Investor Relations 101 (IR101)

[Tina]

Issue Date: IR Alert - July 28, 2009

As Political Pressure Builds, SEC Acts Fast to Limit "Naked" Short-Selling: Interim Rule Created During Meltdown To Be Made Permanent

Amid intense political pressure, the Securities and Exchange Commission Monday said it is taking several steps toward curbing so-called naked short-selling — or borrowing and then selling shares in the hope the stock price will fall. The practice has been blamed by some for driving down the shares of financial stocks. Of particular concern to some critics is naked short-selling, in which investors sell the stock without first borrowing the shares, the Wall Street Journal reports.

The SEC said it will make permanent an interim rule passed during last fall's market turmoil that requires broker-dealers to promptly purchase or borrow securities to deliver on a short-sale. Additionally, the SEC said it is working with several self-regulatory organizations to make short-sale volume and transaction data available to the public on the Internet. Such a move will enhance the amount of information already disclosed under another temporary rule currently. That rule, which expires in August, applies only to certain institutional money managers and doesn't require public disclosure, the SEC said, reports Journal writer Sarah N. Lynch.

Instead of renewing that temporary rule, the agency said it is pushing for broader disclosure of information to people outside of the commission.

"Today's actions demonstrate the commission's determination to address short-selling abuses while at the same time increasing public disclosure of short-selling activities that affect our markets," SEC chairman Mary Schapiro said in a statement.

The SEC said it will hold a roundtable on Sept. 30 to discuss possible new regulations to curb abusive short-selling, such as a pre-borrow requirement.

Separately, the SEC is also reviewing several other proposals to limit short-selling, possibly by reinstating a similar version of the "uptick" rule or imposing a circuit-breaker. A final decision on those proposals is expected later this summer.

[Tina]

Issue Date: IR Alert - July 28, 2009

Shareholder Class-Action Suit Dismissed: Charges that Two Kmart Execs Drove Stock Value Down Post-Bankruptcy are Unsupported

A federal judge has dismissed a shareholder suit alleging two top Kmart officials tried to drive down the price of the company's stock by toying with asset values during and just after its bankruptcy reorganization. Southern District of New York Judge Lewis A. Kaplan threw out a putative class action that claimed former Kmart board chairman Edward S. Lampert and Julian Day, the company's former president, chief operating officer and chief executive officer, intentionally undervalued billions in real estate assets, the New York Law Journal reports.

The plaintiffs in Campo v. Sears Holdings Corp. bought shares in Kmart between May 6, 2003 — the day Kmart emerged from Chapter 11 bankruptcy — through Sept. 29, 2004. Lampert headed the board from May 6, 2003, until March 2005. Day held his positions from March 2002 until October 2004. The plaintiffs alleged both executives undervalued the real estate so Lampert could win control of the company at a low price and both Lampert and Day could acquire Kmart shares for a low price, reports Journal writer Mark Hamblett.

Kaplan explained that Sears was sued because Kmart acquired Sears, Roebuck & Co. in 2005 and Sears allegedly succeeded to Kmart's liabilities.

In filings with the Securities and Exchange Commission, the plaintiffs charged, Kmart stated that its plant property and equipment were worth $4.623 billion but the value was reduced to just $10 million "to adjust assets and liabilities to fair market value ('FMV'), and reflect the write-off of Predecessor Company's equity and application of negative goodwill to long-lived assets."

In reality, the plaintiffs claimed, the value of the real estate was between $9 billion and $18 billion.

But Kaplan disagreed with that argument. "This rather dramatic assertion is not borne out by plaintiffs' well pleaded factual allegations," he said. "First, defendants never represented that the fair market value of Kmart's real estate was $10 million. In each of the statements in question, Kmart disclosed that it had accounted for its assets as required by fresh start accounting."

The judge said that after reading the disclosures "no rational investor reasonably could have concluded that $10 million represented the fair market value of the company's real estate. To the contrary, any literate person would have understood that Kmart had stated that the fair market value of its [plant, property and equipment], as of April 30, 2003, was $4.623 billion."

[Tina]

Issue Date: IR Alert - July 27, 2009

Emerging Trend: ‘Mysterious' High-Speed Trading Practice Damaging the Playing Field — and Manipulating Share Prices

It is the hot new thing on Wall Street, a way for a handful of traders to master the stock market, peek at investors' orders and, critics say, even subtly manipulate share prices. It is called high-frequency trading — and it is suddenly one of the most talked-about and mysterious forces in the markets. Powerful computers, some housed right next to the machines that drive marketplaces like the New York Stock Exchange, enable high-frequency traders to transmit millions of orders at lightning speed and, their detractors contend, reap billions at everyone else's expense, the NY Times reports.

These systems are so fast they can outsmart or outrun other investors, humans and computers alike. And after growing in the shadows for years, they are generating lots of talk. Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer, reports Times writer Charles Duhigg.

And when a former Goldman Sachs programmer was accused this month of stealing secret computer codes — software that a federal prosecutor said could "manipulate markets in unfair ways" — it only added to the mystery. Goldman acknowledges that it profits from high-frequency trading, but disputes that it has an unfair advantage.

Yet high-frequency specialists clearly have an edge over typical traders, let alone ordinary investors. The Securities and Exchange Commission says it is examining certain aspects of the strategy.

"This is where all the money is getting made," said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. "If an individual investor doesn't have the means to keep up, they're at a huge disadvantage."

For most of Wall Street's history, stock trading was fairly straightforward: buyers and sellers gathered on exchange floors and dickered until they struck a deal. Then, in 1998, the Securities and Exchange Commission authorized electronic exchanges to compete with marketplaces like the New York Stock Exchange. The intent was to open markets to anyone with a desktop computer and a fresh idea.

But as new marketplaces have emerged, PCs have been unable to compete with Wall Street's computers. Powerful algorithms — "algos," in industry parlance — execute millions of orders a second and scan dozens of public and private marketplaces simultaneously. They can spot trends before other investors can blink, changing orders and strategies within milliseconds.

High-frequency traders often confound other investors by issuing and then canceling orders almost simultaneously. Loopholes in market rules give high-speed investors an early glance at how others are trading. And their computers can essentially bully slower investors into giving up profits — and then disappear before anyone even knows they were there.

High-frequency traders also benefit from competition among the various exchanges, which pay small fees that are often collected by the biggest and most active traders — typically a quarter of a cent per share to whoever arrives first. Those small payments, spread over millions of shares, help high-speed investors profit simply by trading enormous numbers of shares, even if they buy or sell at a modest loss.

"It's become a technological arms race, and what separates winners and losers is how fast they can move," said Joseph M. Mecane of NYSE Euronext, which operates the New York Stock Exchange. "Markets need liquidity, and high-frequency traders provide opportunities for other investors to buy and sell."

The rise of high-frequency trading helps explain why activity on the nation's stock exchanges has exploded. Average daily volume has soared by 164 percent since 2005, according to data from NYSE. Although precise figures are elusive, stock exchanges say that a handful of high-frequency traders now account for a more than half of all trades.

[Tina]

Issue Date: IR Alert - July 27, 2009,

Shareholders Uneasy About Merck's Plans to Merge with Schering-Plough: Multiple Lawsuits May be Resolved By New Settlement

Merck & Co. and Schering-Plough Corp., which are combining to form the world's No. 2 drugmaker, said they have each reached a settlement to end multiple lawsuits brought by shareholders seeking to block the tie-up. The two settlements, which resolve all existing claims and any that could be brought in the future by shareholders, require public disclosure — mostly already made — of details about Merck's $41.1 billion acquisition of Schering-Plough. The settlements also allow the plaintiffs to seek payment of their legal fees and costs by the companies, the AP reports.

"There's no admission of wrongdoing or liability," said Merck spokeswoman Amy Rose. "No damages were paid." The potential class-action lawsuits were filed shortly after the proposed deal was announced on March 9, when few details were public. Much of the information to be disclosed — on topics such as the opinions of and compensation of the financial advisers who helped the companies put together the deal — was divulged in the joint proxy statement the two companies filed on June 25, reports AP writer Linda A. Johnson.

For instance, Merck agreed to pay J.P. Morgan $45 million for its financial advice; Schering-Plough agreed to pay Goldman Sachs $33.3 million and Morgan Stanley $22 million. Other details were listed in a Securities and Exchange Commission filing made Friday by Schering-Plough.

Those include the fact that Schering-Plough only contacted one other company about an alternative, possibly better deal, and that the first draft of the agreement put deal-protecting restrictions on Schering-Plough: It could not accept a superior proposal from another party and would have to pay Merck $1.75 billion to back out of the deal. The final merger agreement instead set a reduced breakup fee of $1.25 billion and allowed Schering-Plough to end the deal in order to accept a superior bid.

In general, the lawsuits had accused Merck, Schering-Plough and their top executives and board members of breaching their fiduciary duty to shareholders and unjustly enriching themselves with sizable payouts for departing officers.

Among other things, shareholders of Merck argued their company was paying too much for Schering-Plough; Schering-Plough shareholders argued they were getting too little money for their fast-growing company.

Both groups are to vote on whether to approve the merger on Aug. 7. Assuming they approve it, remaining hurdles include divesting some part of the two companies' animal health businesses and getting antitrust approval from regulators in the U.S., European Union and other countries.

The deal is still expected to close in the fourth quarter, Rose said.

[Tina]

Issue Date: IR Alert - July 24, 2009

Crackdown Unveiled on Over-the-Counter Derivatives: Regulators Will Get More Authority Over "Dark Corner" Markets Next Week
Over-the-counter derivatives markets, a "dark corner" of the U.S. financial system, would face much greater public and government scrutiny under proposals detailed by regulators this week. As part of the Obama Administration's broad push to reshape financial regulation, the chairmen of the Securities and Exchange Commission and the Commodity Futures Trading Commission outlined an OTC derivatives crackdown. In addition, Deputy Treasury Secretary Neal Wolin said in a speech that next week the Treasury will deliver draft legislation to regulate over-the-counter derivatives, Reuters reports.

CFTC chairman Gary Gensler told the House Financial Services Committee in a hearing that all derivatives dealers should face rules regarding capital, margin, conduct and record keeping. He urged changes in bankruptcy law to protect against derivatives dealer insolvencies and pressed for position limits for CFTC-regulated OTC derivatives that affect price discovery. "The current financial crisis has taught us that the derivatives trading activities of a single firm can threaten the entire financial system and that all such firms should be subject to robust federal regulation," Gensler said, reports Reuters writers Kevin Drawbaugh and Christopher Doering.

Capital requirements for derivatives dealers would help prevent systemic risk to the U.S. economy such as last year's crisis at bailed-out insurance behemoth American International Group. Derivatives dealers should be subject to record-keeping and reporting requirements for all of their OTC derivatives positions and transactions, he said.

"These requirements should include retaining a complete audit trail and mandated reporting of any trades that are not centrally cleared to a regulated trade repository," Gensler said.

Representative Paul Kanjorski, a Democrat from Pennsylvania and a senior member of the committee, said at the hearing that the views of the CFTC's Gensler and SEC chairman Mary Schapiro would help Congress "to sensibly regulate this dark corner of our financial markets."

The Obama administration has directed the SEC and CFTC to iron out their opposing philosophies in favor of common rules making it easier to find violators and introduce new financial instruments. The two agencies, which have planned a series of public hearings on the matter in the coming weeks, have a Sept. 30 deadline. But they did not rule out asking for an extension.

Schapiro largely echoed Gensler's concerns about OTC derivatives. She also weighed in on another aspect of the administration's plan, saying that any new systemic risk regulator should be backed up by a strong council of regulators empowered to set liquidity and capital standards.

A focus of the administration's regulatory reform plan centers on having standardized over-the counter derivatives go through central clearinghouses. Problems with derivatives such as credit default swaps were blamed for amplifying last fall's economic crisis.

Despite some lawmakers' concerns, Gensler was confident that clearinghouses would lower risk.

"Regulators would be able to see (the clearinghouses) and rigorously oversee them," Gensler said. "I believe over time you might see a consolidation and a concentration in this, but initially the statute would allow for more than one."

Representative Judy Biggert, an Illinois Republican and House Financial Services Committee member whose district includes affluent Chicago suburbs, said she was concerned that a crackdown could harm financial markets' ability to innovate. "It's crucial that we strike the right balance and not overreact," she said.

[Tina]

Issue Date: IR Alert - July 24, 2009

U.S. Sues Investors Over Profits Made From Fake Takeover Rumors: "Suspicious" Trading Nets Millions for Kuwaiti Firm
Securities regulators have sued the head of a Kuwaiti investment firm seeking the return of millions of dollars in profit made after false takeover rumors pushed up shares of two American companies. The Securities and Exchange Commission, which filed the civil lawsuit in Federal District Court in Manhattan, said in a statement that Hazem Khalid al-Braikan, the Al-Raya Investment Company and other related entities in Kuwait and Bahrain had realized trading profits of more than $5 million from suspicious trading, Reuters reports.

The SEC said the defendants "profited from amassing large positions" in securities of Harman International Industries and Textron shortly before bogus announcements of takeover offers for the companies. Other defendants include the United Gulf Bank, described in the court papers as the investment banking arm of the Kuwait Projects Company, and the KIPCO Asset Management Company, a United Gulf unit.

The SEC said Braikan is chief executive of Al-Raya, which the agency said purports to be an international asset management company created in 2007 with KIPCO Asset Management.

