Round-up on CFTC compliance

The Commodity Futures Trading Commission (CFTC) is the US regulator charged with supervisory authority over the futures and option markets. Created in 1974 by the Commodities Futures Trading Act, the CFTC is an independent regulatory agency with the purpose to monitor and protect the markets by prohibiting fraudulent activity or other misconduct and to control against risk from these. In the aftermath of the 2008 global financial crisis and the markets reforms which were implemented during the economic recovery, the CFTC has played a more prominent role in the largely unregulated general derivatives (contracts that derive their value from the performance of an underlying entity, such as an asset, index, or interest rate) and specifically, swaps (derivative contracts where two counterparties exchange cash flows of each other’s financial instruments) markets, to encourage transparency and gradually move toward a more stringent supervisory framework.

The CFTC’s principal mission is to ensure the successful and efficient operations of the futures markets, by keeping competition fair and preventing market abuse or other threats to financial integrity and efficacy. As the futures markets and particularly the derivatives and swaps markets are very international, the CFTC collaborates heavily with international partners and oversees a huge variety of diverse financial institutions and service providers, including exchanges, clearing houses, dealers, and commodity pool operators.

The CFTC has often been seen as the smaller, less powerful or prominent cousin agency to the Securities and Exchange Commission (SEC). However, as the CFTC refines its position within the financial regulatory landscape of the global markets and within the US economy, certain issues and emphases have emerged which distinguish the CFTC.

  • Bitcoin: The CFTC made headlines in November 2017 in paving the way for CME Group and Cboe Global Markets Inc to trade bitcoin futures contracts. Investors and markets professionals all over the world have been waiting for the first regulatory verdicts in the US on how cryptocurrencies markets may be handled. The CFTC has answered this boldly, indicating a permissive attitude toward the trading practices coupled with a strict expectation for robust monitoring and reporting to enable oversight of the famously volatile and active bitcoin trading markets. The CFTC had already declared in 2015 that it would treat bitcoin as a commodity, and the ensuing years have shown US financial regulators struggling to agree on what the cryptocurrency is in terms of financial markets and what risks and protections might be applicable for those wishing to invest or speculate in it. The CFTC has chosen to give the futures trading a yellow light, allowing it to go ahead with a cautious eye toward the intense enforcement and investor protection needs that could arise and obtaining assurances from the exchanges that they will proactively cooperate and share the necessary data with the CFTC: Bitcoin Futures Are Coming and Regulators Are Racing to Catch Up
  • Whistleblowers: While far outpaced by the SEC’s much more well-known and publicized whistleblower program, the CFTC’s program was created at the same time as the SEC’s, by the post-financial crisis Dodd-Frank Act in 2010. In 2017, while still modest in comparison to the SEC, the CFTC is having a banner year for payments of whistleblower rewards. These rewards come from sanctions imposed by the CFTC due to validated whistleblower claims against CFTC-covered organizations. This represents a reporting increase by whistleblowers to the CFTC of 70 percent over 2016, indicating that whistleblowers are recognizing the value of the CFTC as an enforcement body. Therefore this uptrend in handling of whistleblower claims could likely continue: Why Wall Street Should Worry About the CFTC Whistleblower Program
  • Deregulation: The overall trend in the US is toward a preference for fewer or more efficient and targeted regulations. This is a clear reversal especially in the financial markets, where in the years after the global financial crisis the momentum was toward more complex and far-reaching regulatory and supervisory oversight on the economy and market participants. This was a reasonable and necessary response to not only the recession but the numerous and varied financial scandals and frauds that were uncovered and damaged the markets and society’s trust in the financial systems. These risks and root causes of misconduct and abuse are still present, so balancing a regulatory posture which prefers a lighter touch against the need for investor protector and facilitation of transparent and equitable markets is a challenge for all regulatory agencies, including the CFTC: CFTC Enforcement Actions Drop Sharply in 2017
  • MiFID II: The revised Markets in Financial Instruments Directive, or MiFID II, is a wide-sweeping set of EU financial regulatory rules coming into effect in January 2018. These new regulations will have huge impact on the way banks and other financial institutions interact with and make money from the markets. While these are European laws, the globality of the markets means that regulators and market participants all over the world are contending with how to handle these new supervisory guidelines. The Futures Industry Association (FIA) has been actively lobbying the CFTC on behalf of its members, including large banks such as Goldman Sachs and Morgan Stanley, to confirm that the new European requirements will not bring expensive new limitations in the US as well: Wall Street Has New MiFID Migraine, Now in Futures Market
    In continuation of this, one important area in which the CFTC has already been deal-making with the EU in anticipation of the approaching MiFID II application is with derivatives trading venues. The European Commission and the CFTC have agreed upon mutual recognition of trading venues so that those in the United States can benefit from an equivalence decision recognizing them as eligible for compliance with MiFID II requirements by virtue of their satisfaction of CFTC requirements: EU and CFTC Implement Mutual Recognition of Derivatives Trading Venues
  • Blockchain: Apart from regulating bitcoin as a commodity, the CFTC hopes to benefit from the technology that underlies cryptocurrencies, blockchain. The CFTC has voluminous amounts of data from the diverse market platofrms and service providers that it supervises and has historically struggled to parse and study these huge troves of data efficiently and meaningfully. The CFTC hopes that the reporting reliability, transparency, and information security offered by the ledger technology blockchain can enable better review and analysis of this data. Traditional procurement requirements have often dogged attempts to implement more advanced or emerging technologies, but one of the priorities of the CFTC and other US government agencies currently is to leverage innovation such as from financial technology (fintech), regulatory technology (regtech), and supervisory technology (suptech): CFTC Looks to Blockchain to Transform How It Monitors Markets

Check back in the future for more posts which will focus on the investigatory and enforcement priorities and interests of different regulatory organizations or initiatives. Namely, on December 28, there will be a round-up on US Federal Trade Commission (FTC) compliance. On January 16, the post will be about EU implementation of the General Data Protection Regulation (GPPR), major privacy ad data protection regulation by the European Parliament and Council of the European Union coming into effect in 2018.

Round-up on bioethics in medicine

Bioethics is a field of ethical thought and theory which focuses its debate on the relationship between society and biological sciences. These two sets of interests intersect and collide very frequently in medicine, where the impact of scientific advancement on people can be truly a life or death matter. Researchers, doctors, hospital organizations, medical service and product providers, and patients themselves all contend with bioethical dilemmas. With the ever-evolving advancement of AI and other technologies, medicine, like almost all areas of human life is being transformed and along with it, the ethical choices and challenges present are changing too.

