Gramm-Leach-Bliley Act

Besides the Sarbanes-Oxley Act there were a few more of import codes the US authorities penned down to command corporate administration. Of these, two reasonably recent and controversial 1s were the Gramm-Leach-Bliley Act of 1999 and the Foreign Corrupt Practices Act of 1977.

The Gramm-Leach-Bliley Act ( GLBA ) was besides known as the Financial Services Modernization Act. This move has been regarded as controversial because it violated an old tradition in the US — the Glass-Stegall Act, which did non let houses in the banking, security and insurance sectors. The act allowed these companies to come together and work in, what was now called “the fiscal services sector” . For case, it allowed Citicorp ( a commercial bank ) to unify withTravelers Group ( an insurance company ) to formCitigroup, a corporation uniting banking, securities and insurance services. They operated under a house of brandsthat includedCitibank, Smith Barney, PrimericaandTravelers.

In fact, in 1999, many of the Bankss and insurance companies desired the Act. The ground was that they believed consumers invested more money when the economic system was making good but when there was a fiscal convulsion they preferred to salvage their financess in bank histories. The Act allowed them to salvage and put their money in the same fiscal organisation, which would guarantee more security to the consumer and more dependability on the organisation.

Gramm-Leach-Bliley Act ( 1999 )

Motivation:

To consolidate banking, security and insurance companies. It violated the Glass-Stegall Act and the Bank Holding company Act of 1956

Consequence:

It allowed companies like Citicorp to unify with Travelers Group ( an insurance company ) to organize the pudding stone Citigroup, which operated in the “financial services sector” in the US.

Criticism:

Nobel Prize economic expert Paul Krugman has called SenatorPhil Gramm ” the male parent of the fiscal crisis ” due to his sponsorship of the Act. While President Barack Obama believes the act straight caused the sub-prime mortgage crises in 2007.

Defense:

“ ” I do n’t see that subscribing that measure had anything to make with the current crisis. Indeed, one of the things that has helped stabilise the current state of affairs every bit much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would hold been if I had n’t signed that measure… ”
-Former President Bill Clinton, 2008

The act has been criticized by Paul Krugman every bit good as Barack Obama and its impact has besides been linked to the sub-prime crisis of 2007. However, former Senator Phil Gramm, who sponsored the Act, has written in its defense mechanism in February 2009:

“ … if GLBA was the job, the crisis would hold been expected to hold originated in Europe where they ne’er had Glass-Steagall demands to get down with. Besides, the fiscal houses that failed in this crisis, likeLehman, were the least diversified and the 1s that survived, likeJ.P. Morgan, were the most diversified….Moreover, GLB did n’t deregulate anything. It established the Federal Reserve as a superregulator, supervising all Financial Services Keeping Companies. All activities of fiscal establishments continued to be regulated on a functional footing by the regulators that had regulated those activities prior to GLBA.”

The Foreign Corrupt Practices Act ( FCPA ) , which was signed into jurisprudence by PresidentJimmy Carterin 1977, and amended in 1998 by theInternational Anti-Bribery Act of 1998, aimed to command the anti-bribery conventions of theOrganization for Economic Co-operation and Development.

By agencies of this act, it is improper for a US national and certain foreign issuers ofsecurities, to do a pecuniary payments to foreign functionaries for concern intents. Since 1998, the act is alos applicable to foreign houses and those persons who take accept any corrupt payment within the United States.

But what is meant by a “foreign national” ? For illustration, a banker, who is besides portion of a ministry will be accounted for as a “foreigner” . Similarly, physicians at government-run infirmaries are “foreigners” . Employees of international organisations are aliens excessively. The authorities focuses on the purpose of the graft instead than on the sum.

Among recent companies that have been punished under the FCPA areLucent Technologies, Triton Energy Limited, andInvision Technologies. Former representativeWilliam J. Jefferson, Democrat of Louisiana, was besides convicted of go againsting this act by corrupting African authoritiess for concern involvements

Foreign Corrupt Practices Act ( 1977 )

What: Focus on accounting transparence demands under theSecurities Exchange Act of 1934andbriberyofforeign functionaries.

Why: A US Securities and Exchange Commissioninvestigation in the mid-1970s revealed over 400 companies admitted doing questionable or illegal payments in surplus of $ 300 million to foreign authorities functionaries, politicians, and political parties.

Criticism: Open graft is prohibited, whereas more sophisticated signifiers of exercising influence continue to be absolutely legal.

Delaware, located in theMid-Atlanticregion of theUnited States, is known for its Torahs and flexibleness. In a recent Businessweek article, it was called the universe ‘s most close fiscal locations. A recent elaborate ranking of 60 of the universe ‘s fiscal hubs was published in November this twelvemonth and this US province was present in 11 out of 12 secrecy indexs. Even London featured in the 5th place of this lost.

The E seashore province of Delaware, which houses about half of all America ‘s quoted companies, does non put in public record inside informations of trusts, company histories and the individuality of good proprietors – the people who receive the net incomes. It besides allows companies to relocate to other states, go forthing minimum hint – doing it an attractive location to get down concern.

In fact, this is seen as US ‘s weakest nexus in its battle against revenue enhancement equivocation, drug money laundering and illegal payments. Both theFederal Bureau of Investigation and the Financial Action Task Force, have been working difficult to set a cheque on this activity and have besides expressed concern.

It is besides believed that fiscal houses choose the province non merely for the “secrecy” that comes with the bundle but besides for its sophisticated judicial system. However, there have been force per unit areas on Delaware to amend good ownership revelation Torahs. Besides, the recent Stop Tax Haven Abuse Bill, which seeks to discourage the usage by Americans of revenue enhancement oasiss, is pulling intense resistance from US concern involvements.

Delaware

What: Officially the universe ‘s most close fiscal location.

Why: The east seashore of Delaware, place to half of all America ‘s quoted companies, fails to put on public record:

* Details of trusts

* Company histories

* Identity of good proprietors – the people who receive the net incomes

· Allows companies to relocate to other states, go forthing minimum hint

Criticism: Seen as America ‘s weak nexus in its battle against revenue enhancement equivocation, financing terrorist act and drug money laundering.

Mentions:

hypertext transfer protocol: //www.guardian.co.uk/business/2009/nov/01/delaware-first-choice-tax-haven

hypertext transfer protocol: //en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act

hypertext transfer protocol: //en.wikipedia.org/wiki/FCPA