Securities Industry Commentator by Bill Singer Esq

patent for its "predictive attrition program" which was developed with Watson to predict employee flight risk and prescribe actions for managers to engage employees. Rometty would not explain "the secret sauce" that allowed the AI to work so effectively in identifying workers about to jump (officially, IBM said the predictions are now in the 95 percent accuracy "range"). Rometty would only say that its success comes through analyzing many data points.

"If you have a skill that is not needed for the future and is abundant in the market and does not fit a strategy my company needs, you are not in a good square to stay inside of," Rometty said. "I really believe in being transparent about where skills are."

"AI will change all jobs once it is in the workflow, and that is the most meaningful kind of AI. Yes, some jobs will be replaced, but that is a red herring," Rometty contends. "It is about getting people to work at the intersection of this."

This framework represents the views of the Strategic Hub for Innovation and Financial Technology ("FinHub," the "Staff," or "we") of the Securities and Exchange Commission (the "Commission"). It is not a rule, regulation, or statement of the Commission, and the Commission has neither approved nor disapproved its content. Further, this framework does not replace or supersede existing case law, legal requirements, or statements or guidance from the Commission or Staff. Rather, the framework provides additional guidance in the areas that the Commission or Staff has previously addressed. See, e.g., Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO (Exchange Act Rel. No. 81207) (July 25, 2017) ("The DAO Report"); William Hinman, Digital Asset Transactions: When Howey Met Gary (Plastic), Remarks at the Yahoo Finance All Markets Summit: Crypto (June 14, 2018), available at https://www.sec.gov/news/speech/speech-hinman-061418.

As part of a continuing effort to assist those seeking to comply with the U.S. federal securities laws, FinHub is publishing a framework for analyzing whether a digital asset is offered and sold as an investment contract, and, therefore, is a security.  The framework is not intended to be an exhaustive overview of the law, but rather, an analytical tool to help market participants assess whether the federal securities laws apply to the offer, sale, or resale of a particular digital asset.  Also, the Division of Corporation Finance is issuing a response to a no-action request, indicating that the Division will not recommend enforcement action to the Commission if the digital asset described in the request is offered or sold without registration under the U.S. federal securities laws.    

[M]attes grossly overstated Jumio's 2013 and 2014 revenues and then sold shares he held personally to investors in the private, secondary market. The complaint alleges that Mattes made approximately $14 million by selling his Jumio shares and hid these sales from Jumio's board. According to the complaint, Mattes also falsely told an investor that he didn't want to sell any of his shares because there was "lots of great stuff coming up," and that "he'd be stupid to sell at this point." Jumio restated its financial results in 2015, wiping out most of its revenue, and after it filed for bankruptcy in 2016, the shares became worthless.

[P]eter Armbruster, the former CFO of Roadrunner Transportation Systems Inc., hid incurred expenses by improperly deferring and spreading them across multiple quarters to minimize their impact on Roadrunner's net earnings.  Armbruster then allegedly manipulated certain reductions to liabilities, creating an income "cushion" that could be accessed in future quarters to offset expenses.  The SEC further alleges that Armbruster as well as Bret Naggs and Mark Wogsland, former controllers of Roadrunner's Truckload segment, identified and failed to write-off millions of dollars in overvalued assets and overstated receivables at one of Roadrunner's operating companies.  According to the SEC's complaint, Armbruster, Naggs, and Wogsland also misled Roadrunner's outside auditor about these misstated accounts, and as a result Roadrunner materially misstated its operating income, net income, and earnings per share in its annual, quarterly and current reports filed with the SEC.

[T]he court found that the defendants fraudulently solicited and accepted funds from customers for the purported purpose of trading forex.  Further, the court found that the defendants maintained the trust of their customers by providing fabricated account statements, links to YouTube videos describing trades and profits, and sending falsified annual tax documents to customers.  The court also found that Lanzana misappropriated customer funds by using some of those funds to pay other customers, compensate Masanko for customers that he solicited, and for his personal use.    

to inform investors about social sentiment investing tools and highlight their risks. This Alert provides tips to consider before using tools that analyze or aggregate information from social media sources to make investment decisions or attempt to predict changes in the stock market's direction or in the price of a security.

After inheriting, 28.3% of HNW clients' children discontinue the relationship with their parents' wealth manager, according to GlobalData, a leading data and analytics company.

The company's report: ‘2019: Trends to Watch in Global Wealth Management' states that 38% of the global HNW population is above the age of 60, which equates to 4.3 million individuals. This means wealth managers need to have a strategy in place to appeal to the next generation of investors.

Heike van den Hoevel, Senior Wealth Analyst for GlobalData explains: "Reaching out to the next generation early on is critical, but wealth managers are not doing a good job."

Results from GlobalData's 2018 Global Wealth Managers Survey reveal that involving the next generation during the estate planning process is the single most effective retention tool. However, only 59% of wealth managers across the globe offer inheritance planning services directly.

• Securities Industry Commentator
• Bill Singer