Harman shares briefly soared on Monday after several media outlets reported that a private investment firm called the Arabian Peninsula Group planned to buy the high-end audio equipment maker for $49.50 a share — about double the Friday close of $25.18.

The lawsuit deepens problems faced by Bahrain’s banking sector. Two Bahrain banks were connected to multibillion-dollar corporate defaults in neighboring Saudi Arabia in June that have since shaken the gulf financial sector and spurred investor calls for more transparency.

The SEC said Braikan had engaged in "an aggressive trading strategy" of buying Harman stock and call options in the four trading days before the fraudulent tender offer.

The commission said Braikan and the United Gulf Bank liquidated their positions in Harman and requested the money in their Citigroup accounts wired to them.

On July 20, Braikan sold his entire position of 341,000 shares of Harman common stock for a profit of about $1.15 million.

[Tina]

Issue Date: IR Alert - July 23, 2009

Business Groups Attack Obama's Proposal for Consumer-Finance Watchdog: House Committee Pushes Consideration Back to September
This is a critical time for the Obama Administration's proposed Consumer Financial Protection Agency, a centerpiece of its financial market reforms. The CFPA, officially proposed in June, is under fierce attack by the financial services industry, the U.S. Chamber of Commerce and a growing number of business groups. Those forces scored a few points this week when House Financial Services Committee chairman Barney Frank announced that his committee is delaying consideration of the CFPA until September, CNNMoney.com reports.

Frank originally aimed to have the committee approve the legislation by early August. Though some lobbyists proclaim to be backing the administration's plans for financial reform, they're adamantly against an agency that will have consumer financial interests as its sole focus. Steve Bartlett, head of the Financial Services Roundtable, told the New York Times that his group has a dual goal: to support comprehensive reform and to kill the CFPA, reports CNNMoney writer Donna Rosato.

Consumer groups are fighting back and recruiting their own allies from the financial services world. On Wednesday, Rep. Frank joined Americans for Financial Reform for a press conference on Capitol Hill to make the economic case for the new agency. Bennett Freeman, an executive at Calvert Investments, and Tim Duncan, founder of Story Street Wealth Management, were on hand to support the call for the CFPA.

Meanwhile, Elizabeth Warren, who originated the idea for a consumer financial product safety commission two years ago and is expected to become its chief — if and when the agency is created — posted a YouTube video this week to bring her case for the CFPA directly to the public. She also testified before Congress on the need for the agency earlier this month.

[Tina]

Issue Date: IR Alert - July 23, 2009

Investor Group Rallies for SEC Reform: Satellite Radio Investors Protest Short-Selling Regulation By Backing New Film
"Stock Shock—The Movie" is sending shock waves through the offices of the Securities and Exchange Commission as regulators receive DVD copies in the mail. Disillusioned Sirius XM investors have embraced the movie that tells their story and now are sending their new and used copies directly to the SEC. In addition to telling the general history of Sirius XM satellite radio, the movie lays out a compelling case that the stock of this company has been heavily and illegally manipulated, both through naked shorting and also through more standard manipulation tactics.

One investor writes, "I enclose with this letter a DVD copy of the movie ‘Stock Shock.' It is the failure of the SEC to so much as ask the right questions that has ruined its reputation among American investors. The idea that independent movie makers have to produce a feature length movie about stock price manipulation to bring public attention to this issue is pathetic."

"Stock Shock" zeroes in on one of the most shorted stocks on the Nasdaq — Sirius XM, which hit a high of $9.00/share and then plummeted to a horrifying low of .05 (cents) in 2009, leaving an estimated one million Sirius XM investors with their dreams shattered and their bank accounts emptied. Now fans of the movie are taking matters into their own hands as they share information and addresses on the Yahoo finance boards and join forces to change the way short-selling is regulated.

Antony Richard Petrilla, Division of Enforcement at the SEC, confirmed the offices have received copies of "Stock Shock" and the SEC public affairs office has been in communication with the film's director, Sandra Mohr. Time will tell if the efforts can generate a new regulatory approach.

[Tina]

Issue Date: IR Alert - July 22, 2009

NIRI's New York Chapter Calls Special Summer Session to Address Proxy Reform: Focus Is On How IROs Should Proceed
The New York Chapter of the National Investor Relations Institute (www.niriny.org) announced it will hold a special summer program on July 27 to discuss recent, as well as proposed, proxy reform by the SEC. In addition to the new Rule 452 (Broker Discretionary Vote being eliminated for 2010 Proxy Season) passed this month, the SEC is also proposing additional reform to be voted on later this year (access by dissident shareholders to the management ballot that is mailed to shareholders), for which the comments deadline has been set for August 17.

The July 27th program will be comprised of a panel of leaders from several industry associations and will cover both recent reform and the proposed changes. Discussion will include how these changes will impact the role of the Investor Relations professional and what steps IROs should consider to plan for the future. The panel will also share their insights as to the position that each organization is taking with regard to reform, and the concept of piecemeal change versus a complete review and overhaul of the proxy system.

The panel will include Jeffrey Morgan, president and CEO of NIRI National, Niels Holch, executive director of the Shareholder Communications Coalition, and Douglas Chia, senior counsel & assistant corporate secretary at Johnson & Johnson. The moderator will be Professor Michael Goodman, director of corporate communication international at Baruch College. This program is sponsored by Computershare and is being organized in cooperation with the Robert Zicklin Center for Corporate Integrity at Baruch College.

"Due to the significance and the timing of these reforms, we felt it was important to hold a special program this summer to reflect the urgency of change that is confronting corporate issuers, " said Felise Glantz Kissell, president of NIRI-NY and senior vice president, Investor Relations and Strategy for HSN, Inc. "We are pleased to be able to assemble this panel of senior-level experts to provide members with timely information on this important issue."

NIRI-NY's May 27 program will take place at the Baruch College Conference Center, 151 E. 25th St, room 750. Registration and networking will begin at 5:30 pm, with the program beginning promptly at 6:00 pm. A networking reception will follow at 7:00 pm. There is no cost for this event, which will be open to all NIRI members (from NY and other chapters), as well as Baruch students, members of the Society of Corporate Secretaries and the Shareholder Communications Coalition. To register, send an email to http://zicklin.baruch.cuny.edu/centers/cci/events/baruch-college-niri-ny-proxy-reform-panel.

[Tina]

Issue Date: IR Alert - July 22, 2009

Obama Administration Proposes Restrictions on Credit-Rating Companies to Curtail Conflicts of Interest
The Obama Administration on Tuesday proposed setting disclosure requirements and limits on credit-rating companies, aiming to reduce conflicts of interest and provide more information about investment products. Standard & Poor's and Moody's Investors Service are among the firms that would be barred by the Treasury's proposal from consulting with any company they rate. "We need tough rules to regulate conflict of interests," Michael Barr, assistant Treasury secretary for financial institutions, said in a conference call, Bloomberg News reports.

The administration's proposal, part of a regulatory overhaul announced last month, follows accusations by investors and lawmakers that S&P, Moody's and Fitch Ratings gave AAA rankings to subprime mortgage bonds just before that market collapsed. That led to more than $1.5 trillion in write-downs and losses at the world's largest financial institutions since the start of 2007.

Regulators and lawmakers have questioned the independence of the firms, which are paid to grade securities by borrowers and underwriters who want to sell them.

The Treasury proposal would create an office at the Securities and Exchange Commission to supervise ratings firms. It would require the companies to disclose preliminary ratings of companies and use different symbols for structured products to make investors more aware of the risks that may be associated with asset-backed securities. The firms would also be required to hire a compliance officer.

S&P and Moody's are among the firms that have already adopted some of the proposals as they seek to restore confidence in the grading system. Officials from Moody's and Fitch said they supported the goals of improving transparency. Chris Atkins, a spokesman for S&P, said the firm was studying the proposals.

[Tina]

Issue Date: IR Alert - July 21, 2009

CIT Group's Deal with Creditors — Just Days After Obama's Rejection — Seen As Key Indicator of Investor Confidence
The struggling small business lender CIT Group has persuaded its creditors to provide a rescue package including $3 billion in new loans, buying the company a little more time to resolve its broader financial problems, according to a person familiar with the matter. The Obama administration last week denied CIT's request for a second round of federal aid, pushing the company to the brink of bankruptcy and raising concerns that thousands of small businesses would not survive its demise, the Washington Post reports.

CIT's ability to secure a rescue only days after the government's rejection is an important milestone in the recovery of the nation's financial markets, reflecting renewed confidence among investors. It is also a victory for the administration, which avoided both the political consequences of a bailout and the economic consequences of a CIT bankruptcy, reports Post writer Binyamin Appelbaum.

The New York company provides financing to about 1 million customers, including a Los Angeles sleeping-bag maker, an Alabama hardware distributor and the Dunkin' Donuts chain of coffee shops. The company, which funded its lending with money borrowed on Wall Street, fell into trouble after the capital markets collapsed two years ago, cutting off the flow of new money.

Earlier this month, investors lost confidence in the company's ability to survive as it faced looming deadlines to repay old loans. CIT's share price plummeted, and large numbers of customers started to close their accounts.

The company, which has already received $2.3 billion in federal aid, launched a public campaign for more, in particular seeking permission to participate in a program that helps companies borrow money from investors by guaranteeing repayment. But the Federal Deposit Insurance Corp., which operates the program, has not approved CIT's application over concerns about the company's viability.

Last week, the government told the company that more support would not be forthcoming. CIT then told its investors that they faced a choice between providing more money or taking their chances in bankruptcy court. On Sunday, some of those creditors agreed to provide $3 billion at an interest rate above 10 percent, according to a person who had been briefed on the deal, who requested anonymity because the company has yet to make an announcement.

The deal does not guarantee the company's survival. The company still must find a replacement for its traditional reliance on Wall Street funding. Furthermore, the new loans only add to a debt load that CIT already cannot afford to repay.

The company's likely next step, according to financial analysts, is to offer some creditors shares of its common stock in lieu of repayment. The creditors would lose much of their investments but would profit if CIT's shares eventually recover. Other troubled firms, including Citigroup and automakers General Motors and Chrysler, have used versions of this approach in recent months, arguing to creditors that the alternative is to risk losing even more.

Even if CIT survives, the company's problems already are hurting many of its customers. The company has cut new lending to a minimum, focusing primarily on collecting its existing loans.

[Tina]

Issue Date: IR Alert - July 21, 2009

Financial Services Executives Recognize Weaknesses In Sanctions Compliance Efforts, According To Deloitte Survey
Multinational organizations are beginning to feel the business need and regulatory imperative to coordinate economic and trade sanctions compliance activities across borders. Forty-six percent of respondents consider sanctions compliance to be a growing concern, and 63 percent say it is consuming more time, money and personnel than ever, according to a Deloitte survey of 388 executives and managers from around the world.

Increasing global regulatory rigor has made the task more pressing. Yet at nearly one in four companies' compliance staff receives training at best, just once every two years. In fact, some of the biggest challenges respondents' companies face in implementing sanctions-related controls are the complexity of screening all of the dimensions of financial transactions (56 percent) and meeting growing regulator expectations (41 percent).

According to the study, titled Facing the Sanctions Challenge in Financial Services, only 50 percent of companies have operationalized what sanctions policies they do have, creating the real possibility that the absence of a robust sanctions compliance program — or an inadequate one — could result in regulatory discipline by the U.S. Office of Foreign Assets Control (OFAC), as well as federal and state regulators and prosecutors.

"As OFAC continues to be more rigorous in its oversight of financial institutions and international regulators simultaneously increase their own vigilance, more organizations are responding to regulatory actions than they had in the past 10 years," said Michael Zeldin, global leader, Anti-Money Laundering/Trade Sanctions Services for Deloitte Financial Advisory Services. "At the same time, financial institutions have to contend with shrinking compliance budgets and headcounts. This is a combination fraught with danger."

The study also revealed some leading practices in sanctions compliance, including:

* Using risk assessments. Companies increasingly are using risk-based approaches to sanctions compliance, especially since OFAC's 2006 Interim Economic Sanctions Enforcement Procedures and the EU Third Money Laundering Directive required that compliance programs be tailored to a bank's risk profile. Thus, sanctions programs including risk assessments ­— an essential first step to a risk-based approach — have become part of industry-leading practices. Of the 44 percent of survey respondents who reported their companies had a well-defined, sanctions-specific compliance program in place, 70 percent were either completing or had completed a formal sanctions risk assessment within the past two years.

* Leveraging information technology. Financial services companies are at the forefront of industries endeavoring to use IT solutions to meet their expanding compliance obligations. In particular, most companies have been deploying IT solutions at the initial detection stage and then manually investigating the alerts generated by those systems. Just 19 percent of respondents work for firms that have fully automated this process, but more than twice as many (52 percent) expect to do so in three years' time. As automation is expected to increase, the number of companies with largely manual processes (especially at the front end) is expected to drop from 37 percent to less than half that (17 percent) in the next three years.

*Taking a global approach. Elements of sanctions compliance — from setting strategy to overseeing lists — can be run at a global, regional or local level. However, a global approach to sanctions compliance seems most popular; 55 percent of respondents' companies set sanctions compliance policy at the global level and 40 percent develop and oversee sanctions compliance and procedures at a global level. More than one-third (39 percent) of financial executives indicated their companies' board and C-suite executives communicate on sanctions compliance, across all geographic regions, coordinating efforts globally.

* Set a zero-tolerance tone at the top. The growing nature and scope of sanctions imperatives highlights the need to create an appropriate culture of compliance.


