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Trade Compliance: OFAC Embargo and Sanctions Programs

The office of Foreign Assets Control (OFAC) at the Treasury department is responsible for administering a variety of economic and trade sanctions programs. Those programs are intended to impose restrictions on trade by U.S. persons with countries, organizations or individuals that the U.S. government has determined pose foreign policy or national security concerns.

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Topics: ECA Risk Forecast Report 2013

Trade Compliance: Export Control Reform Initiative

The Obama Administration’s efforts to reform the U.S. export control system remain the dominant theme in the export trade compliance field. More than three years after it was announced, the export Control Reform (ECR) initiative continues its slow but steady progress. in 2011, the new License exception Strategic Trade Authorization (ATA) was introduced. it was designed to authorize certain exports of items moved from the U.S. Munitions List (USML) under the international Traffic in Arms Regulations (ITAR) to the Commerce Control List (CCL) under the export Administration Regulations (EAR). efforts during 2012 focused on the continued review of the USML to identify items that are candidates for transfer from the rather onerous USML to the EAR. The Bureau of industry and security (BIS) at the Commerce department, which is responsible for administration of dual-use exports under the EAR, and the directorate of defense Trade Controls (DDTC) at the state department, which is responsible for exports of defense articles under the ITAR, are working in close cooperation to conduct the review of the USML under the ECR initiative.

BIS and DDTC have published coordinated proposed rules covering nine of the USML categories. The proposed rules identify items that the Administration believes should be transferred from ITAR jurisdiction to EAR jurisdiction. none of those rules has advanced beyond the proposed stage, but with the president’s reelection, it is expected that all will now proceed to the final rule stage, and that export jurisdiction over many items will, in fact, be transferred from state to Commerce.

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Topics: ECA Risk Forecast Report 2013

Social Media: Co-Branded Employees

Who owns a social media account that an employee sets up for the purpose of promoting his employer’s business? That’s an increasingly common, and occasionally litigious, question. The Wall Street Journal reports that more and more “co-branded” employees are using social media to build a personal, public identity—a brand of their own—based on their work. But when the rules about ownership aren’t clear, problems can develop.

in Eagle v. Morgan, a federal district court for the eastern district of Pennsylvania addressed the issue of ownership of employer social media accounts by dismissing the complaint of an executive who had launched a Linkedin account, under her own name, which promoted the company. When her company was purchased by another and her employment terminated, she discovered that her Linkedin password and account profile had been changed.

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Topics: ECA Risk Forecast Report 2013

Social Media: Employee Online Behavior

Social media empowers users to become their own publishers—typically using Facebook, Twitter, or Linkedin to update the world on their status and opinions, often accompanied by photos or video. unfortunately, not all employees (including senior executives) are experienced communicators, sometimes resulting in posts that are defamatory to other employees or the company, damaging to the company’s reputation, or revealing proprietary or potentially material information.

Case in point: in July, 2012 Netflix CEO Reed Hastings boasted in a Facebook post that more than one billion hours of Netflix programming had been viewed in June. in December, the securities and exchange Commission sent Netflix a “Wells notice” saying the agency may file civil claims against the company and Mr. Hastings for violating the Regulation Fair disclosure (Reg FD) rule. Mr. Hastings says the information he initially disclosed was not material to the company, adding in a subsequent Facebook post: “Fascinating social media story.”

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Topics: ECA Risk Forecast Report 2013

Social Media: Privacy Concerns

As companies increasingly turn to social media to market and promote, business units should have appropriate policies and operational guidelines in place. it’s also critical to determine to what degree the company’s social media projects utilize third-party consultants and agencies, all of whom need to comply with organizational policy.

Privacy may well be the leading operational risk regarding social media; as marketers collect more consumer data, there’s need for vigilance regarding compliance with federal and state privacy laws.

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Topics: ECA Risk Forecast Report 2013

Emerging SEC Enforcement Trends: Insider Trading, and the FCPA

Insider Trading

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Topics: ECA Risk Forecast Report 2013

Emerging SEC Enforcement Trends: Increased Importance of Whistleblowers

As part of Dodd-Frank, Congress created powerful incentives to encourage persons to report (i) potential violations of the federal securities laws to the SEC and (ii) potential violations of the Commodity exchange Act (CEA) to the Commodity Futures Trading Commission (CFTC). While the Sarbanes-Oxley Act (SOX) encouraged up-the-ladder reporting by employees and allowed for self-policing and self-reporting by companies of potential violations, the Dodd-Frank whistleblower provisions create incentives for external reporting to regulators, thus hindering a company’s self-policing efforts.

The SEC’s rules to implement those provisions of the Act that are within the SEC’s authority raise serious challenges for public corporations, financial services firms, and other companies that are subject to the federal securities laws. Companies can expect an increase in the number of complaints that circumvent internal reporting mechanisms, and that instead, go directly or through plaintiffs’ lawyers to the government.

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Topics: ECA Risk Forecast Report 2013

SEC: Current Enforcement Activity

The enforcement division of the U.S. securities and exchange Commission (SEC) continues to aggressively pursue violations of federal securities laws by corporations, financial institutions, and individuals. Compliance and legal personnel must be proactive to ensure that appropriate controls and policies are in place to prevent or catch misconduct.

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Topics: ECA Risk Forecast Report 2013

Records & Information Management: The Way Forward

Records Management is existentially and has historically been about “governance.” The efficacy of records management programs has generally depended upon compliance, using the lens of a fear of running afoul of regulations, or suffering legal consequences for poorly managed records.

The United States Federal Office of Management and Budget (OMB) issued a memorandum in August, 2012, which refers to records management in different terms:

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Topics: ECA Risk Forecast Report 2013

Records & Information Management: The Advance of Technology

Today’s businesses rely on technology for virtually everything. Business records are almost exclusively becoming electronic and are generated by numerous devices, systems, and applications. Records Managers who have employed Retention schedules to detail the appropriate retention periods and records disposition actions are faced with adjusting their thinking to accommodate new and different types of records.

Mobile devices are now the business appliance of choice. smart phones, tablets, and other PDAs are generating and holding more records than ever before. information Technology functions are now abandoning efforts to “control” which devices are used by employees in favor of a BYOD (Bring Your Own Device) approach. With this flexibility come numerous risks to the records manager:

  • inability to access company records that are housed on mobile devices
  • Rapid sharing and proliferation of records from device to device and from one to many people.
  • difficult and expensive discovery efforts when records are needed  for litigation, regulatory review, and other business purposes
  • Co-mingling of business and personal records
  • difficulty in preserving and managing records through their lifecycle when located on mobile devices
  • difficulty in gaining compliance with legal hold requirements
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Topics: ECA Risk Forecast Report 2013