Trust Digest 69 (October 21, 2014)


Banks Warned of Stiffer Penalties
Banks are not doing enough to curb misconduct and face stiffer punishment if they do not improve, Federal Reserve Governor Dan Tarullo has warned. “If banks do not take more effective steps to control the behaviour of those who work for them, there will be both increased pressure and propensity on the part of regulators and law enforcers to impose more requirements, constraints, and punishments,” Mr Tarullo said.
Key Words: NY Fed, Dan Tarullo, Banking Culture
Trust Issues: Regulation, Culture


Forex-Rigging Fines Could Hit $41 Billion Globally: Citi
Banks could have to pay as much as $41 billion globally to settle probes into allegations traders rigged benchmarks in the currency markets, Citigroup Inc. (C) said today. Deutsche Bank AG (DBK) is seen as probably the “most impacted” with a fine of as much as 5.1 billion euros ($6.5 billion), Citigroup analysts led by Kinner Lakhani calculated, estimating the Frankfurt-based bank’s settlements could reach 10 percent of its tangible book value, or its assets’ worth.
Key Words: Deutsche Bank, Barclays, UBS, Forex Rigging Scandal
Trust Issues: Regulation, Integrity


President Signs Executive Order to Improve Payment Security
In a move that may hasten the adoption of chip and PIN technology in the U.S., President Obama signed an Executive Order Friday to implement enhanced security measures, which include securing payment cards through microchips and PINs. Speaking at the Consumer Financial Protection Bureau, the President said (video) it was “infuriating” for someone “halfway around the world” to “run up thousands of dollars in charges in your name just because they stole your number or because you swiped your card at the wrong place and the wrong time.”
Key Words: Pres. Obama, Information Security
Trust Issues: Capability, Responsibility


New Paper Finds Fuzzy Definitions for Board Diversity
A 2010 federal effort to nudge companies to expand their board nominee searches to include more women and minorities has made little headway because companies are defining diversity as they choose, a new research paper finds. Nearly all of the biggest companies are interpreting diversity as having a varied background or experiences, instead of gender, race or age, according to Aaron A. Dhir, a visiting professor at Yale Law School, who analyzed the proxy statements of the Standard & Poor stock index of 100 companies.
Key Words: Boards, Diversity, SEC
Trust Issues: Similarity, Diversity, Governance


How Apple, IKEA and Tesla Redefine Climate Change Practicality
"Be practical" is a common theme in discussions about future energy sources — even in light of climate change. The rationale usually is that we all need to "face the reality" that fossil fuels will provide the majority of global energy for decades, unless truly game-changing technological breakthroughs emerge and can be scaled. Yet it's clear that the "be practical" approach is anything but.
Key Words: Green Business, Innovation, Alternative Energy
Trust Issues: Sustainability, Capability


Facebook Sues Lawyers for Pressing Dubious Ownership Case
The last thing we do, let’s sue all the lawyers. That, in essence, is what Facebook’s chief executive and principal founder, Mark Zuckerberg, has decided to do in the dormant case of Paul Ceglia, an upstate New York entrepreneur who claimed in 2010 that Mr. Zuckerberg had struck an agreement with him in Facebook’s early days to give him a substantial stake in the company. Mr. Ceglia’s lawsuit seeking a multibillion-dollar stake in Facebook was dismissed by a federal judge amid substantial evidence that he had fabricated the documents purportedly supporting his claim, and prosecutors filed criminal fraud charges against him in 2012 that were still pending.
Key Words: Facebook, Ceglia
Trust Issues: Capability, Alignment of Interests


Microsoft CEO: 'I Was Completely Wrong' About Gender Comment
Microsoft CEO Satya Nadella has provided some insight behind the controversial comments he made at an event earlier this month that women should not focus on asking for a raise but rather have faith that their hard work will be recognized by the system. “I was completely wrong in the answer I gave to the question that was asked around how should women promote themselves and make advances to their own careers,” Nadella told CNBC in an interview this morning. “I basically took my own approach to how I’ve approached my career, and sprung it on half [of] humanity. And that was just insensitive.”
Key Words: Microsoft, Nadella, Workplace Gender Politics
Trust Issues: Trust Repair, Accountability, Communication


Why High-Frequency Trading Is So Hard to Regulate
Stock manipulation is one of the great bugaboos among investors because it generates fear that the market is as rigged as a three-card monte game on a Bronx street corner. Since the publication of Michael Lewis’s book “Flash Boys” earlier this year, high-frequency traders have come under increased scrutiny for their use of sophisticated computer programs that can whipsaw prices by flooding the market with orders in milliseconds. The challenge in pursuing charges against these firms is that they are taking advantage of changes in the technology underpinning the markets to profit from quick trades, which is not illegal. But regulators can find it difficult to draw the line between acceptable trading strategies and manipulation because of the complexity of the strategies.
Key Words: High-Frequency Trading, SEC
Trust Issues: Regulation


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