Russ McCutcheon

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Staff of the Strong Through Our Plan (STOP) Coalition attended Operation UNITE’s three-day summit focusing on the pervasive issue of prescription drug abuse. Over 750 people from varying backgrounds and disciplines from around the country attended the event and discussed strategies and to help curb the problem. Pictured are STOP’s Assistant Director Joshua Murphy with US Rep Nick Rahall (D-W.Va.). Rahall, along with Kentucky Congressman Hal Rogers, were two of the many legislators Operation UNITE brought to the event.

Six years of consideration have led researchers to reject the current American K-12 science curriculum and propose instead a plan that would teach students the relationships between fundamental concepts across the disciplines, rather than force the memorization of loosely connected facts. ARK

Phys.Org:

The 8+1 concepts were derived from two basic questions: What are things made of and how do systems interact and change? The eight concepts are: atoms, cells, radiation, systems change, forces, energy, conservation of mass and energy, and variation.

Traditionally, science in the United States has been taught in isolated disciplines such as chemistry, biology and physics without clear connections being made between the subjects. The 8+1 effort encourages K-12 teachers to use the eight science concepts to build understanding within and between their courses as students advance through the grades.

The natural world seems to operate through these laws and concepts, but when it comes to schooling we dont teach children these laws and then show how these apply in different situations, [Michigan State University professor William] Schmidt said.

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For years, its been a popular pastime to decry the use of mergers and acquisitions (MA) as a colossal, ego-inflating, comp-expanding, waste-of-shareholder-money exercise. Most of these charges are either wildly exaggerated or absurdly simplistic. MA is a necessary means for companies to grow, particularly in a world so driven by change. Failures are unavoidable — its not easy — although measuring whats exactly a failure or a success given the complexities of large corporations is pretty difficult. But its very true that in overheating markets, when currency in the form of shares is highly inflated, lots of lousy, value-destroying deals can get hatched. This is particularly the case in intensely competitive technology industries, where the value creation of a given deal may lie not in the current organization but in a technique, a process, a piece of intellectual property still undergoing gestation: that is, in an opaque future. Thus the truism beloved of Warren Buffett: In MA, theres nothing riskier than tech deals.

And then theres Facebook and Instagram. Facebook is famously paying a cool billion dollars for the two-year-old app-based photo service. Instagram has 13 employees, 30 million users and no revenues. Facebooks Mark Zuckerberg decided the social media giant absolutely had to have the startup, and took a years worth of cash flow and offered it up, about twice Instagrams recently closed Series B venture round valuing the company at $500 million. There was no indication of other bidders, though everyone seems convinced that a Google or an Apple was lurking out there ready to make its own pre-emptive bid. In the developing meme about the Instagram deal, Zuckerberg didnt have a choice: He had to strike. It was eat or be eaten. The sheer uncertainty of the social media landscape cant tolerate hesitation; it demanded action. In California, venture capitalists, investment bankers and analysts cant praise the deal highly enough (of course, they all profit from the resulting euphoria). Zuckerberg showed brilliance, they said, by recognizing Instagrams potential and making the bid — despite the fact that this will further complicate Facebooks enormous and much-hyped IPO in a month or so.

That alone should cause one to pause along with the profound faith in a young CEO who hasnt done much dealmaking. The issue here is not that Zuckerberg made a good decision or not. Well find out in time whether Instagram is a PayPal or a Skype (both eBay acquisitions: the former, as The New York Times lays out today, a big success, the latter, a big loser) or a Flickr (a Yahoo! bomb) or a Flip (which Cisco, a regular and expert user of MA, shut down last year). Instagram most closely resembles some of the giant telecom deals from before the bubble burst in 2001, particularly in the size of the deal and the tiny number of employees. Billions of dollars in those deals were written off when the market collapsed. And let us not wallow in AOL-Time Warner again.

No, the issue with these sorts of deals is how any investor can make a rational judgment about a) whether this deal makes strategic sense, or b) whether the price makes any sense at all. The two are related, of course. The view from Silicon Valley seems to be that Facebook had the money so why not spend it. Cutting-edge tech companies need to bet big and make strategic deals, that is, deals that cant be be valued — the feeling is that Zuckerberg is a genius and if he doesnt know what Facebook needs, then nobody does. Facebook isnt even public so Zuckerberg can spend his money any way he wants and the reaction of users and the tech community seems to be so positive it cant go wrong. Well, of course, it can go wrong. Crowds change their minds, and Instagrams users in the Twittersphere dont seem to want to be enveloped into Facebook world, though this is about as scientific as a finger in the breeze. Apps (and social media sites) come and go. Instagram has very few employees, all of whom are now loaded with dough. They may stay and develop the product — though no one seems to know how itll make money — or they may drift off to start new companies or go into politics or try venture capital. There seems to be few barriers to entry in the app world, and its hard to imagine that Instagram, as nifty as it is, is unassailable. Moreover, its unclear whether Instagram boasts the kind of network effects that makes PayPal, YouTube, Google, Microsoft, Apple and Facebook so formidable. Remarkably, few seem to be asking.

