Category Archives: legislation

Sen. Jeff Merkley Wants to Stop Congress Members From Insider Trading By Banning Them From Owning Stocks

Sen. James Inhofe, an Oklahoma Republican recently elevated to chair the Senate Armed Services Committee after the death of John McCain, was implicated recently in what looked to be an insider trading scandal. A few days after meeting with President Donald Trump and Secretary of Defense Jim Mattis to successfully advocate for a military budget increase, Inhofe purchased between $50,000 and $100,000 of stock in defense contractor Raytheon, which stands to profit from additional defense spending.

Inhofe tried to manage the controversy by claiming that a third-party financial adviser handles his stocks and made the purchase without his knowledge. Minutes after being questioned about the trades, he wrote a letter to his adviser, asking him to no longer trade defense or aerospace stocks. Inhofe has even taken to carrying around a card with a stock reply to journalists about the matter.

But the Raytheon trades represent only a fraction of his trading activity. The same day that Inhofe revealed the Raytheon purchase, he also disclosed the sale of between $15,000 and $50,000 worth of stock from Celgene, a biotech firm, along with a similarly sized sale of stock in Aptiv, the auto parts maker formerly known as Delphi. A month earlier, Inhofe revealed trades in General Electric, Salesforce.com, American International Group, XPO Logistics, Albemarle, Intuitive Surgical, and Intellia Therapeutics.

There’s no way to test Inhofe’s claim that a third party manages his stock portfolio, absent a monitor tracking Inhofe 24/7: He could make a phone call or send a message to direct a trade at anytime. But it’s clear that Inhofe is trading millions of dollars worth of stock a year, while voting on legislation that affects public companies.

It’s clear that Inhofe is trading millions of dollars worth of stock a year, while voting on legislation that affects public companies.

In fact, over the course of 2018, Inhofe has made 57 individual stock trades according to Senate disclosure forms. The value of these trades totaled somewhere between $1.724 million and $4.11 million. In 2017, according to Inhofe’s annual report, he made another 52 trades.

Congress attempted to prevent legislators from insider trading with the 2012 STOCK Act, which prohibits members and their staffs from exploiting insider information discovered in the course of policy deliberations. But unlike corporate “insiders,” members of Congress are not required to establish arms-length trading plansnor has the House fully cooperated with efforts by the SEC to investigate potential wrongdoing.

When compared to corporate insiders, members of Congress are exposed to a much broader array of insider information which implicates a wide range of companies. Given that members of Congress hold a unique position of public trust, Senators Jeff Merkley, D-Ore., and Sherrod Brown, D-Ohio, both potential Democratic presidential candidates, want to put a stop to all the trading. Last week, they introduced legislation that would permanently ban members of Congress and senior staff from trading individual stocks.

“We should not be in the position of thinking about legislation in the context of personal investment,” Merkley told The Intercept in an interview. “As long as you own stocks, it’s hard to rule out of your mind. And the public sees it as a conflict of interest.”

“We should not be in the position of thinking about legislation in the context of personal investment.”

Under the Ban Conflicted Trading Act, all members would have six months after enactment to divest their shares. New members would get six months from their entry into Congress to divest. Members and senior staff could also opt to transfer stocks to an independent blind trust, or hold them for as long as they served in government as long as they do not sell or buy more stocks. Diversified mutual funds or exchange-traded funds would still be allowed.

Merkley questioned whether the Inhofe situation represented a true blind trust. Without assurance that a lawmaker has no role in stock-picking, public cynicism over their trading will remain. “You would have to be legitimately, 100 percent blind,” he said.

Another section of the bill prohibits members from serving as officers on corporate boards, which amazingly is not already disallowed. Rep. Chris Collins, a Republican from New York, was indicted earlier this year for advising friends and family to dump shares of biopharmaceutical company Innate Immunotherapeutic after learning that a clinical trial for the company’s key multiple sclerosis drug failed. Collins knew about the failure before it was public, because he sat on the company’s board.

Currently, Senate ethics rules ban members and staff from serving as board members of publicly traded companies, but House rules do not. Even the Senate rules permit board membership of tax-exempt organizations. Merkley believes codifying into law a full prohibition on members of the House or Senate serving on corporate boards would be beneficial.

The Collins indictment, incidentally, was the one and only instance of a prosecution under the 2012 STOCK Act. While a 2017 Public Citizen report did show that the STOCK Act has reduced market trading activity among members of Congress, it still found between $104 and $337 million in trades by U.S. Senators in 2015, the last year studied.

Individual incidents continue to dog the reputation of Congress. In 2017, former congressman Tom Price’s confirmation hearing for Health and Human Services Secretary was dominated by questions about his numerous stock holdings in health-related companies. Price made several pharmaceutical stock trades on the same day that he pressured regulators to repeal a rule that would harm drug company profits.