  • As previously discussed in this blog’s coverage of whistleblowers in the pharmaceutical industry, the sales and marketing of prescription drugs is a practice full of risks for fraud and misconduct. Pharmaceutical companies paying or otherwise influencing doctors to recommend and prescribe their products to their patients is ripe for conflicts of interest issues. Doctors who might prescribe medication for any reason other than the most appropriate treatment protocol and wellness outlook for their patients, to whom they owe a high standard of professional care, pose great risk of causing both intentional and negligent harm. The risk of this is exceptionally troublesome when the doctors have histories of fraud or misconduct.  Payments from pharmaceutical companies to doctors are legal and not unusual, but they are also certainly controversial and pose significant bioethical challenges to appropriate patient care. In this case, there is definitely a call for compliance controls and ethical decision-making incentives, in that the conduct not against any law or regulation but may certainly run afoul of society’s expectations or medical institutions’ business values:  Drugmaker paid doctors with problem records to promote its pill
  • Traditional Chinese medicine, which uses herbs, plant, and animal parts to make teas or soups, has been relied upon as a popular remedy for centuries. While the practices of clinics offering these ingredients and instructions for using them as cures have been largely unchanged all this time, in recent years technological innovation has reached even into these farthest corners of medical practice. Some of these old-fashioned recipes have gotten a modern variation, turning them from culinary creations to formulations for injectable drugs. The risk lies in the possibility that the patient taking the drug might have an adverse reaction, as the injectable versions of these drugs contain many different compounds, making diagnosing an allergy or contamination very difficult. As major companies enter this market estimated at $13 billion in sales value, doctors are prescribing drugs that are largely unregulated, untested, and unknown. This presents a huge regulatory challenge to ensure public safety and to set supervisory standards for prescription and administration of the drugs:  Patient Deaths Show Darker Side of Modern Chinese Medicine
  • Recently an elderly, unconscious patient showed up in Miami, Florida hospital with a shocking tattoo that read “DO NOT RESCUSCITATE.” Doctors and nurses found themselves struggling to resolve the ethical dilemma of determining their patient’s true desire for care and to what extent. In the state of Florida, an order to not resuscitate (DNR) is valid only if it is completed on an official form and printed on the designated yellow paper. This patient did end up having such a legal form, so when his condition deteriorated eventually, the valid DNR was honored. However, doctors did debate what reaction, if any, they owed to the tattoo and the patient’s evident choice to make his DNR wishes emphatically clear. The medical team in question here provided basic care, sought ethics advice, and got the support system of social workers involved to make a collaborative, respectful patient care plan. The question of what would motivate a patient to have such a tattoo, however, and the wide variety of medical and legal reactions it can provoke, presents an interesting bioethical dilemma in end-of-life care: What to Do When a Patient Has a ‘Do Not Resuscitate’ Tattoo
  • Continuing on this theme of patient care at the end of life, another compelling bioethical dilemma is in the provision of non-essential treatment in hospice. In this case, a patient wanted eye surgery to restore his vision for the last days of his life. He desired comfort, independence, and reconnection with his family before he died that being able to see again could uniquely give to him. Some care providers, however, would not find it acceptable to perform surgery on someone who would die only a few weeks later, incurring costs and risks to provide ultimately unnecessary treatment. The question of when and why to provide this sort of treatment to hospice patients has arguments for cost and efficiency on one side and dignity and compassion on the other: Should Eye Surgeons Fulfill A Dying Man’s Wish To See His Family?
  • During all surgeries and medical treatments, there is an ever-present risk that something could go wrong and the professionals performing the procedure will need to stray from the expected protocol. While this is done in the best interests of treatment success and preventing harm or even saving lives, these interventions present difficult challenges to consent and control. In the scenario of childbirth, these concerns are especially fraught: Doctors who ignore consent are traumatizing women during childbirth

The moral and ethical questions posed in the evolving practice of medicine are and will continue to be the subject of frequent popular debate. Medical care providers confront these issues in their work and standards for and expectations of patient care are impacted by decision-making on these bioethical dilemmas. To build upon the commentary here, check back on December 21 for a post on bioethics issues in scientific research.

Round-up on compliance of aging and death

Many of the contemporary challenges to the meaning of human life and the responsibility of organizations, individuals, regulators, and even governments to contend with them on a legal or regulatory level come from technology. Indeed, bioethics and design ethics are rich with ethical dilemmas caused by advancements of sophisticated technologies such as artificial intelligence and its many applications. However, there is one philosophical area that is in tension with societal existential constructs and is as old as life itself – aging and death.

The ethical dilemmas stemming from the legal and moral responsibilities humans have to themselves and each other as the end of life approaches are contentious and among the most difficult possible. These dilemmas go to the core of society’s moral ideas about the value of life, the extension of human rights throughout physical or mental incapacity due to age, and the treatment of patients and their bodies through and beyond death.

Legal guardians, funeral homes, hospitals, and other individuals and organizations working in and making profits from business related to aging and dying – encompassing legitimate activities as well as illicit ones – all have various duties to their clients and are subject to societal and legal expectations and norms. However, inspection and enforcement efforts are often uneven and struggle to keep pace with the challenges posed by abusive practices or organizational misconduct. Threats to the rights of individuals and the dignity and proper treatment – or at least clear and honest disclosures – that are expected by patients and their families, must be the focus of future regulatory scrutiny and improvement.