"Despite a slowly shrinking global economy in recent months, the speed with which money is changing hands throughout the financial services industry and beyond has remained unchanged," said Tim Phillipps, global leader, Forensic & Dispute Services for Deloitte. "Finding a needle the size of a few million laundered dollars in a billion dollar haystack of legitimate transactions can be a challenge for any multinational organization, but it should remain a global priority for management."

[Tina]

Issue Date: IR Alert - July 20, 2009

Barclays’ Jenkins Announces Plans to Establish His Own Fund Investment-Advisory Firm
(NY Times) Roger Jenkins, the Barclays executive who helped the bank win a vital capital injection from Middle Eastern investors last year, plans to set up his own firm advising sovereign wealth funds on investments. Jenkins, a Barclays veteran who is believed to be one of London’s highest-paid bankers, is negotiating his departure terms after 25 years with the bank, said a person with direct knowledge of the talks who declined to be identified because no agreement has yet been reached, the Times reports.

Jenkins, who chairs the investment banking business in the Middle East but is based in London, is eager to move to Los Angeles to spend more time with his family, this person said. Jenkins first expressed interest in setting up his own firm a year ago, but senior Barclays executives convinced him to stay and help Barclays through the worst of the credit crisis. In October, Jenkins played a crucial role in Barclays $8.6 billion deal with Qatar and Abu Dhabi, which helped the bank avoid surrendering some control to the British government, reports Times correspondent Julia Werdigier.

Earlier this year, he worked on the sale of iShares, the business that was eventually acquired by BlackRock as part of its purchase of Barclays Global Investors.

It should not come as a surprise that Jenkins plans to set up his new venture close to his family. It was his wife, Sanela Diana Jenkins, who introduced him in 2006 to Sheik Hamad bin Jassim al-Thani, the prime minister of Qatar and director of its sovereign wealth fund. Jenkins is a prominent socialite whose friends include Mick Jagger and Paris Hilton.

Jenkins, who does not sit on Barclays’ management board, joined Barclays as a graduate trainee and later built the bank’s successful but controversial structured capital markets business, which also has a tax arbitrage operation. According to the Sunday Times Rich List, Mr. Jenkins earned 40 million pounds ($65 million) last year and has a personal wealth of 120 million pounds.

In a sign that Barclays already prepared for Jenkins’ departure, the bank appointed John Vitalo as chief executive of investment banking and investment management for the Middle East in May.

[Tina]

Issue Date: IR Alert - July 20, 2009

Mark Cuban Beats the Rap: Billionaire Wins Bid to Get Insider-Trading Suit Dropped
(Bloomberg) Mark Cuban won his bid to toss the Securities and Exchange Commission's insider-trading lawsuit against him. U.S. District Judge Sidney A. Fitzwater in Dallas, in an order last week, granted Cuban's request to dismiss the case, without ruling on the merits of the SEC's accusations. He left room for the agency to refile its case, Bloomberg News reports.

In its Nov. 17 lawsuit, the SEC claimed Cuban promised during a 2004 telephone call with Mamma.com Inc.'s chief executive officer to keep confidential a planned private offering of company stock at a below-market price. Later that day, Cuban avoided more than $750,000 in losses by ordering the sale of his 6.3 percent stake in the Montreal-based Internet search company, the agency said, report Bloomberg writers Thom Weidlich and David Scheer.

"The SEC has failed to allege that Cuban undertook a duty to refrain from trading on information about the impending PIPE offering," Fitzwater wrote in his opinion, referring to the so- called private investment in public equity offer.

"We are reviewing the court's ruling and weighing our options," said Scott Friestad, an associate director of SEC enforcement who's overseeing the agency's case against Cuban.

In his ruling, Fitzwater said the SEC didn't allege that Cuban agreed not to trade on the information, only to keep it confidential.

"While the SEC adequately pleads that Cuban entered into a confidentiality agreement, it does not allege that he agreed, expressly or implicitly, to refrain from trading on or otherwise using for his own benefit the information," the judge wrote.

The judge's ruling is "somewhat novel" in how it defines a confidentiality agreement, said John Sylvia, a litigation attorney at Mintz, Levin, Cohn, Ferris, Glovsky & Popeo PC in Boston. "Ordinarily, one would assume that if you agree to come under the tent, that agreement would implicitly entail not using that information as well," he said.

Sylvia, who's not involved in the case, said he's sending his partners a memo suggesting they amend confidentiality- agreement language to note it also prohibits trading on the information.

"I think the SEC now knows it will be a very difficult case going forward," Ralph Ferrara, a lawyer for Cuban, told Bloomberg. "What he did was refine the argument down in a very sophisticated way."

Cuban argued that the SEC's complaint failed to show he was barred from selling the shares and that the agency was trying to expand the definition of insider trading. Ferrara argued at a May 26 hearing that the alleged confidentiality agreement didn't make his client Mamma.com's "fiduciary," or someone required to act for the benefit of another.

"The goal of protecting the integrity of the securities markets and promoting investor confidence would be achieved just as effectively by enforcing duties of nondisclosure and non-use that arise by agreement as by enforcing duties that flow from the nature of the relationship between the information source and the misappropriator," Fitzwater wrote.

The government may not have effectively presented the most compelling argument, that "implicit in the duty of confidentiality is a duty not to trade," said Jacob Frenkel a former SEC lawyer now with Shulman, Rogers, Gandal, Pordy & Ecker PA in Rockville, Maryland.

"Because of the other theatrics that have surrounded the SEC-Cuban relationship, the SEC may just drop this case despite the fact that this decision belongs in the appellate court because it goes to the heart of the agency's application of insider-trading enforcement theory," Frenkel said.

[Tina]

OMG That's unreal.

I have a lot I'm trying to catch up on (news/postings)

[TEX]

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=39825873

[Tina]

Makes for not so pleasant Thanksgiving get togethers that's for sure.

[TEX]

"A lot of these schemes start with trusted people. If you see someone investing their family's money, or their church's money, then it's someone you're more likely to trust,”

ya, Tina, that's we call "affinity scams."

[Tina]

Issue Date: IR Alert - July 17, 2009

Insider Trading Under the SEC Spotlight: Following Allegations of Illegal Trading By Two Commission Attorneys, Stronger Rules Issued

The Securities and Exchange Commission this week released a series of new stronger rules governing securities trading by agency officials, in light of an investigation being conducted by federal prosecutors into possible illegal insider trading by two enforcement attorneys at the commission. The strengthened rules require the pre-clearance of all trades by agency insiders. They also prohibit the trading of all securities of corporations under investigation by the agency. MarketWatch reports.

The rules require SEC employees to certify that they don't have non-public information about the companies whose securities they are trading in. In May, it became known that the FBI had been investigating possible insider trading by the two agency enforcement attorneys, reports MarketWatch writer Ronald D. Orol.

The SEC rules come as the agency's inspector general, David Kotz, is scheduled to testify Monday afternoon at a House Financial Services subcommittee hearing about insider trading and government officials.

The rules come after the agency on May 22 took steps to improve its oversight of SEC staff investments. The commission is taking steps to set up a new computer compliance system that would help the agency verify and monitor employee trading. The SEC also created a Chief Compliance Officer to oversee the agency's compliance program.

SEC Chairwoman Mary Schapiro plans to devote more resources to the SEC's Ethics Office to monitor and review agency staff transactions.

The new rules require supervisors to conduct periodic spot-checks of employee securities transactions and work projects.

The House Financial Services subcommittee is scheduled to discuss an SEC report examining the impact of "alleged inappropriate" trading by government officials. Lawmakers will also discuss legislation that would prohibit insider trading by members of congress or their staff. The bill, H.R. 682, is known as the Stop Trading on Congressional Knowledge, or STOCK Act.

[Tina]

Issue Date: IR Alert - July 17, 2009

Ponzi Hall Of Fame: Madoff May Be the King Schemer, But Fraud Probes Proliferating Across Country

Bernard Madoff may have made headlines as the biggest Ponzi schemer in history, but there are plenty of other cases to share the limelight. There is no exact dollar figure on how much Madoff bilked his investors, but it's been estimated in the tens of billions. Most other pyramid-style scams are run by mini-Madoffs, most of whom measure their take in the millions, CNNMoney.com reports.

"You see a whole range: some of them start small and build over time; some of them have got a good story and they get huge investments," said David Nahmias, U.S. Attorney in the northern district of Georgia, who has prosecuted Ponzi scams. "A lot of these schemes start with trusted people. If you see someone investing their family's money, or their church's money, then it's someone you're more likely to trust,” he added, reports CNNMoney writer Aaron Smith.

A Ponzi schemer masquerades as a legitimate money manager, using fresh cash from unsuspecting investors to make payments to more mature investors, which creates the false appearance of legitimate returns. Some promise annual returns as high as 80%. Here are some of the alleged Ponzi cases currently making their way through federal courtrooms across the country:

* Steinger and alleged accomplices, $1.25 billion, Florida

In late 2008, the U.S. attorney for the Southern District of Florida indicted four defendants in one of the largest alleged Ponzi schemes in recent history. Joel Steinger, a white-collar ex-con and accused ringleader, his brother Steven Steiner and two lawyers, Michael McNerney and Anthony Livoti, are accused of ripping off 30,000 investors in an elaborate life insurance scam through Fort Lauderdale-based Mutual Benefits Corp., which was shut down. All pleaded not guilty, and the case is ongoing.

"The government is simply overreaching in this case," said Jose Quinon, attorney for McNerney. "He's totally innocent of the charges in this case." Livoti's lawyer, Joel Hirschorn, said there was no Ponzi scheme and that his client committed no crime.

* Nicholas Cosmo, $370 million, New York

Another Ponzi scheme was allegedly perpetrated by Nicholas Cosmo, owner of two funds, Agape World, Inc. and Agape Merchant Advance, LLC, in Hauppauge, New York. Cosmo promised his 1,500 investors annual returns of up to 80%, according to the U.S. Attorney in the Eastern District of New York, who called the offer "too good to be true." Cosmo was charged with stealing — not investing — hundreds of millions of dollars.

* Anthony Demasi, $4.7 million, Illinois

Anthony Demasi of Tsunami Capital LLC, a trader in commodity futures, allegedly told investors that one of his trading pools made a profit of 172% — an astronomical claim by any standard. In reality, the pool had no profit at all and was part of a multi-million dollar Ponzi scheme, according to the U.S. Attorney's office in the Northern District of Illinois. The feds say that Demasi poured much of the money into his Chicago nightclubs and blew the rest on gambling.

* Anthony Vassallo, $40 million, California

At the age of 29, Anthony Vassallo is unusually young for a Ponzi defendant. In March, the federal authorities charged him with stealing $40 million from 150 investors — many of whom he met in church. He allegedly spent his take on a $103,000 Lexus and a $24,000 donation to the Church of Jesus Christ of Latter-Day Saints in Folsom.

But Vassallo pleaded not guilty and is currently out on bail, which was posted by family members, according to the U.S. Attorney's office in Sacramento. He is due back in court on July 17 for a status report.

* James Ossie, $25 million, Georgia

The U.S. Attorney's office in Atlanta charged James Ossie, founder of CRE Capital, Inc., in March with running a fast-moving but short-lived Ponzi scheme.

Ossie stole $25 million in nine months, according to the feds, who said he offered high-end investment contracts, starting at $100,000 each, and guaranteed return of the deposit with 10% interest in 30 days. But according to the U.S. Attorney's office, Ossie lost the money almost as quickly, and had only $2 million left when the scam came to an end.

Ossie pleaded guilty on May 21 and is scheduled to be sentenced on July 30, according to the U.S. Attorney's office, which said he had been indicted on 10 counts of wire fraud. According to the firm representing him, Steel Law, he pleaded guilty to one of those counts.

David Nahmias, the U.S. Attorney who indicted Ossie, said the Ponzi scammer's worst enemy is the recession.

"The economic situation kind of exposed a number of them, both because investors are asking for their money back, which tends to make Ponzi schemes fall apart, and I think investors are becoming more skeptical of claims of outrageous returns," he said.

[Tina]

Hi mookies, I subscribe to "IR Alerts" and the "NIRI" but I believe the pull them from various news reases that pertain to this industry.

The links to subscribe are in the ibox.

[@-@]

Who writes these IR Alerts, Tina?

[Tina]

It’s Time to Revisit What Investors Want: Get Back on Track by Studying These Six Post-Recessionary Attributes the Street Is Looking for Now


By John Lawlor, VP of Corporate Communications, dna13

Nowhere is competition more intense today than in the global securities investment market, particularly for equities, where investors have thousands of public companies to choose from in making investment decisions. Public companies must compete for these investment dollars – they must stand out in a crowded market; they must raise their corporate brand and reputation above the competitive noise.

The primary objective of investor relations is to establish a credible, mutually-beneficial relationship between a public company and the investment community. The objective of IR communications is to deliver timely and accurate information to ensure that the company is well understood by both sides of the Street and thereby build the market’s confidence in the company and ensure that it is fairly valued in the marketplace.

In planning and targeting IR communications, it is critical for the company’s investor relations team and executives to understand—and then communicate and emphasize—the attributes the Street looks for in a company in making investment decisions. The six most important are:

1. Strong brand and reputation. The starting point is a strong corporate brand and reputation. The market looks for companies that are doing everything possible to make every customer a repeat customer. As Warren Buffet once said: "If you lose dollars for the firm by bad decisions, I will be understanding. If you lose reputation for the firm, I will be ruthless."

2. Quality management. Hand-in-hand with a strong corporate brand and reputation is a strong, cohesive management team with years of relevant industry experience and a proven track record of driving consistent execution.