In addition, there are numerous instances of senators trading stocks of companies they nominally oversee through committee work, as the Public Citizen report indicates:

Sen. Bob Corker (R-Tenn.) has recently traded hundreds of thousands worth of stock in energy infrastructure businesses while sitting on the Senate Banking, Housing and Urban Affairs Committee. Sen. Thad Cochran (R-Miss.) is also a busy player in energy stocks while sitting on the Senate Appropriations Subcommittee on Energy and Water Development. Sens. Sheldon Whitehouse (D-R.I.) and Pat Toomey (R-Pa.) actively trade in healthcare stocks while serving on healthcare subcommittees. Sen. Tom Udall (D-N.M.) trades in natural resources and precious metals stock while on subcommittees that oversee these industries.

(Cochran is no longer in the Senate, having resigned due to health concerns in April.)

“We really have to establish a public trust of behavior.”

“We really have to establish a public trust of behavior,” Merkley said. “As public officials there are a lot of impositions on our lives. This is not one of them. Having a diversified portfolio is an easy thing.”

Banning congressional stock trading could also make it easier to pass a 0.1 percent tax on stock trades, which the Congressional Budget Office this week estimated would raise $777 billion over 10 years.

Under the bill, if members or senior staff are found to have traded stocks while in office, the congressional Ethics Committees would be empowered to fine them no less than 10 percent of the value of the investment. Of course, congressional Ethics Committees are made up of members of Congress, and they have historically been rather lax in enforcing rules against fellow members. It will also be a challenge for the Merkley bill to pass the Republican-controlled Senate in the first place.

Separate from Merkley’s proposed legislation, Federal Trade Commissioner Rohit Chopra has called for an independent Public Integrity Protection Agency, which would consolidate enforcement capability that’s currently spread around the government, and have the ability to investigate and penalize government officials and those seeking influence. Asked about the idea, Merkley responded: “My first impression is that an office dedicated to the mission of transparency and accountability sounds great.”

Democrats in the House have prepared a broad anti-corruption bill as their first act when they take over Congress next year, but while it beefs up some restrictions on members and provides new enforcement powers to the Office of Government Ethics, it does not include anything on congressional stock trading.

Merkley’s choice to spearhead anti-corruption efforts might be read as part of his efforts to distinguish himself in a crowded 2020 primary field. When asked about his presidential ambitions, Merkley  told The Intercept: “I’m exploring it and will decide within the first quarter (of next year).”

The post Sen. Jeff Merkley Wants to Stop Congress Members From Insider Trading By Banning Them From Owning Stocks appeared first on The Intercept.

Australia: Parliament passes anti-encryption bill

The Parliament of Australia has passed the Assistance and Access Bill 2018, which allows Australian authorities to pressure communication providers and tech companies into giving them access to encrypted electronic communications, all in the name of fighting crime and terrorism. Interception capabilities The companies will be forced to use interception capabilities they already have or to build new ones – although the government claims that the authorities can’t use these powers “to introduce so-called ‘backdoors’ … More

The post Australia: Parliament passes anti-encryption bill appeared first on Help Net Security.

Serbia Enacts New Data Protection Law

On November 9, 2018, Serbia’s National Assembly enacted a new data protection law. The Personal Data Protection Law, which becomes effective on August 21, 2019, is modeled after the EU General Data Protection Regulation (“GDPR”).

As reported by Karanovic & Partners, key features of the new Serbian law include:

  • Scope – the Personal Data Protection Law applies not only to data controllers and processors in Serbia but also those outside of Serbia who process the personal data of Serbian citizens.
  • Database registration – the Personal Data Protection Law eliminates the previous requirement for data controllers to register personal databases with the Serbian data protection authority (“DPA”), though they will be required to appoint a data protection officer (“DPO”) to communicate with the DPA on data protection issues.
  • Data subject rights – the new law expands the rights of data subjects to access their personal data, gives subjects the right of data portability, and imposes additional burdens on data controllers when a data subject requests the deletion of their personal data.
  • Consent – the Personal Data Protection Law introduces new forms of valid consent for data processing (including oral and electronic) and clarifies that the consent must be unambiguous and informed. The prior Serbian data protection law only recognized handwritten consents as valid.
  • Data security – the new law requires data controllers to implement and maintain safeguards designed to ensure the security of personal data.
  • Privacy by Design – the new law obligates data controllers to implement privacy by design when developing new products and services and to conduct data protection impact assessments for certain types of data processing.
  • Data transfers – the Personal Data Protection Law expands the ways in which personal data may be legally transferred from Serbia. Previously, data controllers were required to obtain the approval of the Serbian DPA for any transfers of personal data to non-EU countries. The new law permits personal data transfers based on standard contractual clauses and binding corporate rules approved by the Serbian DPA. Organizations can also transfer personal data to countries deemed to provide an adequate level of data protection by the EU or the Serbian DPA or when the data subject consents to the transfer.
  • Data breaches – like the GDPR, the new law requires data controllers to notify the Serbian DPA within 72 hours of a data breach and will require them to notify individuals if the data breach is likely to result in a high risk to the rights and freedoms of individuals. Data processors must also notify the relevant data controllers in the event of a data breach.

