The renewed push to prosecute institutional investors and their contacts for insider trading raises an enormously difficult question: What, today, is the difference between trading on inside information and performing thorough due diligence on a trades?
The Wall Street Journal :
Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries.
It's patently wrong to disclose material information before it's announced broadly. But the illegality of being an industry expert who can accurately predict what will happen is another matter entirely. I really wonder what sort of information these probes will yield.
“I'm the man. I'm the man. I'm the man. Greene's the man. I'm the man. I'm the greatest person ever. I was born to be president. I'm the man, I'm the greatest individual ever."
-- South Carolina resident and former Congressional candidate Alvin Greene
Sometimes, I encounter prospective clients that don't really understand the process and approach required to achieve effective public relations. They want press mentions without anything newsworthy to say, or they want to pay fees based on how often their name appears in the press instead of traditional arrangements.
Usually, my response is that I'm quite able to generate a considerable amount of attention by saying profoundly and markedly ridiculous things. I guess Alvin Greene, in , has taken a similar say-anything route to stay in the news cycle.
The central bank is hoping that its plans to buy $105bn of Treasuries each month until well into next year will cause long-term interest rates to fall, encouraging households and businesses to spend.
A sustained rise in yields, therefore, could be a serious cause for concern.
The yield stood at 2.63 percent when the Fed announced its strategy on Nov. 3 -- and throughout October, when the Fed was likely signaling the spending to The Street, it crossed that threshold. It closed yesterday at 2.91 percent -- a 9.6 percent jump in just two weeks.
The consensus, as Mackenzie reports, is that yields will eventually fall as the Fed's buying will take place steadily over the next eight months. Still, for a plan that centers on lowering bond yields in order to stimulate spending, this is an awfully strange way to start.
I've been reading a lot about the financial technology that drives corporate treasury departments because of a new engagement as the U.S. press contact for .
A series of posts from Strategic Treasurer, a consulting firm, explains rather succinctly how, and why, corporate treasuries use derivatives, a topic that is widely misunderstood among folks who talk about financial engineering and high finance.
Sans commentary, here are the five misperceptions; read them :
Hedging Requires Crunching.
Derivatives = Speculation.
It’s Important for My Hedges to Make Money.
Risk Management Equals Hedging.
Risk is Absolute.
Hedging Eliminates Cash-flow Volatility.
The use of derivatives by treasury departments was an underreported part of the dialogue surrounding the financial reform bill, which later became the Dodd-Frank Act, earlier this year. I chased down I left in response to by Annie Lowery, who then covered policy for the Washington Independent, because it's still pretty relevant to the theme of corporate treasuries and derivatives use.
The opaque nature of derivatives is precisely what makes them an alluring financial product when used properly. Consider corporate treasuries, which commonly use over-the-counter derivatives to hedge business risks that are beyond their control. These transactions aren't speculative. They're more like an economic utility for many corporations that aren't in the business of [trading them].
Putting all derivatives on an exchange or something like an exchange, which is the only way I know of to force their pricing to become public to the market, takes this option away from the many market participants that use the instruments in productive ways. While I appreciate the good intentions, is it really good policy?
Though the Dodd-Frank Act requires greater levels of transparency for OTC derivatives, the proverbial elephant in the room is how regulators will interpret it. Generally, I expect treasuries that use derivatives in relatively benign ways will be exempt from a lot of the Act's provisions.
And having the benefit of retrospect, the exchange portion of the Act isn't the most harmful thing imaginable for treasurers. I recall hearing cries for policy that taxed derivative use by volume, which would have been much more harmful, potentially, for corporate treasuries that use the instruments responsibly.
One thing I learned by reading on what consumers can do to change the banking system is that the state of North Dakota operates the nation's only state-owned bank, .
In contrast to most commercial banks, Bank of North Dakota (BND) is not a member of the Federal Deposit Insurance Corporation (FDIC). North Dakota Century Code 6-09-10 provides that all BND deposits are guaranteed by the full faith and credit of the State of North Dakota.
The deposit base of BND is unique. Its primary deposit base is the State of North Dakota. All state funds and funds of state institutions are deposited with Bank of North Dakota, as required by law. Other deposits are accepted from any source, private citizens to the U.S. government.
There is a of that speaks favorably of structuring consumer banks in this way, and as of earlier this year, five states that sought to establish state-owned banks.
A member of on which I participate linked to a post from Gary McCormick, chairman and CEO of the Public Relations Society of America, an industry advocacy group.