You might think of this as the management team’s brand and reputation, which is mutually complementary to the corporate brand. Just like good PR contributes to good IR, and vice versa, good management brand contributes to good corporate brand, and vice versa.

This critical attribute is best demonstrated in action, rather than spoken to. Biblical terms are appropriate in describing the right approach: "Thou shalt not tout, thou shalt not surprise; thou shalt be credible, thou shalt deliver."

3. Market leadership backed by sustainable competitive advantage—and substantial barriers to entry. The Street is, without a doubt, looking for companies that hold market-leading positions with strong momentum, and for those increasing market share in a large and growing global market. Also critical is having a stronger strategic position than competitors, and being positioned to maintain and strengthen and market leadership, while further distancing the company from competitors.

This attribute is supported by a solid foundation of company-specific strengths, which combined, present a powerful combination. Here is what you must communicate:

• Product excellence—being recognized for designing and producing outstanding products
• Strong focus on the customer
• Innovative, progressive, forward looking
• Agile, flexible, responsive
• Global outlook and presence
• Committed to quality—having high quality, reliable products and service
• Dependable—delivering on what you promise
• Skilled and professional­­—with an employee population that is world class
• Dynamic, competitive, focused
• Forthrightness, integrity
• Solid sales and distribution channels
• Strong, stable R&D team driving market-leading products

4. Strong underlying economics and scalability of the business. The Street is also looking for a solid track record of growth and good prospects for future growth. This includes: operating in a large and healthy, global market—and in industries where it is not notoriously difficult to make money. Significant geographic diversification and a broad, blue-chip customer base are also hot buttons here, as are sustainable profit margins.

5. Financial fortitude and stability—consistent, strong operational and financial performance. This translates to strong revenue and earnings growth history, as well as accelerating revenue and earnings. Healthy and expanding margins are part of this, as is having a strong balance sheet—and being conservatively capitalized, with strong net cash position, return on capital, and free cash flow.

6. Size and agility. Capping off the list of attributes is having sufficient size and strength to compete effectively and, at the same time, having demonstrated agility. Size can help dampen volatility in operational and financial performance and, therefore, in share price performance, as well.

John Lawlor, is the VP of Corporate Communications at dna 13. Prior to joining dna13, John served as VP of Corporate Relations at Cognos and was responsible for a number of key stakeholders, including governments, industry associations, financial analysts and shareholders.

[Tina]

PR Does Matter: News Dissemination Truly Prompts Trading—So Let's Start Getting the Word Out
By Dick Johnson, President, Johnson Strategic Communications; Blogger, "IR Café"

I know, I know. "It's all about the numbers." Investor relations people (and some CEOs and CFOs), steeped in accounting fundamentals and valuation formulas, are skeptical of public relations. We scoff at press interviews, photo ops … the "spin" stuff PR people do. Of course, no respectable fund manager or analyst would admit to being swayed by a press release, or getting an idea from a newspaper. "It's all about the numbers," they say.

Trouble is, influencing the market is not all about the numbers. It's all about the numbers—plus getting the right people to pay attention.

Two recent studies from respected business schools analyze extensive data on the relationship between press coverage and the market for individual stocks—and conclude that broader dissemination of news has benefits in the capital markets.

The more comprehensive study, a doctoral paper by Eugene Soltes at University of Chicago's Booth School of Business, looks at all U.S./ nonfinancial companies traded on NYSE, NASDAQ or AMEX, excluding the 100 largest by market cap. Soltes and his computer programs count and analyze all articles on these firms, 9.3 million bits of news in total, from the Factiva database for 2001 through January 2007. Then he crosses that information with annual trading data on the stocks, looking for long-term effects rather than a daily "pop" in market activity. Soltes concludes:

The press provides an important and highly visible system of communication between firms and investors. … Specifically, greater dissemination of firm news is found to lower bid-ask spreads, increase trading volume, and lower idiosyncratic volatility. …
By increasing the visibility of firms, greater dissemination may also reduce a firm's cost of capital.

In this paper, "dissemination" has to do with putting news out and getting it covered in the business press. Soltes says the average firm sent out 21 press releases a year, one every 12 trading days, covering deals, earnings and other news. (His tables give a median of 14 releases a year, just over one a month, a figure I like better as the midpoint in a range of small to large companies). For each release, business publications wrote an average of 1.5 articles—obviously, many releases get no coverage, while some get a lot. Soltes did not investigate why some releases get more coverage—being newsworthy probably is the key, although making connections with reporters also helps.

Soltes' point is that more is better—more frequent issuance of news and broader coverage of it. Consider the impact of news dissemination on bid-ask spreads:

Based on an average sized trade, a 20% increase in press coverage reduces the average cost of a trade by $1.07. With the average firm having nearly 25,000 trades a month, this translates into a significant reduction in trading costs.

Soltes also finds more dissemination of news increases monthly trading volumes and decreases the volatility of individual stocks. Most companies—and institutional investors—value reduced trading costs, increased liquidity and lower volatility.

The other recent study, by Brian Bushee and three accounting colleagues at the University of Pennsylvania's Wharton School, focuses on quarterly earnings news. This one looks at the three-day window around earnings (earnings release date, plus or minus one trading day) and yields more detail on immediate trading effects.

The Wharton study looks at quarterly announcements by 1,182 medium-sized NASDAQ firms from 1993 to 2004, excluding large cap companies based on an assumption that differences in coverage are more marked among lesser-known names. The authors analyze 608,296 articles on those quarterly results:

Our results indicate that, ceteris paribus, press coverage has a significant effect on firms' information environments around earnings announcements. We find that greater press coverage during the earnings announcement window is associated with reductions in bid-ask spreads and improvements in depth.

The impact of media attention extends to retail and institutional investors:

We find that greater press coverage is associated with a larger increase in the number of both small and large trades. … For small trades, these results are consistent with the press providing information to a broader set of investors and triggering more trades. For large trades, these results are consistent with press coverage reducing spreads and increasing depth enough to reduce adverse selection costs and encourage more block traders to execute trades.

Both papers take a mechanistic view of corporate processes for disseminating news and how the media respond. These are data mining studies by accounting scholars—focusing on numbers of releases and press stories, word counts and similar measures of dissemination.

No attention is given to the qualitative nature of the news – positive, negative or nuanced. The authors also do not explore why reporters decide to write more, less or not at all. (The Soltes study does analyze "busy news days," when a flood of business or non-business news overwhelms XYX Company's little press release, and confirms that issuing news on busy days has little benefit—although companies obviously can't control when Michael Jackson dies or GM goes bankrupt.)

Neither of these studies venture outside of traditional "news" databases to analyze the impact of using social media, blogs and so on, to disseminate news. My guess is future studies will prove that the impact on markets comes from getting the word out, by any means, as long as you are reaching the investing audience.

Bottom line: Issuing news has a measurable benefit for public companies in the capital markets—increasing volume, reducing trading costs and reducing volatility. More frequent news is better. Getting more reporters or news outlets to write about the company amplifies the benefit. That's what the quantitative evidence says.

So when PR people speak of "creating visibility," it does matter in the market.

Dick Johnson is a financial communicator with 35 years of experience. He is president of Johnson Strategic Communications Inc., an investor relations and corporate communications firm. Since 1997, the firm has helped companies in diverse industries tell their stories to financial and other audiences. A longtime member of the National Investor Relations Institute, Dick was president of the Kansas City NIRI chapter from 2003-06 and remains a chapter officer.

[Tina]

Issue Date: IR Alert - July 16, 2009

Credit Agencies Under the SEC Spotlight: Commission Establishes Group to Oversee Moody's, S&P and Other Rating Firms
A special group of examiners has been asked to focus specifically on supervising credit rating agencies like Moody's and Standard & Poor's, the top U.S. securities regulator said this week. Securities and Exchange Commission chairman Mary Schapiro said she has allocated additional resources to establish this branch of examiners, who will conduct routine and special exams. Schapiro also outlined possible legislative changes to strengthen investor protections including expanding sanctions available to the SEC, Reuters reports.

Credit rating agencies including Standard & Poor's and Fitch Ratings have been under fire for assigning top ratings to securities that later deteriorated in value. The SEC has already taken steps to clamp down on business practices that could present a conflict of interest such as banning an employee from structuring the same product he or she helps rate. But Schapiro has said more has to be done, report Reuters writers Rachelle Younglai and Karey Wutkowski.

"I also have directed commission staff to explore possible new regulations in this area, including limiting the potential for rating shopping," Schapiro said in prepared remarks delivered to a House Financial Services subcommittee.

SEC staff are exploring requiring banks and other bond issuers to disclose all the ratings obtained from credit rating agencies before they selected the credit agency to publicly rate their product, Schapiro said.

Schapiro has been working members of Congress in a bid to preserve the SEC as the country's securities markets regulator and investor protector. Unlike other financial regulators, the SEC has not been stripped of its authorities under proposals from the Obama Administration.

Schapiro said SEC staff have identified legislative changes to help the agency better protect investors. Those changes include giving the audit watchdog the Public Company Accounting Oversight Board the authority to inspect auditors of broker-dealers.

Such legislation has already been introduced in the House of Representatives and was introduced to help prevent a repeat of what happened with Bernard Madoff's auditor, which was uninspected or registered by the PCAOB.

Under current law, auditors of broker dealers do not have to be registered with the PCAOB.

The SEC would like other legislative changes including authorizing the release of certain grand jury information to the agency's, and establishing "aider and abettor" commission causes of action in areas of the securities law where it does not already exist.

Schapiro also said she has asked staff to prepare recommendations on mutual fund distribution fees known as 12b-1 fees, which allow funds to use fund assets for distribution and servicing costs.

The fees are not well understood by investors. "If issues relating to these fees undermine investor interests, then we at the SEC have an obligation to adjust our regulations," Schapiro said in her testimony.

[Tina]

Issue Date: IR Alert - July 16, 2009

Investors and Regulators Attack White House Proposal: Coalition Rejects Move to Further Empower Federal Reserve in Restructuring Bid

A large group of investors with $3 trillion in securities assets and former top regulators on Wednesday released a report attacking the White House's proposal to give the Federal Reserve more power as part of a massive regulatory restructuring under consideration on Capitol Hill. The group, made up of former Securities and Exchange Commission chairmen William Donaldson and Arthur Levitt, former Commodity Futures Trading Commission chairwoman Brooksley Born along with key investors have put out a 46-page-report taking issue with the administration's proposal to empower the Fed as a systemic risk regulator, MarketWatch reports.

The investor group, known as the Investor Working Group, is calling on Congress to create a so called Systemic Risk Oversight Board, which would collect and analyze financial institutions capital limits, practices and financial products. It would also make recommendations to regulators such as the Fed about steps they could take to reduce the risks, reports MarketWatch writer Ronald D. Orol.

The Obama Administration proposal includes reform to the Federal Reserve and other bank regulators. It also seeks to have the Office of Thrift Supervision combined into the Office of Comptroller of the Currency as well as creating a Consumer Financial Protection Agency, which would examine mortgage and credit card products sold to individuals. The proposal is under consideration by key committees in Congress, the House Financial Services Committee and the Senate Banking Committee, which are working on regulatory reform legislation that is expected to be completed by the end of the year.

The group argues that the SROB represents a middle ground between the White House proposal to empower the Fed to examine systemic risk and a council of regulators, made up of agency heads, which some lawmakers and regulators are advocating, that could have the power to set capital standards and make decisions about whether to bailout large financial institutions.

The Obama proposal seeks to create a council of regulators, but it doesn't give it the power to make recommendations, as the IWG is recommending, or set capital standards, as some lawmakers are advocating.

The White House proposal seeks to set up an eight-member financial services oversight council, which will be chaired by the Treasury Department and include the heads of bank and securities regulators. Their council, which would maintain a permanent staff at the Treasury, would seek to coordinate data collection and coordination among bank regulators so that the Fed is aware of any emerging risks.

The investor group argues against giving a council of regulators too much power because they would have "blurred lines of authority" and ultimately "no one would be in charge or accountable." However they are also opposed to giving the Fed too much power because they argue it has competing responsibilities.

"The Fed has other potentially competing responsibilities — from guiding monetary policy to managing the vast U.S. payments system," the report said. "Its credibility has been tarnished by the easy credit policies it pursued and the lax regulatory oversight that let institutions ratchet higher their balance sheet leverage and amass huge concentrations of risky, complex securitized products."

[Tina]

Issue Date: IR Alert - July 15, 2009

SEC May Get Budget Hike to Incorporate “Whistleblower” Fund to Pay Insiders for Information that Curtails Investor Fraud
A key lawmaker this week said he is developing a bill based on the Obama administration's proposals for the Securities and Exchange Commission, including a measure that would set up a fund to pay whistleblowers for information that leads to enforcement actions. "Of the many suggestions already proposed, one important one stands out: We ought to put in place new standards that reward whistleblowers when their tips lead to catching fraudsters," said House Financial Services securities subcommittee chairman Paul Kanjorski, D-Penn., to SEC chairwoman Mary Schapiro, MarketWatch reports.

"By encouraging whistleblowers to come forward when they know of wrongdoing, we will leverage the commission's limited resources and increase the number of cops on the beat," said Kanjorski, reports MarketWatch writer Ronald D. Orol.

Kanjorski also said Congress should seriously consider raising the SEC's 2011 budget by 20%, beyond the 8% increase the House will soon consider for the agency's 2010 budget.