Again, this could turn out to be a fabulous deal. But this is the kind of deal that gives MA a bad name. The notion that Zuckerberg can spend his money any way he wants is not only wrong — its not really his — but about to become a real problem when public investors buy shares. (Substitute, say, Bank of America for Facebook and see how that works.) A billion dollars remains a big number, no matter the market cap. Moreover, its pretty clear, as the Financial Times Lex column pointed out Tuesday, that despite Zuckerbergs statement that this is a one-off deal, what it really suggests — and that the tech crowd confirms in its comments — is that there could well be other Instagrams to be scooped up. Facebook is implicitly admitting that in a burgeoning and remarkably fluid app world, it cant really go it alone: It needs to buy and buy and buy. Again, thats not a shock (Google has been a busy buyer) — though Zuckerberg, prepping for public company status, should be more careful with statements about one-offs he may have to take back, and that will hurt him with investors once he goes public.

Will this deal hurt Facebook if it never works out? Not really. Its just a write-off, which Facebook can shrug off. By then there will be new hot apps, racking up millions of grazing users. But what this deal tells us most clearly is just how risky the Facebook enterprise is. For Zuckerberg to make a pre-emptive bid thats twice the venture valuation from two weeks ago — and one a month before a public offering — suggests two things: either hes undisciplined with all that money (were there negotiations or due diligence? whats the breakdown of cash and shares?) or that the powerful network effects that keep users coming back to Facebook may not be as strong as a relatively obscure two-year-old startups app.

Is this a sign of a bubble? I dont believe that, unless you define bubble in a very narrow sense. Social media is clearly heating up, but for rational reasons: new devices, new services, new apps, an exploding audience. Instagram might look like an old dot-com — lots of users that may come or go, no viable revenue model — but Facebook does not: Like Google, it has found a way to make a lot of money. But you dont have to have a full-blown bubble to lose your discipline as a buyer. You just need the sudden appearance of a lot of cash. Which is how MA gets a bad name.

Robert Teitelman is editor in chief of The Deal magazine.

With 103 days to go for the London Olympics, there is a feel-good factor about the way Indian sportspersons have geared up for the tough challenges ahead.

Over the decades, the story of Indian athletes preparing for the Olympics has always been about how they could ensure participation at the last minute in various disciplines. Quite often, it had to do with just getting entries into the events and no realistic chance of coming anywhere near the medal bracket.

MUSCAT — Meetings of the International Consultancy Committee at The Research Council (TRC) began at City Seasons Hotel yesterday. The three-day meetings discuss a number of topics related to the scientific research and innovation. The first day meeting discussed topics that were raised in the committee’s previous meetings. The agenda of the committee also included reviewing the outcome of the previous meetings and discussing the feedback in their regard.
The meeting touched on means of motivating the research community, besides discussing strategies and policies of innovation and progress in the project of research and innovation complex, in addition to reviewing TRC communication policies and its promotional identity. The International Consultancy Committee comprises experts who have long experience from inside and outside the Sultanate.
TRC has been keen, since forming the committee, on complementing the available experiences with the disciplines so it represents all sectors in a balanced way in terms of the various academic disciplines and experiences in different governmental, private and academic sectors, as well as the civil community sectors. TRC is also keen on the diversity of the geographic representation at the national and international levels. — ONA

By Rachel Wolcott

LONDON/NEW YORK, April 5 (Thomson Reuters Accelus) Regulators rising interest in risk management combined with a long trail of big fines for compliance failures has some consultants and industry leaders wondering whether it is time for the two disciplines to come closer together if not merge completely.

More than ever there are areas of overlap between risk and compliance. Risk management is now hardwired into more rules and regulations since the beginning of the financial crisis. In the UK, for example, the Financial Services Authority (FSA) hasincreased its fines for risk management failures . The USs Securities and Exchange Commission (SEC) has also indicated that it intends to take risk management as well as other governance and compliance issues even more seriously than in the past.Rodney Nelsestuen, senior research director at the CEB TowerGroup, told Thomson Reuters: Whats changed is with Solvency II and Basel III and those types of rule changes since the crisis is weve gone from being a backward-looking regulatory environment to saying we need more capital, better liquidity. The regulators are redefining all these things. So risk has been built into the regulation at a much stronger level than it ever was.

