Former Boss of Bosses For BrokerDealers Joins Bitcoin Bandwagon; Ex-SEC Head Arthur Levitt Is on Board

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Brokerdealer.com blog update courtesy of reporting from WSJ and other news outlets

Arthur Levitt, the longest-serving chairman of the Securities and Exchange Commission, is joining the advisory boards of two bitcoin-focused companies.

Frmer SEC Head Arthur Levitt, photo by Reuters

Frmer SEC Head Arthur Levitt, photo by Reuters

As an adviser to Atlanta-based BitPay, a bitcoin payment processor, and Vaurum, a Palo Alto-based bitcoin exchange for institutional investors, Mr. Levitt says he hopes to “help them understand the imperative of a robust approach to regulation” if bitcoin is to fulfill its promise to further shake up the world of finance. The appointments will be formally announced Tuesday.

Bitcoin is an independent digital currency in which transactions are verified by a network of computer owners and a universal payments ledger. The model strips out banks, credit card companies and other intermediary institutions from electronic payments and so aims to reduce costs in the system.

Mr. Levitt, who ran the SEC between 1993 and 2001 and who these days works in a variety of consulting roles, is one of the highest-profile members of the U.S. financial establishment to work in the digital-currency industry. In an interview, he said he was drawn to the sector by the innovative energy of the young people behind it, a group that he described as always “thinking beyond the box.”

“The intellectual firepower behind [bitcoin] enterprises is astonishing,” Mr. Levitt said. “But I think in terms of compliance and regulations, they are relatively immature.”

He said bitcoin needs regulation to build the trust of the broader population and boost adoption. Bitcoin firms “must have as their top priority a greater public understanding of what bitcoin is, how it works” and of the improvement it brings by “imposing competitiveness on establishment practices and procedures,” he added.

The BitPay and Vaurum appointments come at a crucial time for bitcoin. After it rallied 9100% against the dollar in the 12 months to December 2013, its price has since fallen by 70% from that peak, in part because of regulatory uncertainty.

Europe’s BrokerDealers Battle For Role in New Bitcoin ETF

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marketsmuseBrokerDealer.com blog update courtesy of MarketsMuse.com

Coinfloor has revealed plans to launch a bitcoin exchange traded fund (ETF) and accept additional fiat currencies as part of its efforts to expand internationally.
Starting immediately, the UK-based bitcoin exchange is allowing customers to make deposits in US dollars, euros and Polish zloty, in addition to the British pound.

The company framed the move as a way for it to transition from a UK-only exchange to a global player in the wider market for bitcoin exchanges. Adam Knight, chairman and investor with the exchange, said: “By expanding to dollars, euros and zloty, we are expanding from a UK-only focus to an international one, delivering more value to our UK customers and growing our user base internationally.”

Amadeo Pellicce, CoinFloor’s chief operating officer, explained that the additional currencies were a logical choice for the exchange. “The XBT/USD pair is the most commonly traded pair, so our existing customers naturally have the demand to access the additional liquidity in that market, and we are expanding to euros to better service our European customers by supporting SEPA transfers,” he said.

While US dollars and euros would seem to support the company’s more global goals, the addition of Polish zlotys is perhaps less expected. However, it makes sense in light of its banking partnership – Coinfloor banks with Poland’s PKO Bank Polski, due to the ongoing reluctance of British banks to provide services for cryptocurrency-based companies.

To continue reading, please click this link to MarketsMuse.com

SEC’s Latest Pet Peeve: Grammar. BrokerDealers Beware

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great grammar Brokerdealer.com blog post courtesy of extract from Sep 13 WSJ story by Theo Francis.

After combing through a 19,974-word filing for a securities offering, Securities and Exchange Commission senior counsel Catherine Gordon had some guidance for the company that drafted it.

“In the second paragraph, add a comma,” she wrote to an attorney for the trust, sponsored by Incapital LLC, in December, “to improve readability.”

Meet the stock market’s punctuation police. Corporate securities filings are plagued by some of the world’s most impenetrable prose, but it isn’t for lack of effort. Every year, SEC lawyers and accountants review several thousand of the more than half-million documents that companies file with the agency. And while they are primarily on the prowl for accounting inconsistencies and breaches of securities regulations, they also chase down typos, sentence fragments, jargon, puffery and sloppy punctuation.
Making sure corporate disclosures pass muster falls to the SEC’s 350-member Corporation Finance division—Corp Fin in the trade—which reviews every public company’s primary filings at least once every three years.