  • Overreaching paternalism in guardianship of senior citizens is a highly disturbing trend which has been enforced by the courts in some jurisdictions. Legal guardians pay themselves from their wards’ estates; in some cases they have hundreds or even thousands of clients and force out family members or friends so that they can exert their control and get paid for it. Of course, this is a necessary system for the care of vulnerable senior citizens who need help administering their affairs. However, it is also ripe for misuse by opportunistic individuals, to the great detriment of the seniors they take on as wards and their loved ones. The financial and social abuses that can occur in these cases are frightening and appalling. Legal guidelines and supervisory scrutiny of these guardians should be standardized across jurisdictions to avoid undue harm to any population and to balance the commercial caretaking aspects of the activity with the rights and dignity of the individuals concerned:  How the elderly lose their rights 
  • Funeral home regulation and inspection is currently a patchwork system at best. Gross abuses and lack of internal controls have been the subject of a number of recent investigatory reports. Employee misconduct or insufficient internal policies and procedures at an operation like a funeral home has obviously devastating potential to cause harm to families of departed individuals at a vulnerable and painful time in their lives. Following the loss of a loved one the thought that the personnel of the funeral home trusted with their body might store the remains improperly or misuse their organs and parts is a concept that is hard to even conceive. However, due to insufficient supervision and inconsistent regulatory and investigative practices, these terrible scenarios play out all too often. A coherent and cohesive regulatory framework with the strength to punish misconduct and enforce expectations of operating standards must be implemented:  Gruesome Discoveries at Funeral Homes Put Spotlight on Spotty Regulations
  • On a related note, the dark reality of the organ trade has been the subject of a number of recent investigatory reports as well. Far from just urban legends about crimes that can take place in far-off lands, body brokers are very real and operating in the United States. While many of them do conduct legitimate business for scientific or medical purposes, others trade illicitly or take advantage of individuals who unknowingly give their body parts upon death or those of their loved ones to be later sold for profit by brokers. Fraud and misrepresentation in this industry violates the dying wishes of individuals or the difficult decisions made by families. The ease with which these illicit transactions are conducted is shocking, with human limbs or organs being bought and sold like spare car parts by some individuals. Like funeral homes, an overarching regulatory system needs to be put in place to monitor and inspect these businesses and implement enforcement actions when necessary:  The Body Trade
  • Turning away from illicit or abusive activities to technological advancements that touch upon aging and death, the reach of artificial intelligence has begun to stretch into this area as well. Robots and robotic devices are no longer the figment of the imagination of a distant future. Many organizations are beginning to utilize them in rudimentary form for a variety of assistant-level activities and are trying to develop the AI technology to use it even more in the future. This extends to patient care as well; hospitals and nursing homes are now exploring using robots to assist nurses in treating patients. Machine learning may eventually be able to automate many aspects of basic care, removing human error and relieving non-robotic nurses to focus on more complex or individually-tailored care. This could be a great efficiency for hospital staffing in the future, but it remains to be seen how non-human interaction in the patient care arena will impact the aging experience. Compassion and humility are often of great mental importance when contending with the forces of aging and illness. A mix of human and robotic care of patients will need to be carefully devised to ensure that these needs are met: Hospitals Utilize Artificial Intelligence to Treat Patients
  • Life extension has been a romantic subject of philosophical and scientific desire for millennia. For as long as people have been alive, they have tried to figure out ways to prolong or prevent dying, sometimes delving deeply into the mysterious and esoteric. Current quests in this area are focused on high-tech solutions. Silicon Valley has turned its most sophisticated efforts toward life extension in seeking to “solve for death.” At the very least, these attempts may derive a technology that greatly impacts aging or pushes human life expectancies far beyond the current normal range. Within a generation this may the force of great societal change that will redefine the needs of aging populations that live for longer and continue the quest to avoid death completely: Seeking eternal life, Silicon Valley is solving for death

As demonstrated by the foregoing stories, improper practices and abuses of power, as well as technological advancements, pose risks to the nature of aging and death as it is currently defined within society. Supervisory frameworks must be developed and strengthened to protect the most vulnerable of individuals and ensure that they and their families are not treated unjustly. Risk assessments and coherent, holistic regulatory guidance should be in place to ensure that these protections are upheld.

Round-up on the humanity of artificial intelligence

Human fascination in, and even obsession with, robots is nothing new. For many years people have imagined distant versions of the future where human interaction with different types of robots, androids, or other robotics products was a routine part of life both at work and at home. Sometimes these forward-looking scenarios focus on convenience, service, and speed. Much more often, however, when asked to contemplate a future with ubiquitous artificial intelligence (AI) technology imbedded alongside humans, thoughts stray into possible troubling or dark impacts on society. People worry about loss of humanity as technology predominates, or the possibility that robots could be misused or even gain sentience and have intentions to work against or harm humans.

In the past these scenarios, both of the positive advancement of society and of the potential for isolating, dangerous dystopia, were mostly relegated to science fiction books, Hollywood blockbuster movies, or what were seen as overactive imaginations or paranoid opinions of luddites. Now, however, the news is full every day of developments in AI technology that bring the once-imaginary potential of robots ever closer to present reality.

As technologists and business organizations consider the utility of advancement in AI, ethicists and corporate compliance programs must also consider the risk management issues that come along with robots and robotics. Technology which will have such a broad and deep impact on human life must be anticipated with thoughtful planning for the compliance risks which can arise. In particular the potential for sharing human traits with AI technology or imbedding AI technology in place of human judgment present provocative challenges.

  • Anticipating increased interactions with androids – robots that look like humans and can speak, walk, and otherwise “act” like humans would – leads to the logical question of will humans have relationships with androids and vice versa? This would be not just transactional interactions like giving and receiving directions, or speaking back and forth on a script written to take advantage of or increase machine learning within the android. Rather, this could be intimate, emotionally-significant exchanges that build real connections. How can this be when only one side of the equation – the human – is assumed to be able to feel and think freely? While technical production of robots that appear credibly human-like is still beyond the reach of current science, and giving them a compelling human presence that could fool or attract a human is even further away, work on these tasks is well underway and it is not unreasonable to consider possible consequences of these developments. Will humans feel empathy and other emotions for androids? Can people ever trust robots that seem to be, but aren’t, people? Will the lines between “us” and “them” blur? The burgeoning field of human-robot interaction research seeks to answer these questions and develop technology which responds to and considers these tensions.  Love in the Time of Robots 
  • On a similar note, when could machine learning become machine consciousness? Humans have embraced the usefulness of AI technologies which become smarter and more effective over time after they are exposed to more knowledge and experience. This is a great argument for deploying technology to support and improve efficiency and productivity. Everyone wants computers, networked devices, and other products that use advanced technology to work more accurately and easily. Machine consciousness, however, suggests independent sentience or judgment abilities, the potential of which unsettle humans. From a compliance and ethics perspective there is an extra curiosity inherent in this – what will be the morality of these machines if they achieve consciousness? Will they have a reliable code of ethics from which they do not stray and which comports with human societal expectations? Will they struggle with ethical decision-making and frameworks like humans do? Or will human and human-like practical ethics diverge completely?  Can Robots be Conscious? 
  • In 2016, David Hanson of Hanson Robotics created a humanoid robot named Sophia. At his prompting during a live demonstration at the SXSW festival, Sophia answered his question “Do you want to destroy humans?… Please say ‘no’” by saying, “OK. I will destroy humans.” Despite this somewhat alarming declaration, during the demonstration Sophia also said that she was essentially an input-output system, and therefore would treat humans the way humans treated her. The intended purpose of Sophia and future robots like her is to provide assistance in patient care at assisted living facilities and in visitor services at parks and events. In October 2017, Saudi Arabia recognized the potential of the AI technology which makes Sophia possible by granting her citizenship ahead of its Future Investment Initiative event. A robot that once said it would ‘destroy humans’ just became a robot citizen in Saudi Arabia
  • The development of humanoid robots will certainly become a bioethics issue in the future as the technology to take the human traits further becomes within reach. While there are so many compelling cases for how highly advanced AI could be good for the world, the risks of making them somehow too human will always be evocative and concerning to people. The gap between humans and human-like androids is called the uncanny valley, the space between organic and inorganic, natural and artificial, cognitive and learned. The suggestion that the future of human evolution could be “synthetic” – aided by or facilitated in the development androids and other robotics – presents a fascinating challenge to bioethics. Are humanoid robots objects or devices like computers or phones? It is necessary to consider the humans and androids in comparison to one other just as it is humans and animals, for example. This ethical dilemma gets to the root of what the literal meaning or definition of life is and what it takes for someone, or something, to be considered alive. Six Life-Like Robots That Prove The Future of Human Evolution is Synthetic
  • One of the potential uses of AI technology which worries people the most is in autonomous weapons. The technology in fact already exists for weapons which can be used against people without human intervention or supervision in deploying them. Militaries around the world have been quick to develop and adopt weapon technology that uses remote computing techniques to fly, drive, patrol, and track. However, this established use of this technology is either for non-weaponized purposes or, in the case of drones, deployment of weapons with a human controller. Fully automating this technology would in effect be giving AI-powered machines the decision-making ability that could lead to killing humans. Many technologists and academics are warning governments to consider preventing large-scale manufacturing of these weapons via pre-emptive treaty or other international law.  Ban on killer robots urgently needed, say scientists

