of messages in a compliant manner.  This ensures elected officials are held to a high standard where accountability and transparency exists and empowers the everyday citizen to make sure their elected officials act accordingly.  It also allows for prosecutors to obtain evidence of any inappropriate, illegal, or unethical behavior.

[i] New York Law Journal, Harvesting Evidence From the Sea of Text Messages, Alan M. Winchester and Russell E. Maines, October 06, 2010

[ii] Publicola, Council Members’ Text Messages Not Subject to Public Disclosure, Erica C. Barnett, Tuesday, February 23, 2010

[iii] Los Angeles Times, Legal fight looms over control of Bell, Jeff Gottlieb and Ruben Vives, October 14, 2010

 

A Lesson From Wall Street

A lesson from Wall Street, on September 23, 2010 NYSE’s Commission on Corporate Governance released its report that examines corporate governance.  The report highlighted 10 fundamentals that are absolutely essential in today’s economy and they are as follows:

  1. The Board’s fundamental objective should be to build long-term sustainable growth in shareholder value for the corporation;
  2. Successful corporate governance depends upon successful management of the company, as management has the primary responsibility for creating a culture of performance with integrity and ethical behavior;
  3. Good corporate governance should be integrated with the company’s business strategy and not viewed as simply a compliance obligation;
  4. Shareholders have a responsibility and long-term economic interest to vote their shares in a reasoned and responsible manner, and should engage in a dialogue with companies thoughtful manner;
  5. While legislation and agency rule-making are important to establish the basic tenets of corporate governance, corporate governance issues are generally best solved through collaboration and market-based reforms;
  6. A critical component of good governance is transparency, as well governed companies should ensure that they have appropriate disclosure policies and practices and investors should also be held to appropriate levels of transparency, including disclosure of derivative or other security ownership on a timely basis;
  7. The Commission supports the NYSE’s listing requirements generally providing for a majority of independent directors, but also believes that companies can have additional non-independent directors so that there is an appropriate range and mix of expertise, diversity and knowledge on the board;
  8. The Commission recognizes the influence that proxy advisory firms have on the markets, and believes that it is important that such firms be held to appropriate standards of transparency and accountability;
  9. The SEC should work with exchanges to ease the burden of proxy voting while encouraging greater participation by individual investors in the proxy voting process;
  10. The SEC and/or the NYSE should periodically assess the impact of major governance reforms to determine if these reforms are achieving their goals, and in light of the many reforms adopted over the last decade the SEC should consider the expanded use of “pilot” programs, including the use of “sunset provisions” to help identify any implementation problems before a program is fully rolled out. [i]

The above fundamentals not only apply to Wall Street firms but can also be applied throughout the business industry.  A sound corporate governance policy combined with some of today’s technology from compliance solution providers, such as TextGuard will allow companies to operate with greater transparency. For instance, as more people continue to lose their homes, greater attention will be placed on mortgage lenders and their lending practices.  Earlier this year the Attorney General of Illinois filed a lawsuit against two reverse mortgage lenders for predatory lending tactics.[ii] One way for companies to ensure that their representatives are behaving ethically and following the rules, regulations, and laws is by creating a sound technological infrastructure.

One way for companies to ensure that their representatives are behaving ethically and following the rules, regulations, and laws, is by creating a sound technological infrastructure.   TextGuard currently offers two different compliance solutions for companies.  TextGuard’s  Client Edition & Black Berry Enterprise Server Edition, captures SMS texts which provides Risk Governance professionals greater ability in ensuring corporate compliance and mitigating potential risks.  TextGuard’s VoiceGuard product allows for companies to record, archive, and review mobile phone conversations and provides another tool to the Risk Governance professional.


[i] NYSE Press Release September 23, 2010, http://www.nyse.com/press/1285236224629.html

[ii]Illinois Attorney General Press Release, http://www.illinoisattorneygeneral.gov/pressroom/2010_02/20100208.html

The Mobile Communications Industry Demonstrates Momentum

The GSMA today reported that more than 49,000* visitors from 200 countries attended the 2010 GSMA Mobile World Congress, the premier event for the mobile communications industry. The four-day conference and exhibition attracted executives from the world’s largest and most influential mobile operators, software companies, equipment providers, Internet companies and media and entertainment organisations, as well as government delegations. 54 per cent of Mobile World Congress attendees hold C-level positions, including more than 2,800 CEOs.

