No financial institution (FI) wants to be in the news because of a lawsuit with its customer, but corporate-account-takeover incidents are creating these types of headlines with increasing frequency. Businesses are being targeted by malware, which obtains credentials to a business’s online bank account and uses that access to drain the funds. Malware is not a new threat, but its sophistication is growing in leaps and bounds. Malware is actively targeting small to midsize businesses with keystroke logging, man-in-the-browser attacks, and other invisible methods that compromise an organization’s security. These breaches result in six- and seven-figure losses because they facilitate … Continue Reading →

While Americans and Europeans faced austerity programs, borrowing, or the printing of additional money to bail themselves out of the global financial crisis of 2008, Canadians used their budget surplus, accumulated over the last 10 years by a government that worked to maintain balanced budgets. Generally, the country  weathered the storm well. Canadians are comparatively conservative in their approach to financial activities, from government budgeting and risk-averse financial-institution-foreclosure rates (less than .5% due to rigorous lending policies) to strict regulatory oversight of financial institution activities to investors with a bias toward bonds, domestic equity investments, and low household debt. The … Continue Reading →

Following its six-month study of investment advisors and broker/dealers, the SEC has concluded that investors and financial advisors will be better off if broker/dealers can continue to provide incidental advice and investment advisors can continue to act as broker/dealers when clients need fast execution, liquidity, single-transaction service, etc. Given this mindset, the SEC is seeking to harmonize registered investment advisor (RIA) and broker/dealer rules where RIAs and broker/dealers perform similar functions; this, they believe, will minimize regulatory burden and maximize client benefits. The fiduciary standard is one of these rules that investment advisors follow and that the SEC now requires … Continue Reading →

A couple of weeks back, the New York Times Magazine ran an article on how people are managing the digital content that is left behind when they pass away.  There are a variety of startups (Entrustnet, DataInherit, DigitalLocker) offering services, as well as gurus offering advice on best practices.  Last year, a conference called Digital Death Day took place in San Francisco. Life insurers, agents, and estate-planning lawyers might well consider seeking ways to tap into this thought. It might make sense to acquire one of these sites, investigate an alliance, or, at the very least, find a way to co-market … Continue Reading →

In an interview with Bloomberg earlier this week, Maurice Greenberg, former CEO of AIG, stated that selling off units of AIG was weakening the firm, and that the sale of Nan Shan in particular, wasn’t a good idea. Greenberg knows AIG better than anyone, and may well be right in the long run. But the perceived motivation for the Nan Shan deal, AIG’s desire to “pay off the government,” is incorrect.  The proceeds of the firm’s sale of ALICO to MetLife and its IPO of Hong Kong-based AIA have sufficed to pay down the outstanding credit line owed to the New … Continue Reading →

I recently had an enlightening conversation with Herbert Broens, head of trade finance at Bayer, the German pharmaceutical and chemical multinational, on the topic of trade finance and regulation. Basel III will soon affect the way European corporate treasuries handle their trade finance business; though the outcome is uncertain, corporate executives are starting to prepare. The most significant conclusions from our conversation are summarized in this post and illustrate how regulatory dynamics are perceived by a corporate executive involved with trade finance decisions. First, a bit about trade finance. Corporate treasury executives can control their trade finance volumes with a direct impact to … Continue Reading →

Exchange-traded funds (ETFs) come in many different asset classes, with equity-based ETFs taking the majority of general recognition. The ubiquitous “SPY” ETF (State Street’s S&P 500 Index ETF) is the most frequently traded ETF on exchanges and electronic trading platforms today. Over the last three years, however, fixed income ETFs have charged out of the gates. Traditional ETFs are pooled assets that represent both widely known and customized indices. On an assets-under-management (AUM) basis, the ETF universe overwhelmingly operates in a passive management style in which the fund sponsor seeks to merely mirror the performance of the selected index. One … Continue Reading →

And if they don’t, why not? The purpose of this post is not to explain regulations or provide guidance, but to open a dialogue about all that is murky in the US$4.2 trillion world of the U.S. 401(k). For banks suffering from loan volume losses and plummeted revenue, the post may offer possibilities for a new product — even a few new products — that could evolve with ingenuity or legislative initiative. Here is what I know: Ever since the emergence of 401(k)s, the financial management of these retirement accounts for private-sector employers has been restricted to securities or investment firms … Continue Reading →

As we enter the new year, it’s customary to reflect on the previous year and anticipate the year ahead. It’s also when everyone rolls out their top 10 and 15 lists for their areas of coverage. Though a bit cliché, this is a useful way to pause, reflect, and prioritize time and resources for the year to come. 2010 was a banner year for regulation in the financial services industry, and 2011 promises more of the same. By one count, the Dodd-Frank Act alone requires that regulators formulate more than 243 rules to implement it. With that as a backdrop, … Continue Reading →