The future of scandal-hit hedge funds


Sara Firouzyar

Last month, the U.S. Department of Justice indicted SAC Capital, the Connecticut based hedge fund with c.US$15 billion funds under management, of insider trading.

The indictment, and a related civil case seeking forfeitures and money laundering penalties, imperils the future of the hedge fund and adds to a recent string of high profile corporate scandals rocking the financial services sector.

The US government has accused SAC of presiding over a culture where employees not only flouted the law but were encouraged to tap their personal networks of contacts for inside information about publicly traded companies; all suggesting a chronic failure in the fund’s compliance function.

SAC Capital is just the most recent example of the cost of compliance oversights for global financial institutions. Even with the best of intentions, those that fail to undertake rigorous due diligence and embed a culture of compliance, lay themselves open to scrutiny from increasingly unforgiving regulators and markets.

In light of these recent scandals and with the chaos of Enron and Madoff not too far behind us, much has been said about what can be done to make compliance and ethics programmes more than just corporate window dressing. Some have argued for the creation of a C-level compliance officer: someone with the experience and mandate to actually make things happen in the organisation.

Gong’s client True Office argues that compliance shouldn’t be confined to a single individual or to boardroom strategy documents – it should be equally embraced by every member of an organisation. In a recent Wall Street Journal article True Office CEO, Adam Sodowick, believes this can be achieved through the tactical use of gamification. Gamified compliance training, he says, creates an authentic experience that employees can relate to and apply to their role; changing a mandatory task that is often perceived as dull into a thought-provoking and sensory, ‘play-based’ experience.

However you want to play it, one thing is clear – it’s time for companies, and policymakers, to reject a tick-box approach to compliance programmes, and get much more serious about ensuring that integrity remains at the heart of business.

Reinforcing North-South Trade


Isabelle Alenus-Crosby

At a time when South-South trade is becoming a force to be reckoned with, the North is jumping into action. Is it too late? In this global and growing world, there might just be room for everyone, and I expect that both the US and the EU will regain some footing in Africa in the years to come.

Power Africa, President Obama’s initiative to increase access to low cost energy, and Trade Africa, the initiative to boost trade with and within Africa, have both been written about extensively since Obama’s visit to the continent recently.

President Clinton’s African Growth and Opportunity Act (AGOA) however seems to have been ignored somewhat. And yet, the 2012 Presidential Directive on Sub Saharan Africa, talks about a new and enhanced AGOA, with the potential of making the U.S./Africa trade relationship as significant as the one between the U.S. and the European Union. (The Africa-EU Partnership has also announced that they are entering into “a new phase” with an increase in Trade agreements).

Next month, Washington D.C. will host the 2013 U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum in Addis Ababa.  Trade and investment-related issues are top of the agenda and it is expected that the “new and improved” AGOA will finally be revealed in all its glory.

I guess we should therefore expect extensive (although belated) coverage soon.