SEC Cracking Down on Tarted-Up ADVs

This catchy headline is from InvestmentNews.com. Apparently the Commission has started targeting investment advisers who have lied on their registration forms. The SEC is quoted as saying that it has begun reviewing registration documents to find advisers who have not accurately portrayed their education, assets under management and other aspects of their firm.

According to the Commission, the goal is to stop larger frauds - the director of enforcement is quoted as saying '“If they come face to face with inspectors early on … they're going to know that we're watching, and they're going to be unlikely to graduate to larger frauds.”

Can the Commission really be this naive? Checking Form ADV for lies is going to prevent significant securities fraud? I am pretty sure that those who are committing fraud are not lying in any obvious way on Form ADV, and they are certainly aware that the Commission is "watching," to the extent that the Commission is watching at all.

Liars clubbed? SEC cracking down on tarted-up ADVs

FINRA Orders Chase to Reimburse Customers $1.9 Million

FINRA announced that it has ordered Chase to reimburse customers more than $1.9 million for losses incurred from recommending unsuitable sales of unit investment trusts (UITs) and floating rate loan funds. FINRA also fined Chase 1.7 million.

FINRA's investigation found that Chase brokers made recommendations to unsophisticated customers with little or no investment experience and conservative risk tolerances, without having reasonable grounds to believe that those products were suitable for the customers. FINRA also found that Chase failed to properly supervise its sales of UITs and floating rate loan funds.

Brad Bennett, FINRA Executive Vice President and Chief of Enforcement, said, "With the growing number of complex products in the market today, it is incumbent upon firms to properly train and provide guidance to their brokers about the products that they sell and supervise the sales practices of their brokers. Chase allowed its brokers to sell risky UITs and floating-rate loan funds without providing them with the training, guidance and supervision necessary to determine whether these products were suitable for their customers, which resulted in losses for Chase's customers."

FINRA's also found that WaMu Investments, Inc., which merged with Chase in July 2009, made similar unsuitable recommendations to customers. FINRA found that like Chase, WaMu failed to provide adequate training and failed to reasonably supervise the sale of floating-rate loan funds to customers.

FINRA Orders Chase to Reimburse Customers $1.9 Million for Unsuitable Sales of UITs and Floating-Rate Loan Funds

Celebrating LEO, the world’s first business computer

This year marks the 60th anniversary of LEO, the world’s first business computer—built by J.Lyons & Co, a leading British food manufacturer at the time that also ran a famous chain of tea shops.

Lyons management had long been keen to streamline their back-office operations. In 1947, two Lyons managers visited the U.S. to learn about the latest business processes, including whether the electronic computers they’d heard about during their wartime service, like ENIAC, might be useful. (At the time, the closer-to-home advances at Bletchley Park were still a well-kept military secret.)

They returned inspired by the possibilities and keen to build a machine of their own. After several years of development, LEO, a.k.a. Lyons Electronic Office, took on its first office job on November 17, 1951—weekly valuations for the bakery division, calculating margins on Lyon’s output of bread, cakes and pies.



Until LEO, computing in a work setting was treated like a specialist bit of kit on a factory production line. Each machine was dedicated to a single task. In essence, they were narrowly defined calculating machines. The vision for LEO, in contrast, was bravely broad. LEO was a single computer capable of handling a whole swathe of accounting and bookkeeping tasks, as well as producing daily management reports.

LEO was such a success that Lyons set up a commercial subsidiary to sell spare time on LEO to other businesses, including the Ford Motor Company, which used it to process the payroll for the thousands of workers at its U.K. plant. Later, Lyons also built entirely new LEOs and sold them to other blue-chip companies of the era. In total, more than 70 LEO’s were built, with the last remaining in service until the 1980’s (not bad for a computer that took up an entire room!).

Today we view IT as critical to any enterprise, but in the 1950s, this was by no means a given, as evidenced by a quote from a 1954 issue of The Economist: “There are those who do not believe in the desirability of introducing anything as esoteric as electronics into business routine.” Things certainly have changed, and in a sense, all modern day businesses owe a debt to the LEO team.

Last week at the Science Museum in London, we were delighted to sponsor a small gathering of early LEO programmers  to celebrate their accomplishments and reminisce about their pioneering work. Today, on this 60th anniversary, we invite you to have a cup of tea and join us in toasting LEO—a remarkable ancestor in IT’s family tree.