The lawmaker's legislative efforts come as the SEC itself is moving forward on key initiatives to reform problematic credit rating agencies, limit abusive naked short selling and other endeavors.

Responding, in part, to concern by some lawmakers on Capitol Hill, Schapiro said the agency is examining whether "additional regulation" is needed to protect investors from abusive short selling, such as "naked short selling," the practice of selling a stock short without first borrowing the security or ensuring that the security can be borrowed as is done in a conventional short sale. Critics argue that naked short selling was a major contributor to expediting a number of aspects of the financial crisis.

Schapiro pointed out that the agency is focused on the issue of abusive naked short selling since before she arrived at the agency in January. She pointed out that the commission has taken regulatory actions to limit failures to deliver securities on time following a short sale, a key characteristic of a naked short sale, and that those efforts have led, in part, to a "significant decline" in failures to deliver. The SEC's enforcement division has a "number of active investigations" involving abusive short selling, she added.

However, critics argue that a key reason the SEC is witnessing a decline in failures to deliver is because the markets have improved in recent months, limiting naked short selling opportunities. A major down market could likely lead to a hike in naked short selling. Some lawmakers are seeking to require investors to pre-borrow shares, which is to arrange formally to borrow shares, before engaging in a short sale.

Schapiro also said the agency is exploring new regulations for credit rating agencies, including an approach that would have corporations disclose "pre-ratings" obtained from credit rating agencies before the company selects a firm to conduct a rating. Such an approach seeks to limit the practice of ratings shopping, the current prevalent practice where a corporation shops around for best rating.

"I have directed the commission staff to explore possible new regulations in this area, including limiting the potential for rating shopping," Schapiro said.

Schapiro added that she has allocated additional resources to create a group of examiners dedicated to oversee credit rating agencies.

The agency is also looking at other trading and market related practices, such as "securities lending." However, she did not provide additional details in testimony.

[Tina]

Issue Date: IR Alert - July 15, 2009

Stock Scandal: Seattle Lawyer Faces Charges of Running a “Pump and Dump” Scheme Built Around Fake Product
The Securities and Exchange Commission has charged Seattle attorney David Otto and several others with running a “pump-and-dump” stock scheme related to a “non-existent” anti-aging product. The SEC said the fraudulent scheme touted the benefits of MitoPharm Corp., of Seattle, which claimed to use a berry used in traditional Chinese medicine. But the product was only in the “developmental stage,” according to the SEC, the Puget Sound Business Journal reports.

Participants in the scheme touted the product using fake descriptions and false statements. The promotional materials, according to the SEC, caused MitoPharm’s stock to rise above $2.30 per share, and Otto sold his shares for more than $1 million. The massive sale of stock, the SEC said, caused the stock to fall to 5 cents per share by November 2007.

“Otto and his firm used phony documents to corner the market in a startup company’s stock, and then profited at the expense of unsuspecting investors when the stock-promoting campaign caused the share price to briefly skyrocket before plummeting back down to earth,” said Marc Fagel, director of the SEC’s San Francisco regional office, in a statement.

Also charged were Otto’s associate Todd Van Siclen of Seattle, Houston-based stock promoter Charles Bingham and his firm, Wall Street PR Inc., and MitoPharm CEO Pak Peter Cheung of Vancouver, British Columbia.

[Tina]

Issue Date: IR Alert - July 14, 2009

Climate Disclosure Getting a "Serious Look" From SEC: Regulators Prepare to Impose New Environmental Mandates on Public Companies
Federal regulators are preparing to launch "a very serious look" at requiring corporations to assess and reveal the effects of climate change on their financial health, according to a commissioner on the Securities and Exchange Commission. Initial efforts are under way, moving the commission toward a conclusion that investment groups had sought unsuccessfully throughout much of the Bush administration — forcing public companies to report the dangers they face from releasing carbon dioxide and its warming aftermath, the NY Times reports.

"I think with the changes in the environment and everything that's been happening, it's really time for us to take another very serious look at the disclosure system in this area," Elisse Walter, one of five commissioners at the SEC, told Evan Lehmann of ClimateWire for a NY Times report. "I think it's a very serious issue."

The move would drive the government deeper into the climate debate, potentially reshaping management decisions at companies across the country. It comes as the commission is holding private meetings with top-level advocates of "climate risk disclosure" to discuss what climate-related questions should be asked of companies, according to participants.

One of those advocates is Wisconsin insurance regulator Sean Dilweg, who helped shepherd a landmark disclosure requirement through the National Association of Insurance Commissioners this spring. It is the nation's first such rule, and it compels the vast insurance industry to grapple with its climate challenges.

The insurance initiative, after leading the way, could be eclipsed if the SEC flexes its muscles. The commission oversees every publicly traded company in the country.

"My sense was they're very interested," Dilweg told ClimateWire of the SEC. "They want to do something this year."

Over the last several weeks, Dilweg and managers of large investment funds, including Maryland Treasurer Nancy Kopp, have attended two meetings at SEC headquarters in Washington. Ceres, a group of institutional investors and the main motor behind climate risk disclosure, coordinated the meetings. Commissioner Walter attended one, and a senior adviser to SEC Chairwoman Mary Schapiro was at the other. More meetings are planned.

That marks a turnaround, says Mindy Lubber, president of Ceres, who described the commission's answer to calls for disclosure under former Chairman Christopher Cox as a "deafening no response."

Now, notes Lubber, who attended the meeting with Walter, the SEC's interest is "extremely high."

Advocates are increasingly hopeful that the SEC will move rapidly to issue formal guidance instructing companies to delve deeply into the climate issue to understand how it could increase their risks related to physical damage, financial loss and legal liability.

"The staff is going to be working on it this year," Walter said, adding that it would be too speculative to predict when, or if, the commission would formally adopt new disclosure standards.

"We have a lot of internal education to do," she said. "This obviously is not an agency populated with climate experts, and we're going to talk to everyone who is knowledgeable in the area, who's willing to talk to us. We'll educate ourselves, and then we'll decide — the staff will decide — what to put before the commission or not."

Schapiro, who took over as chairwoman in January, has signaled that greater transparency in the financial markets is needed. She took the rudder as the commission was sustaining withering criticism for taking a hands-off regulatory approach before the financial freefall. Observers are optimistic that climate disclosure will be one mark of a more assertive stance.

If that occurs, it could have unsavory consequences for long lists of businesses. Big emitters like oil and gas companies, for example, might have to formally reveal the output of their greenhouse gases and the disadvantages they face from federal efforts to charge polluters for every ton of carbon that's released.

Even more, the revelations could spark financial fallout. Institutional investment groups with trillions of dollars in assets could use the disclosures as the basis for withdrawing money from companies they consider unprepared for rising risk related to regulation and climatic convulsions.

"It's reasonable to expect that companies would fail to focus on long-term risk posed by climate change, and more forced disclosure would correct a potential market failure," said John Echeverria, executive director of Georgetown University's Environmental Law and Policy Institute. "That seems like incredibly important information that investors might have."

[Tina]

Issue Date: IR Alert - July 14, 2009

Financial Industry Regulatory Authority Filings Show Investor Anger Over Portfolio Advice — Complaints Rose 86% This Year
A lot of investors are blistering mad, not only about the sorry state of their portfolios but also about the investment advice they got on the way down. Their discontent drives a search for scapegoats — someone to blame for lost wealth. But it goes even deeper: Many investors are finding grounds for formally accusing brokers and dealers of bad behavior. The backlash against investment professionals is so sharp that in recognition of public outrage, the financial planning industry is asking Congress to create a national organization to regulate its ranks, the LA Times reports.

The numbers illustrate the outrage. New arbitration cases filed with the Financial Industry Regulatory Authority, a nongovernmental regulator of securities companies, soared 86%, to 1,715, in the first three months of this year after climbing nearly 54% in 2008. Adding in April's figures, FINRA projects that filings are on track to hit 7,000 this year, up from 4,982 last year, reports Times writer Elizabeth Razzi.

"I don't anticipate it slowing down this year or next," said Linda Fienberg, president of dispute resolution for FINRA. She added that investors were prevailing in more of the cases brought this year than they had in the last few years.

The top complaint is breach of fiduciary duty, which requires a representative to act in the best interests of a client, with 946 cases filed through March. FINRA has received a lot of complaints from investors who say advisors put their money into auction-rate securities, which are bonds whose interest rates are set periodically at auction.

"Individual investors had their funds put in auction-rate securities, allegedly having been told these were as safe as a cash equivalent, such as a money market fund," Fienberg said, the Times reports. "In February 2008, that market froze." Suddenly, investors weren't able to retrieve the investments that they had believed were as accessible as cash.

In a March survey by Boston Consulting Group, an international business advisory firm, only 22% of American consumers said they trusted investment advisors to protect their assets.

"When assets decline 30% or 40% in value, you realize there are few active advisors who have actually been able to make a difference in terms of performance relative to the market," said Kilian Berz, managing director of BCG, the Times reports.

Investors' dissatisfaction is affecting the debate over who should even be allowed to call themselves financial planners. Now, practically anyone can claim to be a financial planner or advisor, even if they lack credentials such as the Certified Financial Planner designation, which requires formal study and passing an examination.

In April, a coalition of planning groups asked Congress to set up a national organization to oversee their industry and to hold planners to the strict fiduciary standard of care.

[Tina]

Issue Date: IR Alert - July 13, 2009

Boom Times: Analysts Expect Huge Profits to be Reported By Goldman Sachs on Tuesday in Miraculous Rebound
Most of Wall Street, and America, is still waiting for an economic recovery. Then there is Goldman Sachs. Up and down Wall Street, analysts and traders are buzzing that Goldman, which only recently paid back its government bailout money, will report blowout profits from trading on Tuesday. Analysts predict the bank earned a profit of more than $2 billion in the March-June period, because of its trading prowess across world markets. If they are right, the bank's rivals will once again be left to wonder exactly how Goldman, long the envy of Wall Street, could have rebounded so drastically only months after the nation's financial industry was shaken to its foundations, the NY Times reports.

The obsessive speculation has already begun, along with banter about how Goldman's rapid return to minting money will be perceived by lawmakers and taxpayers who aided Goldman with a multibillion-dollar cushion last fall. "They exist, and others don't, and taxpayers made it possible," said one industry consultant under the condition of anonymity, report Times writers Graham Bowley and Jenny Anderson.

Startling, too, is how much of its revenue Goldman is expected to share with its employees. Analysts estimate that the bank will set aside enough money to pay a total of $18 billion in compensation and benefits this year to its 28,000 employees, or more than $600,000 an employee. Top producers stand to earn millions.

Goldman was humbled along with the rest of Wall Street when the financial markets froze last year. As a result, it lost money in the final quarter, a rarity for the bank. Along with other big banks, it was compelled to accept billions of dollars in federal aid, which it paid back last month.

Amid the crisis, it also converted from an investment bank to a more regulated bank holding company.

If the analysts are right — and given the vagaries of Wall Street trading, any hard forecast is little more than a guess — the results will extend a remarkable run for Goldman that was marred only by the single quarterly loss last fall of $2.12 billion.

Goldman Sachs is betting on the markets, but the markets are also betting on Goldman: Its share price has soared 68 percent this year. The stock is still well off its record high of $250.70, reached in 2007.

In essence, Goldman has managed to do again what it has always done so well: embrace risks that its rivals feared to take and, for the most part, manage those risks better than its rivals dreamed possible.

"It is, in many respects, business as usual at Goldman," Roger Freeman, an analyst at Barclays Capital, told the Times.

Traders said Goldman capitalized on the tumult in the credit markets to reap a fortune trading bonds. It profitably navigated a white-knuckled run in stock markets. It bought and sold volatile currencies, as well as commodities like oil. And it reaped lucrative fees from the high-margin business of underwriting stock offerings, which surged this year as other, more troubled financial institutions raced to raise capital.

Whether Goldman can keep this up is anyone's guess. With so much riding on trading, the risk is that the bank might make a misstep in the markets, or that today's moneymaking trades will simply vanish. The second half of 2009 looks tougher, many analysts say.

[Tina]

Issue Date: IR Alert - July 13, 2009,

Obama Looks to Expand SEC's Pay-Practice Power: President Seeks to Let Commission Bar Some Broker Processes
The Obama administration is seeking to give the Securities and Exchange Commission power to prohibit pay practices at brokerages and investment advisers and broader authority to bar individuals from work in the industry. The Treasury Department sent Congress legislation that would let the SEC ban "sales practices, conflicts of interest and compensation schemes" deemed harmful to investors. The measure lets the agency remove individuals who violate rules from all aspects of the industry, rather than a specific segment such as selling securities or managing money. Bloomberg News reports.

President Barack Obama's SEC proposal is part of the overhaul of financial regulations in response to the worst economic crisis since the Great Depression. Lawmakers have vilified securities firms for selling investors unsuitable products and basing pay on how many transactions bankers execute without regard to whether deals succeed in the long term, reports Bloomberg writer Jesse Westbrook.

"The SEC would be given broad authority to define those kinds of" pay arrangements it deems inappropriate, Michael Barr, assistant Treasury secretary for financial institutions, told reporters in a briefing.

Types of compensation practices the SEC may deem improper might include banks paying brokers more to sell "in-house" investment products, rather than those offered by competitors, he said.

"There has always been a concern that because these people are acting in an advisory capacity, they might be operating under pay practices that are in their interest, not those of their clients," Mark Borges, a principal at Compensia Inc., a San Francisco-area pay consultant, told Bloomberg.

