FROM: THE WHITE HOUSE
Joint Statement by the Leaders of Japan and the United States on Contributions to Global Minimization of Nuclear Material
Recalling the history of Japan-U.S. bilateral collaboration on advanced nuclear activities as well as the International Atomic Energy Agency’s (IAEA) conclusion that all nuclear materials in Japan stay in peaceful activities;
Recalling Japan-U.S. cooperation including through the Global Threat Reduction Initiative (GTRI) which strengthened nuclear security worldwide by reducing sensitive nuclear material in Japan and other countries and securely transporting the material to the United States; and,
Recalling President Obama’s remarks at Hradcany Square, Prague, Czech Republic on April 5, 2009;
Japan and the United States reaffirm our determination to strengthen nuclear security and to further cooperate, through activities such as our bilateral Nuclear Security Working Group and the GTRI, toward our mutual goal of preventing nuclear terrorism.
Today in The Hague, the Netherlands, on the occasion of the third Nuclear Security Summit, Prime Minister Abe and President Obama pledged to remove and dispose all highly-enriched uranium (HEU) and separated plutonium from the Fast Critical Assembly (FCA) at the Japan Atomic Energy Agency (JAEA) in Japan. This effort involves the elimination of hundreds of kilograms of nuclear material, furthering our mutual goal of minimizing stocks of HEU and separated plutonium worldwide, which will help prevent unauthorized actors, criminals, or terrorists from acquiring such materials. This material, once securely transported to the United States, will be sent to a secure facility and fully converted into less sensitive forms. The plutonium will be prepared for final disposition. The HEU will be downblended to low enriched uranium (LEU) and utilized for civilian purposes.
By committing to remove and dispose all HEU and separated plutonium from the FCA, Japan and the United States reaffirm our belief that the most cutting edge sciences do not necessarily require the use of the most proliferation sensitive materials. In this context, our two countries plan to work together to design new enhancements to the FCA, expanding the facility’s scope to include important research on the transmutation and disposition of nuclear waste. Additionally, to ensure that Japan can safely and securely further its important work on nuclear research and medical isotope production, the United States will continue to accept research reactor spent fuel from several Japanese facilities that utilize LEU.
This pledge complements the significant role that both Japan and the United States are playing in finding new ways to continue improving global nuclear security. Many of the remaining gains that the international community can make in this area will require difficult decisions, and Japan has demonstrated its leadership by resolving to remove all special nuclear material from the FCA, consistent with all Summit Communiqués’ spirit to minimize stocks of nuclear material. Our two countries encourage others to consider what they can do to further HEU and plutonium minimization.
Monday, March 24, 2014
REMARKS: PRESIDENT OBAMA AND PRIME MINISTER RUTTE OF THE NETHERLANDS
FROM: THE WHITE HOUSE
Remarks by President Obama and Prime Minister Rutte of the Netherlands After Bilateral Meeting
Gallery of Honor
The Rijksmuseum
Amsterdam, The Netherlands
The Rijksmuseum
Amsterdam, The Netherlands
10:49 A.M. CET
PRIME MINISTER RUTTE: Ladies and gentlemen, welcome to the Netherlands. Welcome to Amsterdam. And, Barack, welcome to this very special location.
We are standing here on historic grounds, surrounded by the finest paintings that Holland has produced and only a stone’s throw away from the house of John Adams, the first American ambassador to the Netherlands and second President of the United States. It’s a location that symbolizes the enduring partnership between the U.S. and the Netherlands. Our shared history and heritage go back a long way.
As an historian, it was a special moment for me when earlier this morning I was able to show President Obama two original documents from our National Archives that played an important role in the age-old friendship between our two countries. The first was our own Declaration of Independence, the Plakkaat van Verlatinghe of 1581, which inspired Thomas Jefferson and his peers. The second was the American-Dutch Treaty of Amity and Commerce of 1782, another remarkable document from an age when peace between countries was usually a heartfelt affair. And today, friendship is still at the heart of the relationship between the United States and the Netherlands, along with trade, shared values, and joint responsibilities.