NON-COMPLIANCE IS A RISK

Equally, non-compliance with the host of new regulations covering all aspects of financial services has become a serious risk for firms. The price of getting compliance wrong is getting larger as headline-grabbing fines in both the United States and UK recently have demonstrated. Surely firms want to avoid being hit with fines such as ones handed to the likes of Coutts, Credit Suisse, and Greenlight Capital.

One way to manage that is to treat compliance issues as a risk category just like credit or market risk, for example. Chief risk officers need to understand the risk of non-compliance and assess their firms performance in compliance as part of the bigger risk management picture.

Nelsestuen said: The bottom line for me is it is time to start bringing risk and compliance closer together. What Ive seen is non-compliance is in itself a risk. Risk managers are trying to understand compliance issues not because they want to run compliance, but they want to understand what risks theyre taking. If you look at Credit Suisse which had a $500 million fine for AML infractions and HSBC non-compliance is a huge risk.

Credit Suisse in 2009 agreed to pay $536 million for failing to comply with US laws, including Iran sanctions violations, as part of a deferred prosecution agreement with the US Justice Department. US law enforcement officials have been investigating HSBCs money laundering controls in a widening probe, and there is speculation it could face a large fine, although the probe is not complete.

MOVING GRC BEYOND JUST C

Governance, risk and compliance (GRC) is a concept that has been around for a while. The term GRC suggests a certain amount of joined up thinking and cross pollination between the three disciplines. The reality however is that the term really only covers one of those disciplines: compliance.

Paul Saunders, at Sapient Global Markets, told Thomson Reuters: GRC is a concept in the market, but Im not sure everyones using it yet. It is looking at how those three factors should come together and maximise the impact and the surface area that those types of functions have on a business as a whole. Opposed to having duplication across the functions, theres a greater impact on the business by coordination and collaboration.

How many firms are taking the bold step of bringing together risk management and compliance or going further to implement a formal GRC strategy is difficult to quantify. Whether risk departments and compliance departments are even communicating with each other is equally hard to gauge. But at a recent conference TSAM Europe 2012, a panel of five risk managers offered their views on merging risk and compliance.

Himanshu Patel, head of investment risk at Northern Trust Global Investments, reported that his firm had moved compliance to be part of the risk function. Northern Trust took that step roughly a year ago, because it believed compliance has a lot to do with risk. The decision was to have cross-training between people on the team. Regulatory compliance is more than ticking a box. Its also an advisory function, he said.

Northern Trust was held the minority view on the panel. Other speakers argued that risk management was just too fundamentally different a discipline to merge with compliance.

Romain Berry, head of cross-product margining for EMEA and APAC at Citigroup, told the TSAM conference: When I was EMEA Co-Head of Performance and Risk Measurement at JPMorgan, we briefly explored the possibility in late 2009 to merge my team with our Compliance Reporting Services team on a global scale mainly to match upcoming UCITS IV regulations and potentially to save cost. But we quickly came to the conclusion that both teams were using separate systems that could not been integrated and staff had quite different skill sets that could negatively impact on the quality of our services to clients. I personally did not believe we could successfully run in the long term a team of hybrid analysts who would possess expertise in both fields for risk measurement and management have become a much more quantitative space over the last 10-15 years. We also considered outsourcing some basic operational processes (like data collection and filtering or report generation) to India. But the difficulty to manage a high turnover of team members in India as its economy continued to blossom and concerns about losing control over inputs into our models could not justify in our minds a cheaper operating cost.

ITS A DEBATE THAT SHOULD BE HAD

When talking about risk management consultants and practitioners often refer to the three lines of defence. Briefly, these lines are:

• on the front-line business taking responsibility for risk management and internal controls;
• the risk management and compliance functions; and
• internal audit.

There is often a blurring of the lines as to how the different functions that make up the three lines of defence operate within a firm. Some firms might prefer to keep the functions separate, because they want risk management to be more strategic. In addition, the compliance function might require different resource and technical knowledge that is better managed separately.

Moreover, different kinds of financial services firms — fund managers, retailing banks, insurance and investment banks — use the risk management approaches that best suit their business-type and function. Where appropriate, however, firms should be at least considering whether a risk and compliance merger could benefit them.

Saunders said: There isnt one purist view. But [whether to merge risk and compliance] is a debate that should be had. In the past, the compliance department was focussed solely on making sure regulation was monitored and tracked and the impact was understood in the organisation and it then adapted and remained compliant. Now more regulation is biting on how an organisation risk manages and is trying to bring more transparency. That transparency piece should drive a need for organisations to look a bit more acutely across what are essentially control domains.

Should risk management and compliance be joined up? The answer is absolutely yes, according to Ian Peters, chief executive of the Chartered Institute of Internal Auditors.