The proposal, which Congress must approve, also would give the SEC authority to impose a so-called fiduciary duty on brokerages offering investment advice. The stipulation requires firms and their employees to put clients' interests before personal motivations, such as fees.

SEC Chairman Mary Schapiro, in a statement, said "applying tough standards that require financial professionals to put investors first will provide us with needed tools to better safeguard investors."

The Obama plan targets mandatory arbitration agreements, granting the SEC power to prohibit them in contracts consumers sign with brokers, investment advisers and those who sell municipal bonds. Mandatory arbitration bars customers from suing financial professionals in court.

The measure gives the SEC authority to reward whistle blowers who give the agency tips about those violating all securities laws. The SEC currently has power to pay individuals who provide the agency with tips on insider-trading violations.

Under the legislation, the SEC would use fines it collects from enforcement actions to reward whisteblowers for information that results in "significant financial awards."

[Tina]

Issue Date: IR Alert - July 10, 2009,

Wall Street Brokerage Staffers Accused of Running "Trans-Atlantic Boiler Room" Scheme to Defraud U.S. and British Investors
Six employees of Wall Street retail brokerage Sky Capital ran a $140 million "trans-Atlantic boiler room" to defraud investors in the United States and Britain, authorities charged on Wednesday. U.S. prosecutors announced a criminal indictment of securities, wire and mail fraud against Sky Capital founder, president and chief executive Ross Mandell and five others, while the Securities and Exchange Commission also filed civil charges, Reuters reports.

All six surrendered to FBI agents on Wednesday and later appeared in Manhattan federal court and entered pleas of not guilty before being released on bond. The SEC complaint said brokers raised $61 million between 2002 and 2006 from investors, but then enforced a policy that prevented them from selling their stocks in Sky Capital Holdings and Sky Capital Enterprises. They were publicly traded on the Alternative Investment Market of the London Stock Exchange until 2006, reports Reuters writer Grant McCool.

"Customers were not told that they would be unable to sell their shares, and the no net sales policy helped artificially inflate the price of the Sky Entities stocks," the SEC said. "When trading in those stocks was suspended by the London Stock Exchange in 2006, the investments were rendered worthless."

The SEC described the purported fraud as a "trans-Atlantic boiler room scheme." Apart from Mandell, of Boca Raton, Florida, other principals and employees charged were former chief operating officer Stephen Shea, Adam Harrington, Arn Wilson, Robert Grabowski and Michael Passaro.

Mandell was released on a personal recognizance bond of $5 million secured by his Florida home and $25,000 in cash. Shea, Harrington, Wilson, Grabowski and Passaro were all released on $1 million bond each secured by property or cash.

Grabowski's lawyer, Bettina Schein, said he would defend the charges. She said his clients still invested with him and that they were "sophisticated and informed investors."

The Office of the U.S. Attorney in Manhattan accused the men of enriching themselves with client money. "Investor funds were substantially used to enrich the defendants and others; to pay excessive undisclosed commissions to brokers and to pay off victims who had lost money through prior purported investment opportunities," the office said.

It said the defendants acted primarily from two successive securities broker-dealers, the Thornwater Company LP and Sky Capital LLC, raising some $140 million for the scheme between 1998 and 2006.

[Tina]

Issue Date: IR Alert - July 10, 2009,

Mysterious Citi Shakeup Sees Short-Lived CFO Kelly Shifted to VP Role as Head of Strategy: Gerspach Upshifts as Corp’s New CFO
In a surprise reshuffling of top management, Citigroup Inc. lured one of the nation's most respected bankers to run its depository business and moved its chief financial officer into a job heading strategy and Citi's own dealmaking. Eugene McQuade, the new chief executive of Citibank, has a lot of experience in banking — and with managing institutions in financial trouble. He was chief operating officer of Freddie Mac, head of banking at Merrill Lynch and president of Bank of America. He was a highly regarded chief financial officer at FleetBoston Financial, when that bank sold itself to Bank of America in 2004, MarketWatch reports.

Citi also said that Edward "Ned" Kelly, who took over the CFO position from Gary Crittenden in April, will return to his previous position as head of strategy and Citi's advisor on its own mergers, acquisition and divestitures. Kelly will be promoted to Vice Chairman of Citigroup. Citigroup also promoted its comptroller and chief accounting officer, John Gerspach, a Citi veteran of 19 years, to succeed Kelly as CFO.

Kelly joined Citigroup in January 2008, initially as head of the company's alternative-investments business. He was one of CEO Vikram Pandit's first key hires after assuming the top job in late 2007 and Kelly has seen his role expand since then. Kelly is a key ally of Pandit, and Citi's main negotiator with the government over the company's rescue.

McQuade will add weight to Citi's efforts to reinvent itself as a more traditional banking businesses. Citibank, one of the banking industry's most recognized brands, was often an afterthought to Citi's massive investment banking and consumer-finance businesses. But with Citi's restructuring, Citibank has become central to the bank's overall strategy. Executives have made clear that attention will shift to the retail banking strategy, particularly in the U.S.

[Tina]

SEC Continues to Investigate Apple's Disclosures About Jobs's Health:

Could CEO's Condition Really Constitute Misleading Material Info?

Apple's disclosures about Steve Jobs's health remain under scrutiny by Securities and Exchange Commission investigators over how his condition went from "relatively simple" to "more complex" in nine days, said a person familiar with the matter. A pivotal question for regulators is what Apple's board knew at the time of Jobs's Jan. 5 announcement that he had a hormone imbalance and a Jan. 14 statement that he was taking a five-and-a-half month medical leave, said the person, who declined to be identified because the probe is confidential, Bloomberg News reports.

Jobs went on to have a liver transplant during his leave. SEC investigators want to be sure that Jobs's January disclosures didn't mislead investors, the person said. Bloomberg reported in January that the SEC had opened the probe. "The issue here is: Did Apple or Jobs make misleading disclosures, tested by what they knew at the time?" said Robert Hillman, a securities law professor at the University of California, Davis. "A disclosure could be misleading if it's a partial truth," he added, report Bloomberg writers Connie Guglielmo, David Scheer and Karen Gullo.

The review doesn't mean the SEC will accuse Jobs or the company of wrongdoing, the person familiar with the investigation said. Apple's lead directors, Art Levinson and Bill Campbell, were being briefed by Jobs's doctors on his condition at the time, said another person familiar with the matter.

Corporate governance experts and lawyers have disagreed about whether Apple has made sufficient disclosures this year about Jobs's health. Some argue that since Jobs is critical to Apple's future, his health is material information that should be shared with investors. Others argue that privacy laws trump investors' right to know the details of his health.

Apple said last week that Jobs, 54, had returned to work. He will spend a few days a week at the office and the rest of the time working at home, the company said. Methodist University Hospital in Memphis said last month that Jobs had undergone a liver transplant there. Apple hasn't acknowledged the liver transplant or said why it was needed.

One issue lawyers agree on: The law is murky when it comes to corporate disclosures about a CEO's health. That may make the SEC reluctant to press a case, said Peter Henning, a former federal prosecutor and SEC lawyer who teaches at Wayne State University Law School in Detroit. Regulators will probably focus on the two statements made by Jobs in January, he said.

"I think they would ask what happened between the first disclosure and the second to find out what changed," Henning said, Bloomberg reports. "If it's an outright lie and he had a diagnosis before that first disclosure that, ‘You're going to need a liver transplant,' then there's an issue. But I doubt the company out and out lied."

When the CEO is a "luminary" and viewed as pivotal to the company's financial health and prospects, health information may be material to the business and therefore require disclosure, said Allan Horwich, a partner at Schiff Hardin LLP in Chicago. He wrote a paper this year advocating that the SEC adopt a rule requiring health disclosures for some CEOs.

"People think his creativity and insights and planning are so very important to the continuing operations of the company," Horwich told Bloomberg. "If you've reached the stage where he is so sick that he goes to the top of the transplant list, that's significant."

Jobs's health has been the focus of investor speculation since he appeared thinner at a company event in June 2008. Apple first said Jobs was suffering from a "common bug." The company later declined to comment on his health, saying it was a private matter, even as he appeared thinner at company events through the rest of the year.

Jobs said in the Jan. 5 letter addressed to the "Apple Community" that the cause of his weight loss was a "hormone imbalance that has been ‘robbing me' of the proteins my body needs to be healthy." He said the treatment was "relatively simple."

While there has to be some measure of confidentiality around the health of executives, any disclosures need to be accurate and complete, said Jahan Raissi, a former SEC enforcement attorney. "Once you open your mouth and start to speak on a topic, you have to say something completely truthful," Raissi, who is now a partner at Shartsis Friese LLP in San Francisco, told Bloomberg. "If what you omitted is material, that's a problem."

Apple's directors, in a statement on Jan. 5, said they had "unwavering support" for Jobs. "If there ever comes a day when Steve wants to retire or for other reasons cannot continue to fulfill his duties as Apple's CEO, you will know it," the board wrote.

"The biggest case you could make is that with 20-20 hindsight they should have dug deeper," said James Cox, a securities law professor at Duke University. "The issue is not going to be whether they needed to disclose the medical records," he told Bloomberg. "It's going to be whether they monitored the disclosures about his health, in relation to investor expectations that Apple would continue to be led by Steven Jobs."

Tim Cook, Apple's chief operating officer, took control of Apple's day-to-day operations while Jobs was on leave. During that time, the company introduced new Macintosh computers, as well as redesigned iPod media players. Last month, Apple began selling a faster new version of the iPhone.

The company's performance over the past six months may be a sign that Jobs's health isn't material, said Henning.

[Tina]

SEC GUIDANCE ON THE USE OF COMPANY WEBSITES

http://www.sec.gov/rules/interp/2008/34-58288.pdf

[Tina]

Issue Date: IR Alert - July 9, 2009,

Social Media and the SEC: Where Do You Stand in the Investor Broadcasting Vs. Investor Relations Debate?

By Brian Solis, Principal, FutureWorks

Last year, the SEC announced that it would recognize corporate blogs and potentially other forms of social media as a recognized form of meeting public disclosure requirements under Regulation FD—in some cases. After much fanfare, analysis and debates, the spotlight on the socialization of IR dimmed. Did public companies and their communications and IR teams even truly take notice?

I believe it's time to bring the discussion back into the forefront so companies can make informed and strategic decisions regarding social media, as well as preventing SEC or investor backlash.

The SEC announcement was a significant validation of a widely recognized medium for facilitating information between companies and stakeholders. Jonathan Schwartz, CEO of Sun, among many others, successfully lobbied over the years for official recognition of blogs and the SEC finally took notice.

While PR, marketing, advertising, branding, HR and customer service are rapidly adopting participatory methodologies, IR has perhaps wisely observed the landscape to ascertain risks and opportunities present within the new SEC guidelines.

In reality, social media is reshaping disclosure and the practice of investor relations. As the social web begets a human voice and genuine transparency, it also raises the risks of meeting and maintaining legal compliance. It's true, the SEC has recently modified its stance on blogs, but as new social tools continue to innovate and gain traction, a gap may be widening between the ability for companies as well as the SEC to keep pace with a rapidly evolving landscape of social networks and the means to meet investor demand as well as the emerging opportunities for engagement and communication.

Analyzing SEC Guidelines

According to the SEC,"As we have developed EDGAR to facilitate and promote electronic availability of information, we also have encouraged companies to make their Commission filings and other company information available on their web sites. We believe that company disclosure should be more readily available to investors in a variety of locations and formats to facilitate investor access to that information."

The SEC published a 47-page report that outlines the boundaries for sharing information as well as holding companies and their employees liable for the information that they post on blogs, networks, communities, and discussion forums.

If public companies are not proactively analyzing these guidelines and establishing internal policies, frameworks and penalties, then they are exposed to the dangers that loom in the form of overly enthusiastic employees who are enamored with new and shiny social tools and objects. One wrong, irresponsible, or casual post, comment, tweet, status update, can produce a domino effect of consequences that have yet to establish precedence. While a tweet, for example, may seem harmless, the activity and response sparked by an update could result in repercussions that trigger SEC and shareholder retaliation. Corporate and marketing executives who rely on self-restraint and common sense across the organization aren't employing common sense at all.

Integrating New Technology with What Works Today

It's the company's responsibility to reach people where they are actively seeking and sharing information, but the SEC also cautions communicators in doing so. Just because blogs, social networks and micro communities such as Twitter and FriendFeed are the current flavors of our digital generation, their conversational roots and culture do not relinquish companies from their responsibility to share data in a way that complies with federal securities laws. The SEC guidelines clearly state,"While blogs or forums can be informal and conversational in nature, statements made there by the company (or by a person acting on behalf of the company) will not be treated differently from other company statements when it comes to the antifraud provisions of the federal securities laws. Employees acting as representatives of the company should be aware of their responsibilities in these forums, which they cannot avoid by purporting to speak in their ‘individual' capacities."

Companies MUST NOT abandon or sacrifice the bridges and services that already effectively connect information to people today and also comply with SEC regulation. It's the responsibility of any community-focused organization to use the tools and channels that extend and supplement each other.

While press releases are among the top choice for meeting disclosure, they are not necessarily inexpensive, and therefore encourage the exploration of new conduits. Companies report spending $15,000 to $50,000 or more per year on issuing press releases in order to satisfy Reg FD. Traditional and social solutions can also be considered as they are sometimes as or more effective than a traditional press release, especially in a recession where every penny counts. The sometimes-exorbitant costs of meeting disclosure have also fueled the study and technological evolution of corporate blogs, wikis and social media releases. They represent exciting, modernized possibilities to adapt to and connect with constituencies and influencers in ways that some rely upon in order to make decisions and also process and produce content based on material company information.

