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Can’t we just ask the regulator?: Difference between revisions
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The world of modern finance was unexplored: broken-fenced frontiers everywhere you looked, and you were free to wander the hinterland scalping unwitting customers — “ripping customers’ faces off” was the vogue term, come to think of it —unrestrained by official hand. | The world of modern finance was unexplored: broken-fenced frontiers everywhere you looked, and you were free to wander the hinterland scalping unwitting customers — “ripping customers’ faces off” was the vogue term, come to think of it —unrestrained by official hand. | ||
This, contemporary [[thought leader]]<nowiki/>s believed, was best for everyone, in the long run. “Government is not the solution to our problem; government ''is'' the problem,” as Ronald Reagan famously put it. | This, contemporary [[thought leader]]<nowiki/>s believed, was best for everyone, in the long run. “Government is not the solution to our problem; government ''is'' the problem,” as Ronald Reagan famously put it. | ||
In recent times this carefree impulse has fallen on stony ground. Of course it has: to survive its own auto-destruction, any new programme must self-organise: that founding spirit of optimistic anarchy will resolve to well-meant gentle governance which in time will calcify into impenetrable rules, etiquettes and ways of operating [[calculated]] to maintain the emergent power structure around the programme. This happened to the fifties, to rock ’n’ roll, in the noughties to the internet, it’s happening to crypto right now and will happen to AI at some point in the future — as long as Skynet doesn’t happen first. | In recent times this carefree impulse has fallen on stony ground. Of course it has: to survive its own auto-destruction, any new programme must self-organise: that founding spirit of optimistic anarchy will resolve to well-meant gentle governance which in time will calcify into impenetrable rules, etiquettes and ways of operating [[calculated]] to maintain the emergent power structure around the programme. This happened to the fifties, to rock ’n’ roll, in the noughties to the internet, it’s happening to crypto right now and will happen to AI at some point in the future — as long as Skynet doesn’t happen first. | ||
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If that is right then we have a wholesale rewrite of confidentiality agreements about to descend on us. The NDA is a well understood beast: its principles are pretty standardised, even if their articulation is not. One principle is “you may disclose confidential information to a regulator if you are firmly asked for it, or compelled to do so”. | If that is right then we have a wholesale rewrite of confidentiality agreements about to descend on us. The NDA is a well understood beast: its principles are pretty standardised, even if their articulation is not. One principle is “you may disclose confidential information to a regulator if you are firmly asked for it, or compelled to do so”. | ||
The SEC’s whistleblowing rule requires something more than that: you must be free to disclose information that may indicate securities law violations ''if you wish to''. There is no ''obligation'' on anyone to disclose violations, however, so an NDA drafted along market standard terms would not explicitly permit whistleblowing. You might try to get home if you have a general “this agreement is to be read to be consistent with all laws as they apply to the parties” but you are reaching a bit here. | The SEC’s whistleblowing rule requires something more than that: you must be free to disclose information that may indicate securities law violations ''if you wish to''. There is no ''obligation'' on anyone to disclose violations, however, so an [[Confidentiality agreement|NDA]] drafted along market standard terms would not explicitly permit whistleblowing. You might try to get home if you have a general “this agreement is to be read to be consistent with all laws as they apply to the parties” but you are reaching a bit here. | ||
JP Morgan’s release said: | JP Morgan’s release said: | ||
{{Quote|“[JPMS client] and [JPMS client’s] attorneys are neither prohibited nor restricted from responding to any inquiry about this settlement or its underlying facts by FINRA, the SEC, or any other government entity or self-regulatory organization, or as required by law.”}} | {{Quote|“[JPMS client] and [JPMS client’s] attorneys are neither prohibited nor restricted from responding to any inquiry about this settlement or its underlying facts by FINRA, the SEC, or any other government entity or self-regulatory organization, or as required by law.”<ref>{{plainlink|https://www.sec.gov/files/litigation/admin/2024/34-99344.pdf|SEC settlement order}}</ref>}} | ||
You can ''answer questions'' from regulators — without compulsion — but you can’t ''volunteer'' things they did not ask for. | You can ''answer questions'' from regulators — without compulsion — but you can’t ''volunteer'' things they did not ask for. | ||
Editorialising for a bit — I know, right: who? me? — then unless JPMorgan wilfully meant to prevent whistleblowing, this seems like a ''bad'' precedent. Nothing in the {{Plainlink|https://www.sec.gov/news/press-release/2024-7|SEC’s press release}} about the fine indicates this is the case. So firstly, JPMorgan is being fined, basically, for agreeing pretty standard NDAs. | Editorialising for a bit — I know, right: who? me? — then unless JPMorgan wilfully meant to prevent whistleblowing, this seems like a ''bad'' precedent. Nothing in the {{Plainlink|https://www.sec.gov/news/press-release/2024-7|SEC’s press release}} about the fine indicates this is the case. So firstly, JPMorgan is being fined, basically, for agreeing pretty standard NDAs. | ||
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In another facet of US justice administration, JPMorgan has agreed to the settlement without admission or denial of liability — perhaps taking the pragmatic view than an eighteen million dollar fine is a drop in the ocean compared to the administrative time and burnt marital capital that it would take to contest such a charge. But in doing so Morgan has acquiesced to a bad principle, thereby enacting it on everyone else. | In another facet of US justice administration, JPMorgan has agreed to the settlement without admission or denial of liability — perhaps taking the pragmatic view than an eighteen million dollar fine is a drop in the ocean compared to the administrative time and burnt marital capital that it would take to contest such a charge. But in doing so Morgan has acquiesced to a bad principle, thereby enacting it on everyone else. | ||
Expect a flurry of activity in the NDA space and — inevitably — the lengthening of an already tedious symbolic ritual. | Expect a flurry of activity in the NDA space and — inevitably — the lengthening of an already tedious symbolic ritual. | ||
{{sa}} | |||
*[[Data modernism]] | *[[Data modernism]] | ||
*[[Complex system]] | *[[Complex system]] | ||
*Non-disclosure agreement | |||
{{Ref}} | |||