As the diverse selection of stories above illustrates, the reach of robots, robotics, androids, and other developments within AI technology are certain to permeate and indeed redefine human life. This will not be in the distant or unperceived future. Rather, real impact from these advancements is even already starting to be seen, and there is only more to come. Governments, organizations, and individuals must make diligent risk assessment preparations to integrate this technology with human life in a harmonious and sustainable fashion.

Compliance issues with marijuana legalization

Marijuana has a complex legal and regulatory history in the United States. Originally widely deployed in a variety of medical and commercial uses, the regulation and eventual restriction of commonly-accepted preparations of hemp and cannabis began at the turn of 20th century with labelling requirements and a push to include cannabis in the definition of a “poison” for which a prescription would be required. By the 1930s a patchwork of state and national policies in law were in place and the criminalization of marijuana was underway in earnest. For the next 40 years any attempt at decriminalization or reclassification was unsuccessful. In the 1970s and 1980s, however, California began to slowly reduce penalties for possession under state law and work toward legalization for compassionate use in chronically-ill individuals, which became legal in the state in 1996.

Since then, the legalization of marijuana has been a matter of legislative interest in many states. This move toward decriminalization at first was limited to the medical use first legitimized in California state law, either for chronically-ill patients or for those suffering from a variety of illnesses for which marijuana has proven to be a desirable treatment in terms of effectiveness and cost. Advocacy in this area has eventually extended to non-medical use; in 2012, Colorado was the first state to legalize recreational use of marijuana for adults.

As of the writing of this post, medical marijuana is legal (to at least some extent) in 23 states plus the District of Columbia; in 8 states medical and non-medical marijuana is legal to sell and possess. As the below selection will show, momentum for decriminalization and handling of emerging legal markets invokes a wide variety of compliance issues which will need to be addresses for business and consumer protections and obligations.

  • Given that medical marijuana was the initial purpose behind modern legalization and that it continues to be the most widely-accepted rationale for it, it follows quite logically that medical marijuana research would need to be recognized and facilitated by the law as well. Senator Orrin Hatch, a perhaps unexpected ally for legalization, introduced the Marijuana Effective Drug Study Act of 2017 to improve the research approval process and increase the national marijuana quota to provide supply for medical and scientific research into its potential health benefits. Because marijuana is still completely illegal at the federal level, it is subject to the most restrictive classification and therefore getting approval to study it or supply of it to study is very difficult. In order for the full efficacy of marijuana as medical and therapeutic treatment to be understood, these administrative burdens must be overcome: Senator introduces bill to make it easier to do medical marijuana research
  • Due to the fact that, as stated above, marijuana is still totally criminalized at the federal level, and state efforts toward legalization vary widely, regulatory expectations are widespread across a cumbersome patchwork. Businesses hoping to join or exploit the marijuana market in states where it is legalized to some extent will confront a huge regulatory burden of rules, reporting and disclosure obligations, and licensure requirements. It will be crucial for existing or new owners of marijuana-based businesses to consider implementing compliance programs early and thoroughly so that they are not caught unaware by government expectations in their jurisdictions. Otherwise, a culture of operational non-compliance will reign, which could have devastating effect on business success rates amid supervisory enforcement actions for deficiencies: Marijuana Businesses, Particularly In California, Struggle To Navigate A Thicket Of Regulations
  • Public sentiment is certainly trending toward legalization. Sixty-four percent of Americans now say that its use should be made legal, which is the highest level of public support that the pollster Gallup has found in the fifty years it has been recording this measure. Certainly high-profile ballot initiatives in a variety of states and increased media attention have come through to the average American and liberalized views on the matter. How will this impact regulatory outlooks? If the federal government comes around to legalization then some universal standard for controls framework and supervisory requirements may be in the future. If not, states will continue to be left to their own devices to create independent markets and risk controls within them:  Record-High Support for Legalizing Marijuana Use in U.S.
  • As the market for legal weed emerges, powerful people wanting to work within are starting to act like they would in any other industry – looking to garner competitive advantage and turn their companies into giants of the marijuana business. Marijuana is a valuable industry and can be seen as a crop, which means it has an agricultural supply chain like wheat or corn that can be exploited. Utility patents, intellectual property protection for crops, can be used by powerful organizations to corner the market on breeding of new varieties, conducting research, and even producing seeds to be licensed: The Great Pot Monopoly Mystery
  • With governments addressing legalization of marijuana all across the United States, organizations are beginning to weigh in too on what their policies of use by their members and employees may be. One visible example of this is with the National Basketball League (NBA) where both the former commissioner David Stern and the current commissioner Adam Silver have expressed at least awareness that the league policies may eventually have to change. While marijuana is still a prohibited substance in the NBA irrespective of the purpose of use, Silver has said he wants to study it and Stern has opined that he feels players should be allowed to do what is legal in their states with respect to marijuana use:  David Stern calls for NBA changes of marijuana rules

As states continue to move toward decriminalizing or outright legalization for marijuana for a variety of purposes, and other organizations contend with their own policies within that system, mechanisms for regulated markets will begin to emerge, presenting interesting regulatory compliance issues with no clear and easy precedent. Governments and businesses alike will need to contend with both the opportunities and the challenges this will present.