Posted by Lynette Webb, Senior Manager, External Relations

Google Music is open for business

Last May at Google I/O, we launched Music Beta by Google with a clear ambition: to help people access their music collections easily from any device. Music Beta enabled you to upload your personal music collection (up to 20,000 songs) for free to the cloud so you could stream it anywhere, any time. Today, the beta service evolves into a broader platform: Google Music. Google Music is about discovering, purchasing, sharing and enjoying digital music in new, innovative and personalized ways.



Google Music helps you spend more time listening to your collection and less time managing it. We automatically sync your entire music library—both purchases and uploads—across all your devices so you don't have to worry about cables, file transfers or running out of storage space. We’ll keep your playlists intact, too, so your “Chill” playlist is always your “Chill” playlist, whether you’re on your laptop, tablet or phone. You can even select the specific artists, albums and playlists you want to listen to when you're offline.

Purchase and share
We also want to make it easy and seamless for you to grow your music collection. Today, we added a new music store in Android Market, fully integrated with Google Music.

The store offers more than 13 million tracks from artists on Universal Music Group, Sony Music Entertainment, EMI, and the global independent rights agency Merlin as well as over 1,000 prominent independent labels including Merge Records, Warp Records, Matador Records, XL Recordings and Naxos. We’ve also partnered with the world's largest digital distributors of independent music including IODA, INgrooves, The Orchard and Believe Digital.

You can purchase individual songs or entire albums right from your computer or your Android device and they’ll be added instantly to your Google Music library, and accessible anywhere.

Good music makes you want to turn up the volume, but great music makes you want to roll down the windows and blast it for everyone. We captured this sentiment by giving you the ability to share a free full play of a purchased song with your friends on Google+.

Exclusively on Google Music
We’re celebrating our launch with a variety of music that you won’t find anywhere else, much of it free. There’s something for everyone, with a variety of free tracks to choose from:

• The Rolling Stones are offering an exclusive, never-before-released live concert album, Brussels Affair (Live, 1973), including a free single, “Dancing with Mr. D.” This is the first of six in an unreleased concert series that will be made available exclusively through Google Music over the coming months.
• Coldplay fans will find some original music that’s not available anywhere else: a free, live recording of “Every Teardrop Is A Waterfall”, a five-track live EP from their recent concert in Madrid and a remix of “Paradise” by Tiësto.
• Busta Rhymes’s first single from his upcoming album, Why Stop Now (feat. Chris Brown), is available for free.
• Shakira’s live EP from her recent concert in Paris and her new studio single, “Je L’Aime à Mourir” are both being offered up free.
• Pearl Jam are releasing a live album from their 9/11/11 concert in Toronto, free to Google Music users.
• Dave Matthews Band are offering up free albums from two live concerts, including new material from Live On Lakeside.
• Tiësto is offering up a new mix, “What Can We Do” (feat. Anastacia), exclusively to Google Music users.

Artist hub
Whether you’re on a label or the do-it-yourself variety, artists are at the heart of Google Music. With the Google Music artist hub, any artist who has all the necessary rights can distribute his or her own music on our platform, and use the artist hub interface to build an artist page, upload original tracks, set prices and sell content directly to fans—essentially becoming the manager of their own far-reaching music store. This goes for new artists as well as established independent artists, like Tiesto, who debuts a new single on Google Music today.



Starting today, Google Music is open in the U.S. at market.android.com, and over the next few days, we will roll out the music store to Android Market on devices running Android 2.2 and above. You can also pick up the new music app from Android Market and start listening to your music on your phone or tablet today. And don’t forget to turn your speakers up to eleven.

Posted by Andy Rubin, Senior Vice President, Mobile

Former CEO to Return $2.8 Million in Bonuses and Stock Profits Received During CSK Auto Accounting Fraud

The SEC announced that the former chief executive officer and chairman of CSK Auto Corporation has agreed to return $2.8 million in bonus compensation and stock profits that he received while the company was committing accounting fraud.

The former executive officer was not personally charged by the SEC for the company’s misconduct, however he is still required under Section 304 of the Sarbanes-Oxley Act (SOX) to reimburse CSK Auto for incentive-based compensation and stock sale profits that he received during the company’s fraudulent period. This marked the agency’s first SOX clawback case against an individual who was not alleged to have otherwise violated the securities laws.

Robert Khuzami, Director of the SEC's Division of Enforcement said, "CEOs should know that they can be deprived of bonuses or stock profits they received while accounting fraud was occurring on their watch."

Rosalind Tyson, Director of the SEC’s Los Angeles Regional Office, added, “[He] received incentive-based pay while CSK Auto was fraudulently overstating its income to shareholders. His bonuses and stock profits are now being rightfully returned to the company for the benefit of the shareholders."