Playing by the Rules: Amplifying Corporate Reach and Resonance

There's a difference between mandates and guidelines and it's your responsibility to understand the nuances in order to comply with Reg FD, while not missing the prospects associated with new and influential online communities.

When you read the SEC guidelines, you'll quickly realize that they do not provide specific instructions and boundaries that dictate permissible and prohibited procedures and activities. In its current form, direction is gray at best. However, analyzing the guidelines based on the framework implied by the SEC, as it correlates to the culture and interworking of any organization, provides a blueprint for constructing a compliant and most likely, more effective, communications infrastructure.

Companies will need to consider whether and when postings on their sites, communities or networks are"reasonably designed to provide broad, non-exclusionary distribution of the information to the public."

While the SEC specifically mentions websites, forums and blogs, it does not specifically name popular networks such as Facebook or Twitter—at least not yet. But that does not mean that they are excluded from the potential communications channels companies can use to reach stakeholders today.

The guiding principle is pervasive throughout the document and essentially advises that companies use the tools and services that reach constituents when, where, and how they rely upon receiving timely information,"In order to make information public, it must be disseminated in a manner calculated to reach the securities market place in general through recognized channels of distribution, and public investors must be afforded a reasonable waiting period to react to the information."

Ebay is one of the widely referenced examples as it relates to disclosure and the"Social Web." It also spotlights an instance when an individual employee is at the forefront of traditionally guarded and controlled information production and distribution process. In this case, Chief Blogger Richard Brewer-Hay maintains a blog and Twitter account where his personal presence is as dominant as his affiliation with eBay.

In January, Ebay released fourth-quarter results and while listening to the earnings call, Richard Brewer-Hay posted live updates to Twitter. The legal team was alerted and after analyzing the medium, possible liabilities, and also associated potential, the team documented a series of 140-character disclosure statements. One tweet reads:"The presentation of this financial information is not intended to be considered in isolation or as a substitute for GAAP financial measures."

As its"internal reporter," the company empowers Brewer-Hay to transparently share company activity to shape the brand and inject personality and perspective through a strategic and proactive outbound communications program.

But he's not alone in his efforts to humanize the corporate voice in and around financial reports, disclosure and earnings obligations through blogs, Twitter and other social presences.

Johnson and Johnson recently reported, for the first time, minutes from the company's annual meeting via Twitter.

EMC Corp. also uses Twitter to extend the reach for company news, while also tracking the opinions of employees, investors and peers.

Dell publishes Dell Shares, an investor relations blog that complements the company's blog network dedicated to providing transparency and insight related to corporate activity, technology, and products.

In May, Intel Corp. allowed shareholders to ask questions via the Web and vote online during its annual meeting. But for now, the company isn't yet integrating blogs and Twitter for use in investor relations until further research and analysis can provide a solid and meaningful connection between Intel and investors.

The Society of New Communications Research tracks over eighty-one Fortune 500 companies that publish blogs, including Wal-Mart Stores Inc., Chevron Corp. and General Motors Corp.— with 20 linking to corporate Twitter accounts (not all are yet utilized however). The SEC also maintains a Twitter presence via SEC Investor Ed and SEC News.

Corporate Twitter Accounts include (partial list):

- Best Buy
- Cisco Systems
- Toys 'R' Us
- Dell
- Johnson & Johnson
- Wells Fargo
- Microsoft
- Time Warner
- FedEx
- New York Life Insurance
- McDonald's
- Oracle
- Google
- Avnet
- Amazon.com
- CBS
- Texas Instruments
- EMC
- Monsanto
- Whole Foods Market
- Rubbermaid
- Symantec

Corporate Voice vs. Individual Personality

Indeed, the SEC is recognizing company-sponsored blogs and networks, which can include CEO blogs and investor relations blogs, among other communities, as official presences in addition to company websites,"Companies can use these for a variety of purposes, including allowing for the exchange of opinions and ideas between a company's management or certain other employees and its various stakeholders. The open format of blogs makes them an attractive forum for ongoing communications between and among companies and their clients, customers, suppliers, shareholders and other stakeholders. Similar to blogs, electronic shareholder forums can serve as a means for investor to communicate with companies and each other and to provide investor feedback on various issues in a real-time basis, and we have adopted rules to encourage their use."

These rules raise concerns as to the extent of transparency and humanization of the information shared, requiring a delicate balance between personality and objectivity. Remember, it's not just what you do say and how, but also what you don't say that can lead to speculation and movement based on interpretation and speculation.

What's important to realize is that maintaining a presence on the"Social Web" is not formulaic, whether it's PR or IR. The answer lies in what matches existing company culture and also appeals to stakeholders in ways that they favor. The spirit of the"Social Web" seems to galvanize the presence of a person or persona, but perhaps interim corporate accounts could help ease the foray into uncharted waters for many organizations. This is all driven and steered by community feedback. By not participating or listening to communities across the Web, however, companies gain nothing in terms of value, advice or feedback—no matter what stage of participation companies fall within. This is not the time to plug our ears and close our eyes in the hopes that this social fervor will subside.

Creating an Effective Communications Network

A critical theme within the SEC documentation is the stipulation that companies are more likely covered under the Fair Disclosure Act if they publish information equally and accurately through a variety of traditional and digital passages. More important, companies should create a hub that documents all available mediums to receive information as it is made public. For example, list all press release services you employ; provide a directory of relevant blogs with URLs and RSS Feeds; list Twitter, FriendFeed, Facebook or other relevant social network profiles; share podcast links and presences on other audio networks such as iTunes; embed electronic documents and link back to host accounts such as DocStoc and Scribd; and also link to a traditional or social media newsroom if this isn't already the directory where this information resides.

News and intelligence should not reside in any one place. Concurrently, new channels should not suddenly appear without proper attention and disclosure. The SEC advises the practice of writing and distributing Notice and Access press releases to alert stakeholders to upcoming material announcements and pointing them to the place of distribution. Notice and Access is the SEC's attempt at helping companies reduce costs associated with traditional press releases, while still utilizing the tools they use today to receive information. Since these releases dramatically reduce the word count, they also minimize the typical expense per release.

The advantages associated with Notice and Access also extend well beyond the financial savings or meeting disclosure. Notice and Access provides a cost-efficient vehicle to condition investors and influencers towards any given format companies choose to prioritize, including corporate blogs and websites.

Wherever possible however, the operation of traditional and new media cross pollination enables companies to broadcast information to a distributed compilation of networks that deliver information instantly, serving the appetite for immediacy where people choose to consume news.

Investor Broadcasting vs. Investor Relations

Traditional investor relations serves analysts, investors, stakeholders and influencers through a combination of strategic outreach and the ongoing distribution of material information using compliant channels and processes. With the extension of the model to now include social networks and also the experimentation of publicizing personalities in the process, companies are potentially emphasizing the"relations" in IR. This opens up a particular area of focus as maintaining relations with analysts for example, is considered outside the realm of traditional disclosure. Engaging in conversations with investors in the public timeline (statusphere), on websites and in the blogosphere can potentially place companies in jeopardy of backlash and legal action.

How and went to engage in social media was a shared concern in a recent discussion I had with several corporate bloggers, social media strategists and also IR professionals. While each were divided in their position on corporate brand versus personal brand when distributing information in social networks, they were united on two important fronts that set the tone for any organization exploring and documenting best practices for participation. The first contends with individuals, particularly those of influence, who share glaringly incorrect information that will most likely have a negative impact on trading and value. Every person I spoke with agreed that a public response in these cases is most likely necessary and that the tone of the response should introduce information poignantly and factually without added perspective or personality. In the instances when public discussions bash or question company decisions, news or value, all were in agreement that these conversations are better left untouched.

These are monumental times in which new regulation and interactive communication channels are established and shaped as marketing and legal teams reach accords based on their interpretation of Regulation FD, the migration and shift of investor consumption patterns and the experiences associated with evolving corporate experimentation and participation.

The New SEC guidelines will most likely mirror much of what's already discussed in this article. The lessons shared here indicate that an ambitious program to extend corporate communications combined with a conservative, truthful and unbiased voice may best serve the function of corporate disclosure and investor relations in the near future. In the end, while companies embrace the"Social Web," its prevailing spirit may actually work against the desire or ability to fully engage in the very conversations that power and define it—at least from any dialogue that involves financial performance or material, undisclosed information.

Brian Solis is principal of FutureWorks, an award-winning PR and New Media agency in Silicon Valley. He is also co-founder of the Social Media Club and is an original member of the Media 2.0 Workgroup. He blogs at"PR 2.0," and Tweets here: @briansolis.

[Tina]

Issue Date: IR Alert - July 7, 2009,

Digital Strategies: Seven Key Things Public Companies Should Know about Investor Relations and Promotion in Today's Market

As a public company, there are multiple channels and destinations where investors consume information. In the current Web 2.0 environment, controlling those channels and destinations can be increasingly difficult and very different from traditional methods. In fact, public companies now face the challenge of pushing their story out to multiple audiences through multiple platforms in order to differentiate and gain exposure. Therefore, having a digital communications strategy in place will start with the right program and leverages new communications tools that allow companies to connect with all stakeholders more frequently.

As reported by investment networking multimedia Equedia, here are seven key points that every corporation should know and follow — an every IR firm should be ready to deliver.

1. Keep the Press Releases Flowing

It is imperative to frequently issue updates on your company regardless if you have significant news or not. This will not only help reach new investors, increase brand name recognition and increase your search engine results but gives you a reason to reach out to existing shareholders.

But don't let them go to waste. Ensure that every release encompasses what you are trying to say by including interactive media and exposure that elicits instantaneous response.

2. It Takes Time

It takes time to build a proper IR campaign that reaches the right investors. Promotion through newsletters, direct mail, and broadcasts do work – if you select the right firm. But they also work much better when combined with an IR strategy that can make every news release, email blast, direct mailers, and telephone calls twice as effective.

3. Set Expectations Before Hiring New IR or PR Firms

What are your IR goals? Utilizing proprietary databases of investors developed by a newsletter networks and financial media relations firms work great if you want quick volume but what's to keep the investors from selling? Corporations often make the mistake of hiring one firm with expectations that do not match their goals. Make sure you understand what the IR/PR Firm will do for you before engaging in their services. Often times, combining the right firms will work wonders and boost results exponentially.

Find an IR strategist that can help implement the proper program and your company will begin to realise the effective benefits of these strategies.

4. Education is Paramount

Corporations often fail to educate investors regarding their specific industry or sector. Third party reports, analyst research, and educational materials can steer new investments into your company and retain investors. It may be difficult for corporations to keep up with the copious amount of information so be sure to hire a firm that can assist you with these materials.

5. Work Your Way Up

Do not make the mistake of hiring and paying extravagant fees to IR firms that claim they can provide instantaneous buying into your company. Ask any firm you approach to start off with something small and have them prove their system before shelling out more cash. Often times, a good IR firm should have no problems with this and may often have non-advertised programs for corporations that meet their requirements. Once you have built some trust, do not hesitate to ask if they have or know of any bigger programs that might be in line with your objectives.

6. The Power of Video — How it Works

Online video exposure ensures maximum ROI for your communications efforts. Of all the online users that have viewed an online video ad or promotion, 52% took action, 45% elicited a response, 28% looked for more information, and 16% actually bought something.

Take a look at some of the public corporations who have engaged in corporate videos and see how they trade in terms of volume and reaction to positive news. You will be surprised at how effective a true video strategy can be. However, there are those who have spent thousands of dollars on corporate online video but have failed.

Before your corporation engages in new media exposure and communications, be sure to learn the strategies and opportunities available to ensure the success of your campaign.

7. Be Careful of IR Firms that Overcharge and Under-perform

Many IR firms cannot truly explain what it is they do and why they charge so much. Some firms charge to use their chat or forum services and some will charge to feature your corporation on their website. Be sure to understand the scope of their work before making any arrangements. With email spam and unsolicited programs still in effect, be careful when selecting a firm that may utilize these programs as they can tarnish the reputation of your company.

[Tina]

July 7, 2009

NIRI President’s Note

This past week I attended an SEC meeting where the topics of discussion were: 1) proposed rules for the implementation of federally mandated say-on-pay for TARP fund recipient companies; 2) a proposal for increased disclosure (related to risk and compensation) and to clarify proxy solicitation rules; and 3) a vote on the approval of an amendment to NYSE Rule 452 (to eliminate the broker discretionary for director elections). In my opinion, every IR professional should understand the implications of each of these matters.

Say-on-Pay
The proposed say-on-pay guidelines (pdf) are currently focused on TARP recipient companies, however federal legislation is pending that may mandate an annual advisory say-on-pay vote for all companies, so assume these proposed guidelines may ultimately affect everyone. The SEC’s 60 day comment period will end in September and I encourage all companies to review this with their executive and legal teams and consider commenting on any concerns you may have regarding the proposal. I believe one of the key issues is the period of any advisory vote. If this is done annually, will shareholders have the time and resources to properly review and evaluate each company’s executive compensation structure or will they simply accept the recommendation of the proxy governance firms? Many believe the proxy governance firms are potentially conflicted due to their corporate governance evaluation and consulting services, yet this could add to their influence.

