The Foreign Account Tax Compliance Act, commonly known as FATCA, has been called everything from “America’s manifest destiny law” to an “American tax nightmare.”
The ultimate goal of FATCA, enacted in 2010, is to enable the IRS to extend its information-gathering powers on a global scale. It combats offshore tax evasion in two distinct ways:
- by requiring U.S. citizens, including those living abroad, to report their holdings in foreign financial accounts and their foreign assets on an annual basis to the IRS, and
- by requiring foreign financial institutions (“FFIs”) (which include just about every foreign bank, investment house and even some foreign insurance companies) to report to the IRS (or to their government, which then reports to the IRS) the balances in the accounts held by customers who are U.S. citizens.
If U.S. citizens don’t comply with the reporting rules, they can be subject to severe penalties if caught by the IRS. (read more…)
Certified public accountants face a range of risks that can lead to professional liability claims. Aon Affinity Executive Vice President Ken Mackunis and Senior Vice President Dave Sukert discuss how firms can mitigate their potential for liability. (Aon Affinity is the administrator of personal and business insurance benefits for members of the American Institute of Certified Public Accountants.)
Have technology and cybersecurity-related issues raised the risk of professional liability claims?
Mackunis: In the course of delivering professional services to clients, CPAs are ultimately responsible for the tools and technology necessary to complete their engagements, so if they lose or misplace their laptop or tablet, there is potential for claims from both clients and third parties. Additionally, accounting professionals have a duty to protect personally identifiable information, in compliance with HIPAA privacy laws, among others. A failure to maintain and protect private information, in contravention of laws or regulations, could result in greater risks of claims being brought against a practitioner. (read more…)
The circumstances surrounding the arrest of Navinder Sarao for his actions related to the Flash Crash have been covered widely, but there is one angle that seems to be slipping through the cracks: Sarao’s intent. Or more precisely, his lack of intent.
Considering the volume of trade orders Sarao is alleged to have placed and then canceled, it seems likely his intention was to manipulate the market. And if Sarao ever stands trial and it is proven that he was “spoofing” or manipulating the market in some other way, then he should be punished accordingly.
However, I find it hard to believe Sarao woke up on the morning of May 6, 2010, and said to himself, “Today I am going to crash the market, drive shares of Accenture to one cent, raise Apple shares to more than $100,000 and then call it a day.” In fact, his actions after the Flash Crash suggest he had no idea his trades played such an allegedly large role in the day’s events. (read more…)
A collection of stories from SmartBrief publications and around the web…
JPMorgan software identifies potentially rogue workers: Bloomberg reports on a Reagan-esque initiative at JPMorgan to “trust, but verify” the actions of its employees. Sally Dewar, JPMorgan Chase’s head of regulatory affairs for Europe, is overseeing an algorithmic program that identifies employees who might go rogue. The software considers dozens of factors, including whether an employee violates trading rules or fails to attend compliance classes. “It’s very difficult for a business head to take what could be hundreds of data points and start to draw any themes about a particular desk or trader,” Dewar said. “The idea is to refine those data points to help predict patterns of behavior.”
Treasury Market Practices Group says HFT might be no bueno for Treasurys: High-frequency and other types of automated trading have increased risk to trading Treasurys, according to the Treasury Market Practices Group, which is sponsored by the Federal Reserve Bank of New York. (read more…)