Round-up on compliance issues with blockchain technology

One of the hottest topics of 2017 is blockchain. This advancing technology is seemingly the possible solution to every business problem conceivable. Companies across all industries – as diverse as banking to food production and seemingly everywhere in between – are experimenting with how they might be able to use blockchain to make their reporting and related processes more reliable or efficient. Many are even contemplating how they may take advantage of blockchain to market software applications to other companies, hoping to enter the profitable fintech (financial technology), regtech (regulatory technology), or suptech (supervisory technology) markets.

But what is blockchain? Most famously, it is the core technological component of the well-known cryptocurrencies, such as Bitcoin or Ethereum. Simply put, blockchain is an open list of records (which comprise the “blocks”) which are securely linked together with cryptography. As the blocks are all linked together and independently identified with references to their linked blocks, the data contained therein is extra safe from individual manipulation or alteration. This is a decentralized computing system which is incredibly useful for recordkeeping and records management activities, especially those where security is especially important such as identity management and medical records.

Due to the broad desirability of a secure and adaptable record maintenance technology, blockchain, which was initially developed only less than a decade ago, has been a disruptive influence in many industries already. Across all business areas, companies are looking to blockchain for possible benefits, all relevant to compliance, to their reporting processes.

  • Transparency for pension fund reporting is one major potential use of blockchain. Following the Madoff scandal and other highly-publicized frauds in the investment management industry, there has been more pressure than ever in expectations for investor protection and reporting disclosures. Many pension funds have balked at public and supervisory demands for increased transparency due to the cost concerns for implementing additional reporting mechanisms in balance with very low profit margins. This reaction does not help to enhance trust between investor clients and this fraud-vulnerable industry. Therefore the decentralized, secure nature of blockchain offers appealing opportunities for filling this confidence vacuum. Blockchain-based platforms can get investors access to their own pension information without fears of data manipulation or increased cost burden on firms: How Blockchain is revolutionizing fraud prone industries
  • On a related note, banks and other financial institutions have borne much of the competitive pressure blockchain has created with the advent of cryptocurrencies – but they also stand to benefit from this, if they can make the best of it. Cryptocurrencies such as Bitcoin are a compelling alternative to the centralized, traditional banking system for customers who desire extra security or anonymity. While cryptocurrencies have been traditionally depicted as a safe haven for illegitimate or even illegal payment activities, the mainstream attention on them has created a broader appeal and audience for them. As a response to the interest their customers have shown in cryptocurrencies, banks have started to delve into the potential for the blockchain technology. Some has invested in tech start-up companies concentrating on various blockchain applications while others have delved more deeply into relationships with fintech partners. At this point banks’ proprietary efforts have mostly been restricted to in-house research on potential use of blockchain, but inevitably competitive momentum will start to drive larger institutions toward developing their own projects in this space. These developments are likely to encourage efficiency, inspire leaner and more innovative business models, and serve the regtech and suptech goals of increasing cooperation with regulatory authorities. Ultimately this could help to modernize and improve the persistently staid and legacy-driven banking industry into a bolder and more transparent business model:  How banks and financial institutions are implementing blockchain technology
  • The advertising industry is newly subject to regulatory scrutiny with the upcoming EU privacy directive, the General Data Protection Regulation (GDPR). This law will apply to any organization doing business in, using technology in, or targeting the citizens of, any EU country, so it has a broad global reach. The GDPR will impose new requirements for handling and controlling private data, including protective and disclosure obligations. Therefore blockchain-based solutions, which can be both secure against manipulation or leakage, and distributed with open access so that users making disclosure requests can see the information directly for themselves. This will help to reduce the burden of this reporting as well as improve cost margins rather than coming up with expensive and vulnerable in-house solutions or outsourcing the reporting to third-parties with their own attendant risks: How Blockchains Can Help the Ad Industry Comply With the GDPR
  • Commercial aviation is another industry looking to blockchain systems to help with its risks – this time in cybersecurity management. Airlines and support companies rely a lot on IT systems to do everything from fly and direct aircraft to book and manage passenger travel. These systems are highly imperfect, as system outages and computer crashes that lead to flight cancellations and stranded passengers show in the news each year. They are also vulnerable to cybersecurity risks where intruders could breach personal data, disrupt airline operations, or corrupt and steal client and aircraft information. Storing and protecting this data within vulnerable or old/legacy systems poses many cybersecurity challenges. The concept of tamper-proof blockchain technology is therefore compelling to the aviation industry for these obvious reasons. Blockchain could help to keep operational data safe and protect companies from cyberattacks. More importantly, pressure to adopt it could drive aviation companies to make the difficult yet very important technological updates and improvements to their systems which will serve safety and regulatory concerns alike: How Blockchain, Cloud Can Reinforce Cybersecurity in Commercial Aviation
  • The pharmaceutical industry has long been vexed by inaccurate and unreliable supply chain tracking. It is especially vulnerable to stolen and counterfeit medication entering the supply chain untracked and finding its way to patients, putting their safety at risk. Tracking medicine with blockchain could change all this. A consortium of pharmaceutical companies, including major firms Genentech and Pfizer, are already collaborating together on a tool called the MediLedger Project, which seeks to manage the pharmaceutical supply chain and track medicines within it to ensure that drug deliveries are recorded accurately and transparently. This would take the current complicated and inefficient network of software management in the supply chain to the next level, securing the supply chain with an integrated and decentralized blockchain system. It could also enable sharing of essential information from companies to partners and customers without exposing sensitive business information, a challenge in the industry so far: Big Pharma Turns to Blockchain to Track Meds

There are many potential advantages from a compliance perspective to blockchain, which has the potential to enhance transparency, protect privacy, address various process-driven risks, and strengthen cybersecurity controls, among other benefits. As the technology advances time will tell how broad the applications of blockchain may be across these diverse industries with similar needs for compliance risk management.

Round-up on evolving role of central banks

Central banks may have once been quite remote in their workings to the average person, relegated to seemingly academic and technical tasks of interest rate management and currency market machinations. Perhaps many people had only ever heard of the Federal Reserve and had no perspective on the worldwide system of international and supranational central banking.