The new law also imposes penalties for noncompliance, but these are significantly lower than those contained in the GDPR. The maximum fines in the new Serbian law are only 17,000 Euros, while the maximum fines in the GDPR can reach up to 20 million Euros or 4% of an organization’s annual global turnover.

In 2012, Lisa Sotto, partner and chair of the Privacy and Cybersecurity practice at Hunton Andrews Kurth, advised the Serbian government on steps to enhance Serbia’s data protection framework.

Draft Bill Imposes Steep Penalties, Expands FTC’s Authority to Regulate Privacy

On November 1, 2018, Senator Ron Wyden (D-Ore.) released a draft bill, the Consumer Data Protection Act, that seeks to “empower consumers to control their personal information.” The draft bill imposes heavy penalties on organizations and their executives, and would require senior executives of companies with more than one billion dollars per year of revenue or data on more than 50 million consumers to file annual data reports with the Federal Trade Commission. The draft bill would subject senior company executives to imprisonment for up to 20 years or fines up to $5 million, or both, for certifying false statements on an annual data report. Additionally, like the EU General Data Protection Regulation, the draft bill proposes a maximum fine of 4% of total annual gross revenue for companies that are found to be in violation of Section 5 of the FTC Act.

The draft bill also proposes to grant the FTC authority to write and enforce privacy regulations, to establish minimum privacy and cybersecurity standards, and to create a national “Do Not Track” system that would allow consumers to prevent third-party companies from tracking internet users by sharing or selling data and targeting advertisements based on their personal information.

Senator Wyden stated, “My bill creates radical transparency for consumers, gives them new tools to control their information and backs it up with tough rules.”

The Future of Voice, Fraud, and the Impact to CX | A Recap

Voice is growing out of the call center, out of your telephone and is growing into the next interface. In previous years, we have released fraud reports revolving around the call center, but with the expansion of voice, and the fraud that follows, we have shifted our perspective to voice intelligence – after all, voice is everywhere: your digital assistant, your latest kitchen appliance, and even your car.

The eras of economies have passed us by, first characterized by digitalization, then the wave of mobile devices, and now by voice – paving the way to the conversational economy. These economies are accompanied by their own collection of problems – and fraudsters are not letting up. There has been a 350% increase from 2013 to 2017 in phone fraud, and a 47% increase from last year. Banks and the insurance industry are experiencing a higher level of fraud, with a 20% and 36% increase in fraud year over year respectively.

So how did we get to these increased fraud rates?

There have been an increasing amount of data breaches year over year; last year, there were 1,300 data breaches. These breaches make it easy for criminals to commit fraud – ultimately feeding into the $1.5 trillion cybercrime market. Additionally, a lot of enterprises rely heavily on KBAs, or knowledge-based authentication questions, which function as secrets for security. These “secrets” can be easily hacked through social engineering or through the black market.

The arrival of the omnichannel has not helped with containing fraud – consumers want to be able to contact a business through any channel, with the expectations for the experience to remain consistent. However, there are consequences for the omnichannel – it allows fraudsters to use resources from one channel to access an individual’s details in another channel. Lastly, as we build more tools to stop fraud, fraudsters are evolving quickly and learning how to combat these security measures.

Overall, fraud is the ultimate impact to customer experience – your customers have expectations for who they do business with, and if they expect their data to be safe with you, this should be upheld. We’re living in a world where consumers are likely to switch who they do business with if their customer experience expectations are fulfilled.

For more information on the future of voice, fraud in the voice channel, and the impact it has on customer experience, tune into our on-demand webinar here.

The post The Future of Voice, Fraud, and the Impact to CX | A Recap appeared first on Pindrop.

How to Minimize Leaking

I am hopeful that President Trump will not block release of the remaining classified documents addressing the 1963 assassination of President John F. Kennedy. I grew up a Roman Catholic in Massachusetts, so President Kennedy always fascinated me.

The 1991 Oliver Stone movie JFK fueled several years of hobbyist research into the assassination. (It's unfortunate the movie was so loaded with fictional content!) On the 30th anniversary of JFK's death in 1993, I led a moment of silence from the balcony of the Air Force Academy chow hall during noon meal. While stationed at Goodfellow AFB in Texas, Mrs B and I visited Dealey Plaza in Dallas and the Sixth Floor Museum.

Many years later, thanks to a 1992 law partially inspired by the Stone movie, the government has a chance to release the last classified assassination records. As a historian and former member of the intelligence community, I hope all of the documents become public. This would be a small but significant step towards minimizing the culture of information leaking in Washington, DC. If prospective leakers were part of a system that was known for releasing classified information prudently, regularly, and efficiently, it would decrease the leakers' motivation to evade the formal declassification process.

Many smart people have recommended improvements to the classification system. Check out this 2012 report for details.