“It’s a hugely exciting time to be in the mobile communications industry and the extremely strong attendance at the 2010 Mobile World Congress underscores that,” said John Hoffman, CEO, GSMA Limited.  “The innovation that is the hallmark of our industry was on display front and centre this week, from the insightful presentations in our conference programme to the demonstrations of new devices, technologies and services in the exhibition halls.  Once again, Mobile World Congress stands out as the must-attend event for the global communications industry.”

During the event, leaders from companies including Alcatel-Lucent, BBC, Bharti Airtel, China Unicom, Ericsson, Huawei, KDDI, RIM, Samsung, Spotify, Telstra and Vodafone, among others, discussed and debated the trends and issues which are shaping the mobile industry today and into the future.  In a Mobile World Congress first, Google Chairman and CEO Eric Schmidt delivered a Mobile World Live keynote to a standing-room only crowd in Barcelona; the session has also been viewed by more than 35,000 people to date via the Mobile World Live portal.  To access the replay of the Mobile World Live keynote, as well as interviews with the industry’s leading executives, please visit www.mobileworldlive.com.

More than 20,000 people visited the inaugural App Planet, a focused event designed to bring together the many critical elements of the broad mobile application ecosystem together in one location. Google, Motorola, RIM, Sony Ericsson, Vodafone and WIPJam each held application developer conferences (ADC) within App Planet.  Overall, more than 6,000 developers attended Mobile World Congress this year.

The 2010 Congress featured 1,300 exhibiting companies and occupied more than 56,000 net square metres of exhibition and business meeting space.  Nearly 2,400 international print, Web and broadcast media attended the event to analyse and report on the many significant industry announcements made at the Congress.

“The GSMA is committed to holding the Mobile World Congress in Barcelona through 2012,” continued Hoffman. “We thank the city of Barcelona, Catalonia, Fira de Barcelona and all our Barcelona partners for being such warm and efficient hosts, and we look forward to being back here next year.”

Sponsors for the 2010 Mobile World Congress included LG Electronics as Platinum Sponsor and Generalitat de Catalunya as Mobile Innovations Platinum Sponsor.  For more information on the 2010 Mobile World Congress, please visit www.mobileworldcongress.com.

Note to editors

*This figure includes all attendees for the event, including delegates, exhibitors, contractors and media

About the GSMA

The GSMA represents the interests of the worldwide mobile communications industry. Spanning 219 countries, the GSMA unites nearly 800 of the world’s mobile operators, as well as more than 200 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers, Internet companies, and media and entertainment organisations. The GSMA is focused on innovating, incubating and creating new opportunities for its membership, all with the end goal of driving the growth of the mobile communications industry.

For more information, please visit Mobile World Live, the new online portal for the mobile communications industry, at www.mobileworldlive.com or the GSMA corporate website at www.gsmworld.com.

Compliance By MobileGuard!

By making the most of the advantages offered by mobile communication devices your staff can work harder, smarter and faster than ever before. However, at the same time you have the responsibility of making sure that your company is operating within the compliance requirements set out by the regulatory bodies who oversee your industry.

In general, these regulations cover several key areas: ensuring that mobile communications are secure, archiving all messages for retrieval if required, and monitoring employee communications. If these conditions are not met then it could mean serious consequences for your company. In the past, companies who have been convicted of not meeting compliance requirements have been fined anywhere from several thousand to millions of dollars.

MobileGuard’s solutions enable your company to maintain efficiency using mobile technology while working within current regulatory legislation and recently passed mobile mandates. With a MobileGuard solution in place, all mobile communications are monitored and archived according to the policies and settings you define. This technology is easily upgrade-able with new mobile communication compliance regulations when they arise.

Having a MobileGuard mobile communication compliance solution in place eliminates the data security problems presented by the use of mobile communication devices in industries where sensitive information is exchanged. Your staff can rely on the efficiency of instant communications, while you can have the confidence of knowing that the system in place will protect your company from liability.

MobileGuard provides complete mobile device compliance and message archiving for every industry, so your business can meet existing and future electronic information storage and retrieval regulations.

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