The 2008 global financial crisis, however, thrust central banks worldwide into the spotlight. Economic news since that time garnered a lot of attention in the media as countries attempted to recover from the economic crisis and re-defined their financial systems to be more resilient and guided by a more effective controls framework. This effort has been one that started with a focus on free-wheeling rescue and stimulus and subsequently has morphed to still include those objectives, with somewhat more restraint when possible, but now also to visibly impact many other areas of the financial system and markets.

In this process, central banks around the world have found themselves in a bit of an existential quest to determine what their engagement level and scope will be. Technological advancements and changes in post-crisis regulatory and legislative priorities have pressured central banks to decide whether they will contribute to certain markets and identify the extent of their own autonomy within their national systems.

  • Bank of Russia is facing a possible national banking crisis, as two major banks have needed rescue due to liquidity problems in just a month’s time. In August, there was a run on deposits at Bank Otkritie FC. In September, B&N Bank asked for a bailout to increase liquidity. The current problem could stem from the central bank’s efforts to rejuvenate Russia’s banking industry in 2014 on the heels of financial troubles in the industry from falling oil prices and international sanctions. At that time, Bank of Russia offered inexpensive loans to major banks to encourage them to take over smaller ones that were not doing well.   This consolidation caused the large banks to take on the troubled assets of the small banks, which are now creating the current liquidity pressure. Otkritie even has alleged that the assets it acquired were fraudulently represented in the purchases. This suggests issues with Bank of Russia’s supervision of those entities. If these early bailouts cannot contain the problems then a privatization trend could take hold:  Russia to Bail Out Second Major Bank in Month as Troubles Spread
  • The Swiss National Bank is publicly listed on the Swiss stock exchange, with 48 percent of its shares privately owned. Some other countries do have central banks with private shareholders, but this year, the share price of the Swiss National Bank has almost doubled. This trading activity is an interesting anomaly, as shareholders do not stand to benefit from the Swiss National Bank’s interventions in the foreign currency markets to keep the value of franc down. It’s possible that some investors are speculating on this thinly-traded stock in order to profit from price volatility that is not hard to generate with fairly moderate-sized transactions. Other motivations could be shareholders hoping for a public-to-private buyout by the bank or a flight to quality:  The mysterious rise in shares of the Swiss National Bank 
  • South Africa’s central bank Reserve Bank claims its independence is under attack as the South African government has been encouraging lawmakers to redefine the mission of the bank from inflation management to promoting socioeconomic benefits for South Africans. The Reserve Bank has been targeted by the Public Protector who is charged with investigating a bailout by the central bank from 1992. Far from a neutral process, this investigation has been controversial and politically-charged, and it has been seen as seeking to undermine the independence and reputability of the central bank. This very public reputational dispute begs the question of how central banks worldwide may be blamed disproportionately for their country’s economic problems or pressured politically to adopt agendas contrary to their essential purpose:  South Africa Central Bank Says Anti-Graft Head Met Zuma Team
  • The hot market this year has definitely been in cryptocurrencies, and questions have abounded about how national supervisors would react to a proliferation of trading exchanges and market offerings in Bitcoin, Ethereum, and others. The People’s Bank of China (PBoC), China’s central bank, has issued probably the strongest regulatory challenge to the market for cryptocurrencies so far. The PBoC first banned initial coin offerings (ICOs), the IPOs of the cryptocurrencies market, and then ordered all trading exchanges in Beijing to cease trading cryptocurrencies and quit allowing new users to register. China’s relevant industry regulator, the National Internet Finance Association of China, fell in step with the PBoC to condemn cryptocurrencies as illegal, linked to illicit activities, and too risky for market stability and investor protection interests:  China Is Shutting Down All of Beijing’s Bitcoin and Cryptocurrency Exchanges
  • However, not all central banks have had such an allergic reaction to bitcoin and other cryptocurrencies. Taking in stride the possible risks and undesirable associations, others are contemplating whether the way to manage speculative trading in their own currency markets might be to join in issuing cryptocurrencies as well. This “if you can’t beat them, join them” approach has been suggested by the Bank for International Settlements, a consortium of national central banks based in Switzerland. Some central banks, including the Bank of England and the Bank of Canada, are already experimenting with blockchain technology for interbank payment systems. The Reserve Bank of India is also looking into blockchain and even considering issuing its own cryptocurrency, as is the Estonian Ministry of Finance (to the disapproval of the European Central Bank). The overall verdict is that central banks need to take more time to consider their own interests before becoming enthusiastic cryptocurrency offerors, but the enticement of participating in the market in hopes of stemming potential risks to the financial system and their own monetary policy may prove too much to resist:  The Bitcoin Bandwagon: Central Banks Consider Their Own Cryptocurrencies

As the global economy continues to deepen in complexity and interconnectedness, inevitably bouncing between financial recovery and relapse, the role of central banks in this worldwide system will also keep evolving. Systemic changes in the market and transformative advancements in technology both represent threats to, but also opportunities for, the traditional central banking system.

Round-up on compliance issues with self-driving cars

The science fiction world of the future is in active development. Projects involving artificial intelligence are on the forefront of the business strategy of many Silicon Valley technology companies and the venture capital firms that finance them, as well as traditional automotive companies and electronics manufacturers. Advancements in automation are the focus of major investments by these organizations, all of which hope to stake a competitive claim in this disruptive market.

Artificial intelligence innovations and specifically those involved automation do include robots and computer-generated personas serving functions ranging from assistants to recruiters to reservationists like the writers of earlier decades once imagined. However, one of the more practical applications of this emerging technology is in the transportation industry. Self-driving cars offer fascinating efficiency and improvement possibilities for a world that is increasingly urbanized. Organizations working in the self-driving cars industry all hope to address the constant dilemmas within the automotive industry – design and production safety, environmental sustainability, distracted driving, how to handle congestion and commuting.

Of course, as this advanced technology develops, obvious compliance and ethics considerations emerge. Consumer protection, safety and privacy, design ethics, and regulatory response are all challenges which business interests in the self-driving car industry must confront. one of the Many of the challenges of modern society in general are writ large in the world of higher education.