Last year alone, the securities industry’s style police sent nearly 8,800 letters to more than 4,600 companies, according to LogixData, which analyzes SEC filings. The letters, which eventually become public, contained more than 66,000 questions, most seeking fuller disclosure or better adherence to accounting rules. But many would have been right at home in freshman English.

SEC staffers asked a brewer to provide the volume of a barrel, a wedding organizer to define “marriage-seeking profiles,” racing companies to describe their horses with complete sentences, a biopharmaceutical maker to explain aplastic anemia and an annuity company to punctuate the end of a sentence.

For the full story from the WSJ, please click here.

 

Social Media and Financial Services; BrokerDealers Need To Know

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A brokerdealer.com blog special article.

No longer are organizations and financial brands able to focus exclusively on email aliases, storefronts and toll free numbers for support and customer participation. Now, a brand must engage customers 24/7 in social media. However, as we have seen together with the rise in social media junk, the upsurge in social fraud, the continuing social account hacks and also the ever increasing regulatory focus on social websites, financial services’ social media programs endure the most comprehensive set of compliance challenges and hazards.

Actually, every one of the specific financial services sub-verticals including retail banking, insurance, wealth management, charge cards, etc., all tend to have two to three major categories of social media applications including centralized brand programs, adviser / agent programs and social customer care systems. Unfortunately, they may just be partially equipped to manage conformity and risk for just one of their social programs.

Brand plans confront regulations but in addition have a tendency to be exposed around account hacks deceitful accounts and social media junk. Social care plans have to worry about those same problems in addition to controlled and sensitive data managing of misdemeanors of FINRA Customer Criticism Dangers regulations or FFIEC Regulation Z and DD on top and PCI. Advisor and agent applications have to handle industry regulations like FFIEC FINRA, FTC and SEC, along with corporate standards including keeping the advisor or agent account protected and using approved employee bio data, approved publishing tool workflow.

Here are several best practices to help financial services organizations address the comprehensive set of compliance and danger challenges they confront in social media:
1. Don’t rely on keyword detection: manual workflows and Less accurate key word dictionaries do not scale. Technology that comprehends context and the content ought to be employed to automate detection, handling and improving retention and eDiscovery search for several compliance, legal and related content violations.
2. Define Policies & Organization Obligations: Create a cross-departmental working group defining and executing on who is responsible for applying them, creating policies and reacting to incidents across social systems.
3. Learn Compliance Context: Social marketers, IT teams and agents or brokers will not be naturally compliance specialists. Thus, they must be trained by external and internal compliance specialists, so they are informed regarding the circumstance of the regulations.
4.Shield Social Accounts: Maintain access control on social pages, profiles, and accounts by restricting what tools can publish to the report, protecting passwords and monitoring the account to discover and prevent account hacks.
With increasingly more resources being committed by financial services brands to social networking, the urgency grows with it each day. Without a serious strategy and investment in this more comprehensive set of compliance areas and social danger, financial services organizations will fight to efficiently and safely scale their social plans.

BrokerDealers and Bankers Using James Bond Strategies

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Brokerdealer.com blog update courtesy of extract from today’s WSJ story profiling James Bond style schemes used by bankers and brokers in effort to wrap pending deals and transactions under a cone of silence.

wsj logo“Project Swift” sounds like the name of a military invasion or an Olympic marathoner’s training plan. But it is actually the code name for a corporate buyout, inspired by a private-equity associate’s fondness for singer Taylor Swift.

Labels like Project Token, the name Apollo Global Management APO +0.41% LLC used to mask its purchase of children’s restaurant favorite Chuck E. Cheese, or Project Fusion, the code for Kinder Morgan Inc. KMI +1.23% ‘s consolidation of its oil-and-gas holdings into a single company, are designed to keep reporters, traders and even rival companies from sniffing out deal news before formal announcements are made.

For the young bankers who get to choose them, code names are an amusing diversion from the financial modeling and PowerPoint presentations that fill their days.

But one deal-making powerhouse is putting an end to the name game, opting instead to automate the process to avoid the pitfalls that go with the territory.

Goldman Sachs Group Inc. GS +0.82% now requires bankers to use name-generating software that offers 10 random options like Project Calculator or Project Daniel. The new system has been phased in across the bank over the past two years, according to people familiar with it.

Though bankers can refresh the options as often as they like, some say the new naming process has taken some fun out of the game. And they say people involved in their deals often forget the random names generated by the software.

For the full story from the WSJ, please click here.