Peters told Thomson Reuters: In terms of the relationship between the two, I would see compliance as being an aspect of risk management. Certainly they should be joined up to be able to understand each other. Theres a certain logic to have them managed within the same division, but it depends on the organisation. The critical thing is that they are talking to each other and understanding each other. Often in an organisation it may be appropriate for them to be together. Certainly they are two aspects of the second line of defence I see no problem in them being together and I can see potential benefits. But each organization needs to make its own decisions.

Peters, however, emphasized the need for the internal audit function to remain separate and maintain its independence. What you dont want to do is merge together your three lines of defence which is less effective, then you just have one line of defence, he said.

(Note: an earlier version of this story had the following quote from Berry, which did not make clear this issue was considered while he was working for JPMorgan: We did consider merging the teams and were considering outsourcing the teams to India. We did realize though that compliance and risk are different functions. We thought it would be difficult to merge two different skill sets._

(This article was produced by the Compliance Complete service of Thomson Reuters Accelus.  Compliance Complete (http://accelus.thomsonreuters.com/solut ions/regulatory-intelligence/compliance- complete/) provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges.)

By JE Geshwiler

For the AJC

Janie Stokes was a master at teaching and at quilting. Over the past several years, she combined those talents with the aim of seizing childrens attention and firing up their enthusiasm to read and to explore other disciplines.

Five US army staff on President Obamas trip to Colombia may have been involved in inappropriate conduct along with several Secret Service agents sent home on Friday, officials said.

US Southern Command said the five had been staying at the same hotel as the agents. The allegations are said to involve prostitutes.

The Secret Service agents have now been suspended.

Mr Obama is in the city of Cartagena for the Summit of the Americas.

The US Southern Command said that the five members had violated curfew and would be investigated.

The personnel are not permitted to have contact with anyone and will return to the US with the rest of the group after the summit, officials said.

Apology

Gen Douglas Fraser, commander of the Southern Command, said he was disappointed by the entire incident and [said] that this behavior is not in keeping with the professional standards expected of members of the United States military.

According to Reuters news agency, a policeman in Cartagena said at least one Secret Service agent had attempted to take a prostitute up to a hotel room without registering her.

In a statement on Saturday, the Secret Service said 11 employees had been put on administrative leave, and apologised for the distraction caused by the incident.

This is standard procedure and allows us the opportunity to conduct a full, thorough and fair investigation into the allegations, it said in a statement.

The 11 employees included both special agents and Uniformed Division officers, the agencys assistant director said, according to the Associated Press.

The agency did not disclose details of the alleged behaviour.

BEIJING, April 14 (Xinhua) — The recent decision of the Communist Party of China (CPC) Central Committee to investigate Bo Xilais serious discipline violations, and the police reinvestigation of Neil Heywoods death, have garnered wide support from all walks of life in the country.

These moves have been objectively reported by most international media. However, a few overseas media have placed excessive interpretation on the cases and even taking the chance to make inappropriate comments on Chinas politics.

In fact, the decision is another resolute move by the ruling CPC to strengthen the enforcement of Party disciplines and continue to unswervingly push forward the rule of law.

In 1996, the rule of law was written into the outline of the ninth five-year plan for national economic and social development and the long-range objectives to 2010, becoming an important principle for guiding Chinas modernization drive.

The rule of law does not only mean running state affairs according to law, it also indicates that administrators must obey the law and handle state affairs through legal means. It is a comprehensive and profound change from the tradition of rule by man, which had been practiced in China for thousands of years.

The rule of law can ensure that Chinas development is not affected by uncertain factors and avoid upheavals such as the Cultural Revolution.

Although China has encountered many difficulties, the country is marching forward along the right road. In 2010, a socialist system of laws with Chinese characteristics was established as scheduled. Solving problems through legal means has become the consensus of the Party and the people.

As the ruling party with more than 80 million members, the CPC has stipulated strict disciplines to ensure the Partys advanced nature.

Real Madrid is on the verge of a La Liga championship while having one foot in the UEFA Champions League semifinals. Manchester City is just three points behind in the Premier League title race.

Yet a blockbuster move in the coach#39;s box could be taking place for both sides.

According to reports out of Spain, an agreement is in place for Madrid manager Jose Mourinho to leave the Spanish club at the end of June and#0160;replace Roberto Mancini at Manchester City. There have been months of speculation regarding Mourinho#39;s potential premature exit from Real Madrid, with reported internal strife and dissention sparking talks of his departure. The mercurial manager has been linked to a number of English clubs, including his former employer, Chelsea.

Mourinho is two years into a four-year deal at Madrid, where high expectations for silverware have only been met so far with a 2011 Copa del Rey triumph, and he has been reportedly coveted by City#39;s ownership.

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