Derivatives, Structured Notes, and Mortgage-Backed Securities, Especially Internal Controls Over Their Use and Marketing
Acquired knowledge of financial products, especially internal controls over the use and marketing of derivatives, structured notes, and mortgage-backed securities, primarily from 9 years doing financial industry audits and studies for GAO and from completing 16 graduate courses in financial markets and trading at Illinois Institute of Technology (IIT) between 1992 and 1997.
As a Co-Project Manager on a major assignment during my last three years at GAO, developed audit plans; gathered, assembled, and analyzed information; and helped develop recommendations for the Secretary of the Treasury, the Federal Reserve Board, SEC, and the Commodity Futures Trading Commission to respond to a request from a House Subcommittee Chairman. The audit team addressed the Chairman’s concerns by analyzing (1) federal sales practice requirements applicable to over-the-counter (OTC) derivatives, mortgage-backed securities, and structured notes; (2) the extent of end-user satisfaction with sales practices, product use, and related disputes and costs of these disputes; (3) the views of end-users and dealers on the nature of their relationships and responsibilities; (4) actions end-users and dealers have taken to reduce the potential for sales practice disputes; and (5) actions regulators have taken to address sales practice issues. Questionnaires were sent to nearly 2,400 randomly selected organizations.
Assessed the adequacy of internal controls over the use and marketing of financial products; interviewed officials at many end-users including Procter and Gamble (P&G), dealers including Bankers Trust, end-user groups including the End-Users of Derivatives Association, dealer groups including the International Swaps and Derivatives Association, and consulting firms including Capital Market Risk Advisors; obtained and analyzed information concerning lawsuits end-users had filed against dealers; frequently worked with the GAO attorney assigned to the team; and developed a recommendation to help end-users and dealers reach agreement on the nature of their relationships.
Copies of the report titled “OTC Derivatives — Additional Oversight Could Reduce Costly Sales Practice Disputes” (GAO/GGD-98-5) as well as copies of other reports I made major contributions to, including “Financial Derivatives – Actions Needed to Protect the Financial System” (GAO/GGD-94-133) and “Securities Markets – Clearly Defined `Chinese Walls’ Standards Have Been Issued” (GAO/GGD-91-115), can be obtained from GAO at 202-512-6000 or www.gao.gov .
Completed many undergraduate and graduate business and accounting courses, including 16 graduate courses between 1992 and 1997 in the IIT’s Financial Markets and Trading program. IIT courses focused on financial product use, marketing, accounting, and regulation; ethical and legal issues; and financial mathematics. Wrote a lengthy paper on P&G’s lawsuit against Bankers Trust and what P&G would have prove to sustain its charge of common law fraud.
Completed National Association of Securities Dealers Regulation, Inc. arbitration training in February of 1998. Training covered conflict of interest issues, managing the discovery process, deliberating specific types of motions, conducting hearings, and determining liability and awards.
Federal Agency Policies, Procedures, Operations, and Internal Controls – Especially Financial Institution Regulators And IRS
Acquired knowledge of federal agency policies, procedures, operations, and internal controls primarily from 18 years doing GAO audits and studies of many federal agencies and programs and from 13 years serving on the Executive Committee of the Chicago Chapter of the Association of Government Accountants (AGA). Knowledge of financial institution regulators acquired primarily from 9 years spent doing financial industry audits and studies as discussed above. Knowledge of IRS, especially its collection and criminal investigation activities, acquired primarily from 3 years doing GAO audits of IRS; from 9 years working for IRS; and from supporting casualty loss, educational, and other tax deductions.
As an AGA Chicago Chapter Executive Committee member between 1983 and 1996, gained broad exposure to many policies, procedures, operations, and internal controls used by the many federal agencies represented in the chapter’s membership and on the Chapter’s Executive Committee, including the Departments of Agriculture, Education, Health and Human Services, Housing and Urban Development, Labor, Transportation, and Treasury; Environmental Protection Agency; General Services Administration; Railroad Retirement Board; and the Veterans Administration.
As a GAO Evaluator-In-Charge during 1987 and 1988, developed an audit plan; gathered, assembled, and analyzed information; and developed recommendations to respond to request from the Joint Committee on Taxation to (1) review IRS’s Criminal Investigation Division’s (CID) program for investigating tax law violations involving income from legal sources, (2) identify the law enforcement results and tax revenues generated from program operations, and (3) recommend management improvements to enhance operations. Work included selecting a nationwide sample of 400 closed criminal cases and reviewing actions that CID as well as the Examination and Collection Divisions had taken. Audit work resulted in important recommendations which IRS agreed with and implemented to improve the timeliness of actions taken to assess and collect taxes on closed criminal cases. Listed as a major contributor in the report titled “Tax Administration — Reducing Delays in the Pursuit of Tax Revenue on Closed Criminal Cases” (GAO/GGD-89-41).
As a GAO Site Senior during 1986 and 1987, gathered, assembled, and analyzed information to respond to request from the Joint Committee on Taxation to review CID’s program for investigating tax law violations involving income from illegal sources, identify the law enforcement results and tax revenues generated from program operations, and recommend management improvements to enhance operations. Work included reviewing actions that CID as well as the Examination and Collection Divisions had taken on a nationwide sample of 720 closed criminal cases. Audit work resulted in important recommendations which IRS agreed with and implemented and were included in a report titled “Tax Administration — Investigating Illegal Income — Success Uncertain, Improvements Needed” (GAO/GGD-88-61).
As an IRS Special Procedures Staff Advisor between 1976 and 1980, conferred with IRS Attorneys, Revenue officers, Revenue Agents, and Special Agents as well as taxpayers and their representatives to resolve complex tax issues and determine a course of action designed to protect the Government’s interests and expedite payment of taxes due. Work included reviewing and recommending acceptance or rejection of requests to institute civil proceedings, large dollar accounts reported as uncollectible, transferee assessments, offers-in-compromise, and jeopardy assessments.
Personnel Management and Employment Issues
Knowledge of personnel management issues acquired primarily from extensive supervisory experience; from my work over the years in assisting federal managers, attorneys, and union officials in resolving employment disputes; and from my completing many university and GAO courses involving personnel management and employment issues. Personnel management was both my undergraduate major and MBA area of concentration.
Consumer Issues
Knowledge of consumer issues acquired primarily from assisting attorneys over the years in pursuing consumer litigation filed in state and federal courts involving various matters including the validity of an arbitration clause, construction of a new home, and purchase of automobiles as well as charges of breach of contract, failure to honor warranty, and fraud. Experience includes oral arguments before appeals courts and petitions to the Illinois and U.S. Supreme Courts. Member of the Better Business Bureau, Consumers Union, and HALT.
Appeals of Residential Assessed Valuations
Knowledge of appeals of residential assessed valuations acquired primarily from obtaining engineering reports, repair estimates, and appraisals and presenting such evidence to township assessors, county boards of review, and state property tax appeal boards as well as to state circuit and appeals courts to obtain reductions. Completed IRS and graduate courses in real estate appraisal.
Local Public Policy Advocacy
Knowledge of local public policy advocacy acquired primarily from assisting local public interest groups in presenting their positions to elected city and county officials and to the news media. Work included developing strategy, drafting letters to government officials and newspaper editors, obtaining signatures on petitions, and speaking at county board meetings.