  • One of the first questions that comes up in any discussion about autonomous vehicles is of public relations. How will people – both other drivers and pedestrians – react to seeing a car with no driver behind the wheel? Will this be a distraction in and of itself? Virginia Tech and Ford tested this recently by sending out a fake self-driving car onto the streets of Arlington County. This car was intended to look like it had no driver, as an autonomous vehicle would, but in reality, there was a driver “dressed” as a car seat, complete with a face mask, in a specially-configured seating area. Such studies should help to determine the best design for autonomous vehicles taking in considerations of their surroundings, as well as to give ideas of what indications need to be provided outside of the vehicle to let people know what it is:  “Driverless van” is just a VT researcher in a really good driver’s seat costume
  • Ford is far from the only corporate giant interested in self-driving cars. From the consumer electronics sector, Samsung has made a major investment of money and resources with a dedicated business unit to developing autonomous technology. Samsung would like to compete with startups already working in this space, such as Mobileye, which is partnered with major automotive companies including BMW and Fiat Chrysler. Samsung acquired Harman, a major audio technology company, last year toward preparing for this effort. This work will be done in California, which has been granting self-driving permits via its Department of Motor Vehicles rather aggressively. Removing regulatory and administrative hurdles that might have prevent granting the permits has given California a leg-up in attracting businesses which hope to exploit this growing market:  Samsung makes a $300 million push into self-driving cars
  • Like the California DMV, the federal Department of Transportation has been quick to provide guidance on autonomous vehicles so that development and testing for the technology can proceed expediently. These guidelines are recommended but not mandatory and suggest fewer restrictions in the development process, hoping to facilitate innovations and advancements by manufacturers in a technology which is seen as positively disruptive for public safety and access to mobility. The DOT plans to have an evolving approach to addressing automated driving technology as the industry develops, indicating that the government wants the industry to take the lead in setting its agenda:    Department Of Transportation Rolls Out New Guidelines For Self-Driving Cars
  • In general, this deregulatory agenda seems likely to rule the day in the autonomous driving business, at least for now. Federal safety regulators will take a hands-off approach for the time being, deferring to the objections of organizations developing the technology, especially with regards to a proposed requirement that the National Highway Traffic Safety Administration would have had the ability to approve or reject autonomous vehicle systems before they were offered for sale. A light regulatory touch has been deemed the way forward in order to support what is seen as a transformative technology. Rather than legislate and establish oversight and review standards from the beginning, in this instance lawmakers and regulators have chosen to let the technology lead the way and presumably will intervene when development and testing leads to actually using and selling the vehicle systems in consumer and public applications:  Trump’s Regulators Ease the Path for Self-Driving Cars
  • On the same day that the deregulatory posture of the DOT and NHTSA was announced, the National Transportation Safety Board, an independent federal entity that investigates plane, train, and vehicle accidents, announced that a manufacturer was partially to blame for a car accident involving semi-autonomous driving technology. In this case, a motorist died in a high way accident using Tesla’s Autopilot feature, which handles steering and speed when engaged. In the accident, the Tesla crashed into a truck that entered its lane without the Autopilot system recognizing it. In its own investigation, the NHTSA laid the blame for the accident on human error, saying that the driver should have been monitoring the car despite having the feature engaged. The NTSB however, said that the Autopilot system had insufficient system controls to prevent the accident. As autonomous vehicles make their debut on the road, and semi-autonomous vehicles become even more widespread, it is very important for consumer safety and protection that this control framework is considered in the design and manufacturing process to protect against insufficient monitoring by drivers or abuse of the system, however possible:  Tesla Bears Some Blame for Self-Driving Crash Death, Feds Say   

Check back tomorrow for a companion post to this round-up: selected TED/TEDx talks on self-driving cars and what autonomous vehicles may mean for individuals, organizations, and society.

Round-up on counterfeiting of consumer goods

Counterfeiters have existed for time immemorial. Ever since the concept of value was introduced by exchange of money and the idea of authenticity or identity first became established, fraudsters have aimed to produce fake money and forged documentation. Following the counterfeit money were unauthorized copies of the products that the money could purchase, a trade which has become ubiquitous and sometimes even represents a larger market than that for the authentic item.

With the spread of globalization, a diverse range of counterfeit products are sold and bought all over the world. Sometimes this is without any attempt by the seller to deceive, with the fake product offered to a consumer who willingly buys a bootleg or replica copy. Others are to customers who think they are purchasing the real thing, often from a very expensive or luxury brand or of a very popular and desired item.

No matter the intent behind the transaction, commerce in counterfeit items is growing all the time and presents many dilemmas for corporate investigators and law enforcement in identifying the fraudulent practices and protecting both brands from this illicit trade while preventing consumers, wittingly or otherwise, from engaging in it.

  • Most of the world’s counterfeit items are produced and manufactured in China – enough so that the trade in these fraudulent goods is a $400 billion industry, by some accounts representing as much as 10% of China’s GDP. This is a striking paradox, as many authentic items such as Nike shoes and Apple iPhones are produced practically alongside knockoff versions of the same. While the traditional logic is that counterfeit goods are part of the assumed risk of doing manufacturing business in China, corporations are actively trying to take control via clever action against fraudsters. Brand protection efforts include hiring private investigators to find and seize fake goods and try to navigate the complicated, labyrinthine underground of the Chinese counterfeiting industry:  To Catch a Counterfeiter
  • South Korea has joined China as one of the major world centers for counterfeit activity. However, unlike many of the goods which come from China, which are low-quality replicas that make unconvincing fakes to the educated consumer, the market in South Korea is knowingly demanding for “copycat brands.” These consumer desire is driven by the prevalence of streetwear fashion which replicates items worn by celebrities and seen on the internet from brands which are not easily purchased or even available in South Korea. In order to answer customers’ requests to be up on these global trends, counterfeiters are making high-quality fakes to sell to the fashion savvy who might not even care whether their items are real, as long as they are able to access the desired style:  Why South Korea Is the Home of Counterfeit Culture
  • More than what’s in a name – what’s in a set of parentheses? For years Costco has sold rings advertised on their in-store signage as “Tiffany” rings. There is no affiliation between the rings sold by the wholesale giant and those available at the specialty jewellery retailer Tiffany & Co. While Costco made no claim that it was selling imitations of the Tiffany & Co. rings, Tiffany alleges that calling the rings “Tiffany” on the signage was a false identification, and that consumers could have been misinformed and mistakenly purchased the rings believing they were Tiffany & Co. A judge has ruled that Tiffany is entitled to almost $20 million in damages and interest from Costco for this marketing scheme, indicating that “Tiffany” is not to be used a generic term to describe the setting of a ring to consumers, as Costco alleged it was intending to do:  Costco owes Tiffany more than $19 million for selling counterfeit rings 
  • Counterfeit goods in the apparel market are well-known, everyone having seen before the ubiquitous fake Louis Vuitton and other designer bags that brands have been fighting against for years. Another area in fashion where fakes are becoming prevalent is makeup. The black market in the beauty industry is growing all the time, with counterfeiters making and selling popular products to satisfy demand when the real ones sell out quickly, aren’t available in certain markets, or are highly priced. The safe and hygienic production of makeup is a very complicated business, involving health standards, inspections, and scientific processes, which fraudsters do not typically invest time or money to replicate along with the products. Consumers having gotten sick and injured from using these fake makeup products which are often ordered online or bought in the discount shopping districts where knockoff handbags used to be the main fare. Especially concerning is that many people purchase these fake cosmetics in bulk, to fraudulently resell online as the real thing or to use on unsuspecting clients as makeup artists:  We Went Inside Beauty’s Black Market & It’s Worse Than You Think
  • Equally concerning to consumer protection and safety as fake cosmetics is the growing prevalence of knockoff wine. The Chinese market is participating in rising prices and demand in a hot retail wine market, for auction buyers, home drinkers, and restaurant suppliers alike. Along with these eager buyers, as always, come the sellers of counterfeit and contraband products. Fake imported wines abound in China. On high-ticket wines, empty bottles of the real thing are actually sold on the black market and then re-filled with fake wine to be sold to unaware purchasers. Aside from damaging the high-end market with a flood of counterfeit wines, there are also concerns for the average consumer. Sometimes dangerous ingredients and chemicals are added to cheap wine to change the color or taste in order to fool consumers, who can then get sick from the doctored alcohol:  China Is Facing An Epidemic Of Counterfeit And Contraband Wine

