SEC knocking at the door? Cooperate

Well, unless you’re certain you’ll be found innocent of any charges the SEC is bringing to bear. If you’re eventually going to get nailed, cooperating will garner a lower penalty.

From the link:

A new study finds that it may pay — at least in dollar terms — to help the SEC by sharing results of internal investigations and keeping the public informed when something has gone awry. Rebecca Files, an accounting professor at the University of Texas at Dallas, claims that while cooperating with the SEC increases a company’s likelihood of getting sanctioned, being both cooperative and forthcoming in information shared with investors can result in lower penalties. “It’s just like going to the cops and turning yourself in,” she says. “You’ll still have to pay some cost for your actions, but the penalty will be significantly reduced.”

Files based her findings on a study of 1,249 restatements made between 1997 and 2005, 10% of which resulted in a sanction against the company or its managers. She drew her conclusions on how forthcoming companies were about their problems in press releases and 8-Ks, as well as how quickly they came forward after a problematic reporting period. Since the SEC’s dealings with these companies occur behind closed doors, she could not know how fully cooperative they were in any investigation.

Hey bloggers, new FTC rules coming down the pipe

That group includes yours truly. The Federal Trade Commission is coming down on undisclosed paid web 2.0 content including blogging and social networking on December 1.

I do a little paid blogging, plus I tack web 2.0 exposure onto most of my PR and MR work. I don’t have a current disclosure policy — it’s pretty much chance that something gets disclosed, or not — and I’m certainly not going out of my way to hide anything. My guess is most posts that shill for something are pretty obvious whether I overtly disclose, or not, that fact.

I also  bet a lot of enthusiastic blogging I do on subjects that really grab me might even come off as shilling. For the record almost all press releases I post are posted purely with the intent of widely spreading information I find personally interesting.

At the end of the day I’m not too certain how the FTC can even seriously patrol this “issue.”

From the link:

As of December 1, the Federal Trade Commission is going to require bloggers, and prominent tweeters and Facebook types to disclose any paid endorsementsto their followers, online friends and readers. These new rules have the potential to change everyone’s online habits. Here’s what you need to know:

New banking rules

Regulation is coming fast to the banking world. I’m no fan of business regulation, but the financial sector has no one to blame but itself for any rules imposed from above. Particularly after taking handouts from the taxpayers.

From the link:

U.S. Treasury Secretary Timothy Geithner will soon propose an overhaul of the financial regulatory system that is expected to give the Federal Reserve powers to monitor broad economic risks, a Treasury spokesman confirmed on Monday.

As officials grapple with the worst financial meltdown since the Great Depression, government officials plan to outline a revamp of controls over banks and financial institutions aimed at preventing a repeat of the crisis.

Geithner is due to soon outline proposed changes that are also expected to include tougher capital standards for banks, according to a report in the Wall Street Journal that a Treasury spokesman said is accurate.

The administration’s goal is to unveil its proposals before the meeting of the heads of state of the Group of 20 rich and developing economies in early April, the report said.

The rules are further expected to aim to ensure that banks cannot shop among different regulatory agencies to obtain the most lenient supervision and require more transparency and stricter rules for the way money flows between banks.

Q&A with George Soros

The May 15, 2008, New York Review of Books had an interesting interview with financier George Soros. They covered financial regulation, currency, the housing crisis and the global economy. The interview even touches briefly on politics.

This interview is a great read to hear a highly educated opinion on all those subjects. For those who see the name “George Soros” and only think of the man who pumped tens of millions into the 2004 election to attempt and unseat Bush 43, this interview might open your eyes a bit.

He’s not Democratic ideologue. Maybe for a bit more market regulation than I prefer, but after these last few years beginning with the Enron debacle it’s hard to argue for a completely free market. And he’s certainly made a whole lot more money out of all the markets he discusses than I have — and most other people for that matter.

Here’s two samples from the interview.

… on the 2004 election:

Woodruff: A larger question on the campaign—you gave, I believe, something like $23 million in 2004 to various Democratic efforts: MoveOn.org and candidates. Far less than that so far this year—why the change?

Soros: Well, because I think that was a unique time when not having President Bush reelected would have made the situation of this country and of the world much better. I think now it’s less important. And, in any case, I don’t feel terribly comfortable being a partisan person because I look forward to being critical of the next Democratic administration.

… on his philosophy of market regulation:

Woodruff: What of your book and the philosophy that comes of it?

Soros: In human affairs, as distinguished from natural science, I argue that our understanding is imperfect. And our imperfect understanding introduces an element of uncertainty that’s not there in natural phenomena. So therefore you can’t predict human affairs in the same way as you can natural phenomena. And we have to come to terms with the implication of our own misunderstandings, that it’s very hard to make decisions when you know you may be wrong. You have to learn to recognize that we in fact may be wrong. And, even worse than that, it’s almost inevitable that all of our constructs will have some kind of a flaw in them. So when it comes to currencies, no currency system is perfect.

So you have to recognize that all of our constructions are imperfect. We have to improve them. But just because something is imperfect, the opposite is not perfect. So because of the failures of socialism, communism, we have come to believe in market fundamentalism, that markets are perfect; everything will be taken care of by markets. And markets are not perfect. And this time we have to recognize that, because we are facing a very serious economic disruption.

Now, we should not go back to a very highly regulated economy because the regulators are imperfect. They’re only human and what is worse, they are bureaucratic. So you have to find the right kind of balance between allowing the markets to do their work, while recognizing that they are imperfect. You need authorities that keep the market under scrutiny and some degree of control. That’s the message that I’m trying to get across.