Former CEO to Return $2.8 Million in Bonuses and Stock Profits Received During CSK Auto Accounting Fraud

The Orabrush story: How a Utah man used YouTube to build a multi-million dollar business

From time to time, we post about how entrepreneurs have used Google tools to build successful businesses—both on and offline. In this post, you’ll read the story of how a Utah entrepreneur used YouTube to build a market for his tongue cleaner product, the Orabrush. Starting this month, CVS/pharmacy will begin carrying the product in stores across the United States. - Ed.

When Dr. Bob Wagstaff invented the Orabrush tongue cleaner, he tried all the traditional business strategies to sell his product. He invested $40,000 into a TV infomercial, approached retail shops to carry the Orabrush in stores and offered to sell his patent to other oral hygiene companies. None of it worked. The infomercial yielded only 100 orders, and people walked past the product in stores without a second glance.

As a final attempt to get his business off the ground, Dr. Wagstaff took the advice of Jeffrey Harmon, a local college student, and started marketing the tongue cleaners on YouTube. With a $500 budget, they produced and posted their first video introducing the Orabrush and offering the product for purchase online.



The quirky, commercial-style video explained that 90 percent of bad breath comes from bacteria on the tongue—hence the solution, the Orabrush tongue cleaner. Shot in a makeshift studio in the neighborhood pool hall (listen closely and you can hear the balls cracking in the background), the video went viral, rocketing to 16 million views.

Building a brand on YouTube
After the explosive reaction to their first video, Harmon took on the role as Chief Marketing Officer and began creating regular webisodes, introducing new characters like Morgan, the dirty tongue. Harmon then used YouTube video ads to reach more people and grow their fan base. The “Cure Bad Breath” videos built a loyal following, and their YouTube channel grew to nearly 40 million views.

After two years, Orabrush had sold more than a million tongue cleaners to people in 40+ countries. The Orabrush brand became so popular that local pharmacy store managers began contacting Orabrush directly, citing requests from customers who had heard about the brand online. This fall, Walmart began carrying the Orabrush tongue cleaners in its 3,500+ stores across the United States. And this week, CVS/pharmacy has added the Orabrush tongue cleaner to more than 7,000 stores across the country. That’s a lot of tongue cleaners!

These days Orabrush is taking a new approach to drive even more sales in stores. One of the first businesses to use YouTube TrueView video ads, Orabrush has created tailored endings to their videos that direct the viewer to the closest CVS/pharmacy carrying the Orabrush.

Elbow grease and a clever mascot
While Orabrush may have taken an unorthodox approach, their success came from old-fashioned elbow grease, perseverance and a bit of ingenuity.

“YouTube has helped normal people like Dr. Bob and a couple of college kids to take an idea, put it in front of people and get an honest response,” Harmon, now chief marketing officer at Orabrush, told us. “We can now play on the same terms as huge companies—and be successful.”

Hear more about Orabrush’s journey to success in this video:



Posted by Lane Shackleton, Product Manager, YouTube

Greater choice for wireless access point owners

From tagging a post with your location, to checking in to a restaurant, to simply finding out where you are, location-based services have become some of the most popular features of today’s Internet. One of the key ways technology companies are able to determine a location for these services is through a location database, which matches publicly broadcast information about local wireless networks with their approximate geographic location. By looking for wireless access points that are close to a user’s phone, location providers can return the approximate location you need. In addition, this method is a good alternative to other approaches, like GPS, because it’s faster, it works indoors, and it’s more battery-efficient.

The wireless access point information we use in our location database, the Google Location Server, doesn’t identify people. But as first mentioned in September, we can do more to address privacy concerns.

We’re introducing a method that lets you opt out of having your wireless access point included in the Google Location Server. To opt out, visit your access point’s settings and change the wireless network name (or SSID) so that it ends with “_nomap”.  For example, if your SSID is “Network”, you‘d need to change it to “Network_nomap”.

To get started, visit this Help Center article to learn more about the process and to find links with specific instructions on how to change an access point’s SSID for various wireless access point manufacturers.

As we explored different approaches for opting-out access points from the Google Location Server, we found that a method based on wireless network names provides the right balance of simplicity as well as protection against abuse. Specifically, this approach helps protect against others opting out your access point without your permission.

Finally, because other location providers will also be able to observe these opt-outs, we hope that over time the “_nomap” string will be adopted universally. This would help benefit all users by providing everyone with a unified opt-out process regardless of location provider.

Update Nov 21: Edited punctuation to clarify the "_nomap" tag.

Posted by Peter Fleischer, Global Privacy Counsel

(Cross posted on the European Public Policy Blog)