Companies and governments worldwide are doing their most to crackdown on the illegal production and manufacture of counterfeit goods, and to prevent the sale of these products to consumers. This is an effort which requires international cooperation and a constant pursuit to stay up to date in the counterfeiters’ methods in order to attack and prevent their attempts. Consumer protection and brand value to corporations are both at risk in the continued spread of these illicit practices and products.

Round-up on higher education compliance

Many of the challenges of modern society in general are writ large in the world of higher education. The obstacles to ethical decision-making that are prevalent for individuals and organizations in business are also present in the educational environment. Campus culture often represents a microcosm of culture at large, with many complex social dynamics playing out in close quarters. Students as well as educators and administrators are confronted by complicated moral dilemmas as generational divides and differing expectations for justice, integrity, and duty of care coexist.

  • In taking the administrative decision to close a popular but controversial student dormitory, the Massachusetts Institute of Technology stepped into the thorny issue of informed consent. In order to support their choice to deaccession “Senior House” as a student housing, MIT used data from student surveys that were supposed to be anonymous (but were actually tagged with geolocation information) to collect evidence that the dormitory was the source of high drug usage, low graduation rates, and other behavior deemed unsafe or unacceptable by the Chancellor’s Office. This methodology of gathering data from students and their organizations without explicit expression of the purpose and its intended usage, and the questionable decision-making that stems from it, bring into question the ethics of universities’ relations with the students for whom they are supposedly providing a supportive and inclusive community. The closure of Senior House by MIT is seen as part of a trend of university administrations to exact more control over students’ lives, including conduct they may expect to be unrelated to their educational relationship with their school, such as things that happen off-campus, when school is out of session, or even online:  A Weird MIT Dorm Dies, and a Crisis Blooms at Colleges
  • Given the insular culture that many university academic departments are known for cultivating – focused on competition and comparison and often resulting in isolation and highly politicized decision-making – hostile working environments can quickly emerge on interpersonal levels. Unlike most at-will employees in the job market at large, however, many experienced professors have security of tenure and therefore their interactions with colleagues are not always checked by their fear of reprisal that could lead to losing their jobs. In some situations this can create workplaces that value and promote individuals for their academic prowess but turn a blind eye to claims of troubling personal behavior with colleagues or even students. Universities are often accused of failing to adequately investigate these allegations or not even providing a sufficient framework for safe and effective reporting. Hierarchical departments allow powerful, tenured professors to exploit their positions, with addressing toxic behavior taking a backseat to protecting those reporting harassment:  She Was a Rising Star at a Major University. Then a Lecherous Professor Made Her Life Hell.
  • “Call-out culture” – in which people, often in groups, point out statements or actions of others that they see as problematic or abusive and take down the person in question – has been fed by the public’s appetite for controversy and the prevalence of the internet and social media, where otherwise innocuous events between friends can be broadcast all over the world for commentary, criticism, and ridicule. While understandably some of the intent of call-out culture is to suggest and reinforce more positive, informed standards for interactions in a more inclusive society, this often goes too far. Far from just being restricted to taking down those who act with the intent to cause offense, or educating those who are unaware of the real implications of things they do and say involuntarily or too casually, this culture has fostered an environment where innocent behavior is subject to ridicule and derision. In the university setting, this fear of group criticism is very destructive to creation of community. Being unable to have dialog in the classrooms and student centers of universities has a major chilling effect on sharing of views and open learning:  The Destructiveness of Call-Out Culture on Campus
  • The call-out culture trend described above between students also exists on campuses between professors and other academics. Instead of playing out on social media, this dynamic takes place from editorial boards and academics who read papers in journals, or even just commentaries on papers in journals, and then pile on to criticize the author’s intent. Leaving aside the merit of any arguments made among these groups, the dynamic is the same, of stifling dialog and using groupthink to determine which expression is acceptable or even legitimate. Often this criticism is not very informed and even extends to having the outright intent of policing which and whose ideas are considered worthy of engaging with and debating about:  Academe’s Poisonous Call-Out Culture 
  • Another impact of social media and the internet on the classroom has been the rise of the “teacher influencer” – educators who are given free educational software or equipment, and even sometimes paid in addition, to use for their students in exchange for making posts online or giving talks about the products. These teachers can argue convincingly that their students benefit from access to these products, and that their business arrangements are taken on with the sole objective of benefiting their students in a time when school supplies and improvements are vastly underprovided and underfunded.   However, the standards for disclosure of these arrangements and the handling of the potential conflicts of interest that can arise even from the most innocent, helpful intentions are uncharted ethical territory:  Silicon Valley Courts Brand-Name Teachers, Raising Ethics Issues

In many ways the academic setting, for secondary education as well as at the university level, can be seen as an incubator for these social disruptions that occur in every area of contemporary life. Educational institutions are struggling with cultural changes that redefine the responsibilities in and limits of authority. Issues of consent, safety, cultural values, and conflicts of interest all prompt compelling compliance dilemmas in the higher education domain.