Increased Disclosure and Clarification of Proxy Solicitation Rules

The proposed rules have not yet been released, so I will spend more time on this in a future IR-Weekly column. However, based upon the comments at the meeting and in the SEC news release, the issues are “intended to improve the disclosure provided to shareholders of public companies regarding compensation and corporate governance matters when voting decisions are made. These new disclosures are designed to enhance the information included in proxy and information statements, and would include information about:

• The relationship of a company’s overall compensation
policies to risk.
• The qualifications of directors, executive officers and nominees.
• Company leadership structure.
• Potential conflicts of interests of compensation consultants.

In addition, the proposals are aimed to improve the reporting of annual stock and option awards to company executives and directors as well as to require quicker reporting of election results. The Commission also proposed amendments to the proxy rules intended to clarify how they operate.” These proxy rules include requiring proxy voting results to be issued via 8-K within four within business days instead of the next 10-K or 10-Q, clarification of short slate eligibility requirements and other solicitor requirements. A sixty day comment period on this proposal will start immediately and end in early September.

NYSE 452 Amendment to Eliminate Broker Discretionary Voting for Director Elections

This proposed rule was approved by a 3-2 vote of the SEC Commissioners and is effective for all director elections after January 1, 2010. You may recall that NIRI sent a comment letter (pdf) to the SEC on this rule outlining our concerns and requesting improved shareholder communications ability before any action. The final Rule 452 Order (pdf) is 50 pages long, full of insightful commentary and its approval was not unexpected. The positive news from their public statements is that every Commissioner acknowledged the “m yriad” of issues that remain unresolved in the shareholder voting and communications system. However, those who voted in favor of this amendment dismissed the argument that these issues must be resolved before any amendments to Rule 452 are approved. During the meeting, Chairman Schapiro indicated a working group will be formed to address these issues later this year. I found it interesting that one of the arguments for approving the Rule 452 proposal is the fact that brokers have no “economic interest” in the shares that they are voting. Nevertheless, at least one Commissioner commented that approval will likely increase the influence of the institutional vote and correspondingly the influence of the proxy advisory firms, who also have no economic interest. I find this Commissioner’s comment to be very perceptive, and I have a growing concern that the conflicted interests of the proxy advisory firms are becoming even more troubling.

Over the past few weeks, I have written in this column about proxy access and areas of concern. To summarize, the issues mentioned to date include federal law usurping state corporate law and ensuring director “independence.” This week, I want to make you aware of another matter in the proxy access proposal – the ability of companies to recommend a slate of directors to shareholders. Under the proposal, companies will not be allowed to recommend a slate of directors on the proxy card for shareholders to choose as an election option. Many shareholders, particularly retail shareholders, review company voting recommendations when making their proxy voting decisions. This ability will be eliminated on the proxy card and shareholders will have to figure out who is the most qualified candidate to ensure long-term growth and success for the company, without any recommendation from management. I find this troubling, as retail shareholders may not have the resources that institutional voters have when it comes to determining proxy matters. I believe management’s recommendation is an important factor in a retail voter’s decision.

One of the ways companies can help shape the proxy access proposal is to submit comment letters to the SEC on this matter. Currently, comments must be received by mid-August, but NIRI has joined six other organizations requesting an extension (pdf) of an additional 30 days due to the complexity of this proposal. NIRI’s member survey on proxy access will be sent to you in the next two weeks as we work on our own comment letter to the SEC.

[Tina]

Issue Date: IR Alert - July 7, 2009,

Study: Heeding Lessons from Downturn, Majority of Corporate Executives Report Need to Overhaul their Approach to Risk-Management

The vast majority (85 percent) of corporate executives say they need to overhaul their approach to risk-management if the lessons of the economic crisis are to be used to improve business results, according to results of Accenture’s 2009 Global Risk Management Study, based on a survey of 260 chief financial officers, chief risk officers and other executives with risk-management responsibilities at large companies in 21 countries, also found that 40 percent of respondents said that their companies already have increased or will increase their investments in broader risk-management capabilities in the next six months. Nearly another third (31 percent) of respondents said their companies are currently considering increasing their future investment in risk management capabilities.

Accenture’s analysis also pointed to a lack of integration of current risk-management and performance-management processes. While nearly half the respondents said that their company’s risk-management function is involved to a great extent in strategic planning (48 percent) or in investment and divestment decisions (45 percent), only 27 percent said the risk-management function was involved to a great extent in objective-setting and performance management.

"Executives could improve their organizations’ performance and position themselves for economic recovery by linking and balancing risk management and performance management to aid their decision-making and increase shareholder returns," said Dan London, managing director of Accenture’s Finance & Performance Management practice. "Being effective at this also requires companies to integrate their risk management capabilities enterprise-wide."

Survey respondents also identified a number of common problems with their risk-management functions, including:

- Ineffective integration of risk, return and capital issues in decision-making (identified by 85 percent of respondents);
- Lack of alignment between the company’s strategies and its risk appetite (85 percent);
- Insufficient enterprise-wide risk culture (82 percent);
- Inadequate availability of timely risk, finance and business data (80 percent);
- Lack of integration and aggregation across all risk types (78 percent); and
- Ambiguous risk responsibilities between corporate and business units (78 percent).


Additionally, executives identified benefits they anticipate as a result of addressing their companies’ risk-management shortcomings. For instance, while nearly three quarters (72 percent) of respondents said that their companies’ risk management function has a major impact on their ability to comply with regulations, nearly two-thirds (61 percent) said the same about its impact on the company’s ability to sustain profitability; and 58 percent said that risk management has a major impact on a company’s ability to manage liquidity and cash flow.

Further, the study found that broader and better integrated risk management capability can have a variety of impacts on companies, including on: their ability to achieve competitive advantage (cited by 53 percent of respondents); their reputation in the public and with media (53 percent); rating-agency ratings (53 percent); their ability to achieve profitable growth (53 percent); their ability to secure positive analyst commentary (50 percent); and their ability to reduce cost of capital (47 percent).

"The current economic downturn is the ultimate stress test of a company’s risk management function, and the lessons learned can be leveraged to restore confidence and create a stronger, better, integrated and aligned platform for improving performance under a variety of business conditions," London said. "Leading companies recognize that an expanded, integrated risk-management program supported by technology that allows management to monitor risk-related factors across a company is not just a protective tool but one that can provide companies with a competitive edge in a constantly changing world."

The survey also found that companies expect new risk-related challenges as a result of the current economic environment, including more stringent regulations and increasing costs associated with growing complexity in the risk environment. For instance, forty-one percent of respondents reported that their risk-management costs have increased by at least 25 percent in the past three years, including 14 percent who reported a 50 percent rise in these costs.

Asked to identify the biggest challenges they face over the next two years as they develop more rigorous risk-management capabilities, respondents pointed to: difficulty aligning with the overall business strategy (identified by 93 percent of respondents); the need for more effective collaboration with business units (89 percent); the need for greater integration in the firm’s processes and culture (89 percent); and inadequate resources and talent (88 percent).

[Tina]

Issue Date: IR Alert - July 7, 2009,

Seeking "Fair and Transparent Price Discovery Process" for Energy Commodities, Regulators Mull Futures Contracts Limits
Federal regulators will examine whether the government should impose limits on the number of futures contracts in oil and other energy commodities held by speculative traders, the head of the Commodity Futures Trading Commission said Tuesday. The agency will hold a hearing later this month to gather views from consumers, businesses and market participants on the idea of new limits for energy futures contracts, the agency’s chairman, Gary Gensler, said in a statement, the AP reports.

It will be the first in a series of hearings in July and August on various topics to determine how the commodities agency "should use all of its existing authorities to accomplish its mission," Gensler said. The hearings come against a backdrop of concern in Congress and complaints by traders over speculation in the oil futures market.

By law, the agency sets limits on the amount of futures contracts in some agricultural products that can be held by each market participant to protect against manipulation. But for energy commodities — crude oil, heating oil, natural gas, gasoline and other products — it is the futures exchanges themselves that set the position limits if they desire to do so.

"This different regulatory approach to position limits for agriculture and other physically delivered commodities deserves thoughtful review," Gensler said, the AP reports. "It is incumbent upon the C.F.T.C. to ensure a fair and transparent price discovery process for all commodities."

Oil traders and brokers have complained that funds traded on exchanges have pumped billions of dollars into energy commodities — enough to artificially prop up energy prices.

For example, benchmark crude oil prices have roughly doubled since March even though government reports show the United States brimming with surplus oil. Investors have been buying oil barrels not because of traditional supply and demand, but on the expectation that the economy will eventually improve. Some are also buying crude oil as a hedge against inflation, betting that the dollar will get weaker and push the price of energy commodities even higher.

The agency twice last year took the unusual step of disclosing investigations into the possible manipulation of prices — of crude oil and cotton futures.

[Tina]

IR Alert Daily News (thread)

[Tina]

NIRI Weekly Updates (thread)

[Tina]

NIRI definition of Investor Relations

What is investor relations?



“Investor relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company’s securities achieving fair valuation.”

Let’s clarify a few terms in this statement:

strategic
big picture thinking, usually important to the long-term success of the company, as opposed to tactical, like the intricate details of a production process.

management
the senior leaders of the company; also the activities they pursue to make sure things get done and done correctly to please customers, attract and retain employees, and create value for shareholders.

finance
counting and reporting the company’s results of operations, financing the company by borrowing money and selling shares to investors, managing the company’s financial structure, and ensuring that the company makes strategic decisions that are likely to increase value for shareholders.

communication
the discussion, formal and informal, between the company and those individuals and institutions that are interested in the company’s success; communication can include activities like news releases, speeches, the annual report, media interviews and sound bites by senior leaders, telephone and email discussions, and so on.

marketing
research and analysis of customer needs, media methods for reaching desired customers and audiences important to the company, advertising, development of sales materials, and often the sales function in the company.

effective two-way communication
the conduit for providing timely and complete information to shareholders, and actively soliciting opinions and feedback from shareholders that is shared with management and the board.

financial and other constituents
individuals and institutions (like banks and mutual funds) that have invested in the company, as well as other folks who are interested in the company’s success and often depend on the company.

securities law compliance
adhering to the rules and regulations that govern how public companies must communicate with shareholders and other interested parties.

fair valuation
the value of the company as measured by the price of its stock and/or debt securities, taking into consideration its expected future financial performance and adjusting for known risks; this is often measured in relation to similar companies and/or the market in general.

So to simplify, investor relations blends attributes of senior leadership, finance, communication, and marketing to achieve a fair relative value for the company’s common stock in the stock market.

Or to be really short, investor relations is focused on the creation of value for shareholders.

[Tina]

thanks rce and welcome

I'll be posting IR news updates as well

[umiak]

interesting board tm. thx. board mark.

[Durkkdiggler]

Uh oh.

EOM.

[Tina]

Week 1 Orientation Week

[Tina]

University of California has a very efficient and courteous staff.

Although they state that you need to be registered in classes two weeks prior to the start date, they "rushed" and enrolled me into the Intro to Investor Relations today (start date) and being an NIRI member, was able to get a pretty nice discount for the IR program.

[Tina]

Issue Date: IR Alert - July 2, 2009,

New Disclosure Rule Approved By SEC: Shareholders Now Given a Vote on Executive Compensation at TARP-Enabled Banks

The Securities and Exchange Commission this week voted unanimously to propose a rule giving shareholders a vote on the pay of executives at banks receiving funds from the federal government's bank-bailout program. The proposal was part of a larger package of governance and disclosure rules under consideration by the agency. Commissioners at the SEC also voted to consider transparency rules to expand disclosure of pay packages and other governance matters, MarketWatch reports.

They also approved, in a split, party-line 3-2 vote, a measure introduced by the New York Stock Exchange that prohibits brokers from casting director-election votes on behalf of investors that don't vote themselves. "All three of these measures seek to enhance the quality of the system for each of 800 billion shares voted annually," said SEC chairwoman Mary Schapiro, reports MarketWatch writer Ronald D. Orol.

Some institutions that haven't paid back the government money from its Troubled Asset Relief Program and will need to give investors a say on pay include Bank of America, Citigroup and other financial firms. J.P. Morgan Chase & Co., Goldman Sachs and Morgan Stanley repaid TARP funds, in part, to avoid pay restrictions associated with the program.

The say-on-pay proposal would allow shareholders a non-binding vote on the pay packages of executives of financial institutions that have accepted funds as part of TARP.

The corporation is not required to follow the results of the vote, however a substantial vote against executive pay packages is likely to be embarrassing.

Such an approach, which Congress is considering for all U.S. corporations, would likely lead to more behind-the-scenes discussions between management and shareholders about executive pay packages.

The agency proposed new disclosure regulations, including a measure that would require corporations or dissident investors to provide more details in proxy disclosure documents about the business experience of director nominees.

Existing rules require only a brief description of the business experience director candidates have over the past five years. The agency will consider whether boards should disclose more details about why they choose a particular leadership structure.

The measure also requires corporations to provide more information about how its pay policies create incentives that impact the firm's risks and how management is controlling that risk. The measure also seeks improved reporting of stock and option awards in a compensation table based on fair value rules, which seeks to provide a more accurate sense of the officials pay at that time.

New disclosures about fees paid to consultants are also required in situations where the advisor or any of its subsidiaries provides other services to the company. The new proposal is intended to enable investors to consider pay decisions and assess any conflicts of interests a consultant may have in recommending pay packages.

The measure also requires a corporation to disclose the results of an investor vote within four business days after the end of the meeting at which the vote was held. In many cases of contested director elections, when dissident investors nominate their candidates for election against management's slate of directors, corporations often delay release of results of elections for a week or a month after election.