Since that first treaty we have worked together in the growing awareness that economic prosperity, a safe and stable world and international cooperation go hand in hand. With this in mind, the President and I talked about a wide range of subjects, starting with a joint climate initiative and the new steps we will take today in that regard. The Netherlands is joining with the United States and a group of other countries in a bid to stop international public funding of new coal-fired power plants, for example, by multilateral development banks. We want to achieve an international level playing field to ensure that private and public parties invest in green growth wherever possible.
We also discussed the important topic of the Transatlantic Investment Partnership between the EU and U.S. Once concluded, this agreement will create more economic growth and jobs on both sides of the Atlantic. Importantly, it will set new standards that will benefit global trade and third countries as well. This partnership will bolster our excellent bilateral economic ties even further.
During our conversation I stressed how much we value this partnership. The Netherlands is the world’s third largest investor in the United States and we are home to some 1,800 American businesses.
And of course, we also spoke about the major international security issues in Syria, Iran and Ukraine. Concerning the last, we both regard Russia’s attempts to annex the Crimea as a flagrant breach of international law and we condemn its actions in the strongest possible terms. The presence of so many world leaders in the Netherlands this week presents an important opportunity for the international community to discuss this subject, as well as other pressing issues that affect our common interests.
Finally, we looked ahead at the Nuclear Security Summit today and tomorrow. President Obama deserves all the credit for getting this topic high on the agenda. In 2010, Washington hosted the first summit on this seat. In 2012, it was Seoul’s turn. And now the Netherlands is proud to host the summit today and tomorrow in The Hague that will bring us closer to the goal of securing potentially dangerous nuclear material.
Barack, your presence underlines the importance of the summit, and this event, too, demonstrates the strength of the bilateral ties between our countries and of our joint commitment to peace, security and democracy. I’m delighted to be able to hear from you publicly here at this splendid location.
Again, thank you for coming.
PRESIDENT OBAMA: Mark, thank you. And it is a splendid location. I’m so grateful for your kind words. We were very pleased to welcome you back in 2011 to the White House, and I appreciate your warm welcome today. This is my first visit to Amsterdam and to The Hague and to the Netherlands, and I’m so pleased that I’ve had a chance already to meet some wonderful students. I want to thank the Mayor and the curator for their hospitality as well. I’m proud to be with some of the Dutch masters who I studied in school, and to see just the extraordinary traditions of this great country.
I’d be remiss if I did not mention that I’m proud of both of our teams at the Olympics. So in addition to painting, you really know how to speed skate. (Laughter.)
As the Prime Minister said, we just had an excellent opportunity to experience the museum and to see those documents, including the Treaty of Friendship that John Adams negotiated more than 200 years ago, as a reminder of the historic ties between our countries. And this is -- of all the press conferences I’ve done, this is easily the most impressive backdrop that I’ve had to a press conference.
Of course, we’re here for our third Nuclear Security Summit. And I want to thank His Majesty, King Willem-Alexander, as well as Mark, the people of the Netherlands, for all the preparations that go into bringing together so many heads of state. This is just one more example of Dutch leadership -- not just on nuclear security, but on many global challenges.
As you know, the Netherlands is one of our closest allies, and our cooperation underscores a larger point -- our NATO allies are our closest partners on the world stage. Europe is the cornerstone of America’s engagement with the world. And today we focused on several priorities -- in Europe and beyond.
First, we obviously spent a considerable amount of time on the situation in Ukraine. Europe and America are united in our support of the Ukrainian government and the Ukrainian people. We’re united in imposing a cost on Russia for its actions so far. Prime Minister Rutte rightly pointed out yesterday the growing sanctions would bring significant consequences to the Russian economy. And I’ll be meeting with my fellow G7 leaders later today, and we’ll continue to coordinate closely with the Netherlands and our European partners as we go forward.
Second, I thanked the Prime Minister for the Netherlands’ strong commitment and contributions to NATO. Dutch forces have served with distinction in Afghanistan and joined us in confronting piracy off the Horn of Africa. Through NATO, the Netherlands contributed to the deployment of Patriot air batteries in Turkey and are making important investments in NATO defense capabilities. Dutch forces are also making critical contributions to the international stabilization mission in Mali. So, across the board, the Dutch are making their presence felt in a very positive way, and we’re very grateful for that.