McCormick, on behalf of the Society, to deride a new content model from Forbes that further blurs the important line between paid and earned media. An excerpt:
Professional communicators, advertisers and marketers have a responsibility to provide the public with pertinent information regarding the motivations and sponsorship of content they create. PRSA's Code of Ethics states that professionals have the obligation to "reveal the sponsors for causes and interests represented," and that, "open communication fosters informed decision making in a democratic society."
In both regards, AdVoice and many other digital sponsored content platforms fail.
For anyone unfamiliar with the AdVoice platform, it's a new revenue strategy that took hold , which muddled independent reporting with corporate speech. I used to be quite enthusiastic about True/Slant, and upon its launch I urged some of my clients to consider contributing content.
But the reason I liked it was because the lines between independent content and corporate content were really, really hard to miss. The very nature of its name – True/Slant – implied a mingling of independent reporting and spin. The platform was unashamed of this and I credited its developers for that.
Regarding McCormick's critique, I responded on the listserv with something I hope is relatively thoughtful and relevant, and I'm reposting it here:
Those who know me in actual life know I'm not too fond of the stances PRSA tends to take on industry issues, which I consider too soft. I want an advocacy group that's much more of a detractor or watchdog, but the industry issues that are most important to me, like my stance against unpaid internships, don't get a lot of attention from the Society.
So I was happy to read this column from McCormick. This is the most aggressive stance on anything important I've heard the Society take in recent memory: […]
I realize it's easier for the Society to criticize publishers than it is for it to criticize other practitioners or agencies, lest it risk turning off dues-paying members, but nevertheless, its stance against this type of sponsored content really surprised me.
A disclosure: I used to be quite active in the Society and held a national leadership position in the student portion of it when I was in college. I let my membership lapse a couple of years ago, though, because I felt the Society had an overt focus on large agencies, none of which I've ever particularly wanted to work at or with.
Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick, The Harvard Business Review's podcast network yesterday to talk about her upcoming article in the publication, “Reputation Warfare,” which covers the viral nature of criticism today in light of social networks and self-published content.
Have a listen:
Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.
The interview covers some recent case-studies in reputation management. What it only covers in passing is the notion that some criticism of a company is entirely reasonable, and efforts to silence reasonable criticism before it goes viral usually does a disservice to everyone, including the brand.
What I'd love to hear is Gaines-Ross's thoughts on how a company can use the social web to embrace reasonable criticism to address negative customer experiences as well as the bad public relations that might transpire. Domino's Pizza an entire re-branding strategy around embracing its critics online in a visible, Twitter-and-Facebook-friendly manner.
I hate hearing about folks in the media industry losing their jobs, especially in this economy, so I was troubled when I read this note from Mark Fitzgerald, editor at Editor & Publisher magazine, announcing the lay-off of most of the publication's editorial staff. :
A company memo announcing our firings said, “Editor & Publisher magazine will be utilizing more individuals for the print edition who are experts in their individual fields as opposed to reporters who track down experts and put the expert’s story into the writer’s words.”
So, essentially, the publication's editorial approach is moving towards a Huffington Post-esque model, where editors give industry insiders the bylines under which to write whatever they feel like writing. In other words, they'll publish a magazine full of op-eds, not traditional news reportage.
It isn't awfully surprising. Consider I wrote for Greentarget, a PR firm I used to manage accounts for and currently consult with on a number of engagements, in early 2009:
Karl Marx said that when the means of production in a system change hands, then a revolution has begun. I can describe today’s media sphere as nothing less.
These changes make our approach to client work different than it was before. Issuing news releases and using personal relationships to pitch reporters story ideas used to be synonymous with “media relations” to many in our industry. Today, because of widespread reporter lay-offs and maturing new-media platforms, the best approach to telling a meaningful corporate story is evolving.
One effect that’s apparent is that news outlets are more receptive to our offers to contribute content directly from clients. For example, explaining a complex story with several moving parts is, many times, better done in a contributed article or op-ed, not a staff-written feature, because publications have more news to cover today and a lighter staff to do it with. These contributions give companies more control over the copy that runs, but this freedom must not be abused: submissions still need to reflect strong news values and be non-promotional in nature.
Give me some leeway in quoting Marx for a second. Can Editor & Publisher pull off this transition from traditional reporting to newsworthy syndication of corporate communications material and glorified op-eds? And will anyone step in to fill the void left by the departure of its editorial staff?
Moreover, what will be the most accurate thing to call its content when the change-up in strategy is underway?
Though I'm an infrequent blogger, I consume an astounding amount of news, mostly in the areas of business, energy, and global affairs. So much so that I can usually see an important yet mostly ignored news narrative developing, even when it focuses on something I don't understand very well.