Third, we discussed how we can keep expanding the trade that creates jobs for our people. We’re already among each other’s largest trade and investment partners, but we can always do more. And so I appreciated the Netherlands’ strong support for the Transatlantic Trade and Investment Partnership, or T-TIP, which can fuel growth both in the United States and in Europe, especially for our small and medium-sized companies.
Fourth, we discussed a range of global challenges. And as the United States and the P5-plus-1 partners continue negotiations with Iran, we have the basis for a practical solution that resolves concerns over Iran’s nuclear program. But at the same time, I think it’s important that everyone remember during these negotiations we’ll continue to enforce the overall sanctions architecture that helped bring Iran to the table in the first place.
I also wanted to commend the Netherlands for its leadership in the international effort to destroy Syria’s chemical weapons, and that includes your role as the host of the Organization for the Prohibition of Chemical Weapons. And more broadly, our two countries are going to keep working together to deliver humanitarian assistance to the Syrian people.
And, finally, we reaffirmed our shared determination to confront climate change and its effects, including rising sea levels, which obviously is something that the Netherlands is concerned about, given your experience with seas and tides. We’re pleased that the Netherlands has joined our initiative that will virtually end all public financing for coal-fired plants abroad. It’s concrete action like this that can keep making progress on reducing emissions while we develop new global agreements on climate change.
So, a final note. When John Adams was negotiating the treaty that we saw earlier, he wrote that the Dutch have -- and I’m quoting here -- have always “distinguished themselves by an inviolable attachment to freedom and the rights of nations.” That was true then; it remains true today.
So, Mark, I want to thank you and the Dutch for your hospitality, for your organization, for your partnership and for your leadership on the world stage. And I want to thank you for sharing these extraordinary paintings with me this morning.
Dank u wel. Thank you. (Applause.)
END
11:00 A.M. CET
11:00 A.M. CET
ADVANCING GLOBAL NUCLEAR SECURITY FACT SHEET
FROM: THE WHITE HOUSE
FACT SHEET: Advancing Global Nuclear Security
In 2009, President Obama launched an ambitious global agenda to prevent nuclear materials from falling into the wrong hands. During his visit to Prague, the President called on the international community to prevent terrorists from getting access to the building blocks needed for a nuclear bomb by putting an end to dedicated production of weapons-grade materials and securing all of the world’s vulnerable nuclear material within four years. He urged countries to lock down sensitive materials, break up black markets, detect and intercept materials in transit, and use financial tools to disrupt their trade.
Translating ambition into action, the President convened an unprecedented Nuclear Security Summit in Washington, DC in 2010. Forty seven countries from every region in the world committed to work together to ensure that nuclear materials could not be sold or stolen and fashioned into nuclear weapons.
The stakes are high and the threat is real. The danger of nuclear terrorism is one of the greatest threats to our collective security. The hardest part of making a nuclear weapon is getting the material. Even a small amount of nuclear material could kill and injure hundreds of thousands of innocent people. Terrorist networks could acquire the materials to assemble their own nuclear weapon, wreaking havoc on global peace and stability, and resulting in extraordinary loss of life and global economic damage.
Since 2009, the world has made substantial progress. The United Nations Security Council unanimously adopted Resolution 1887, endorsing a comprehensive agenda to secure all nuclear materials. Individual countries have taken specific and concrete actions to secure nuclear materials in their countries and to prevent illicit trafficking and smuggling. The world has worked to strengthen the International Atomic Energy Agency (IAEA) and to ensure it has the resources and authorities it needs to meet its responsibilities. And we have worked to build the Global Initiative to Combat Nuclear Terrorism into a durable international institution.
Earlier this year, the United States and Russia completed implementation of the 1993 U.S.-Russia Highly Enriched Uranium Purchase Agreement, one of the most successful non-proliferation programs in our history. Low-enriched uranium derived from 500 metric tons of highly enriched uranium blended down from 20,000 Russian nuclear warheads, became fuel for U.S. nuclear power reactors. The program supplied nearly ten percent of all U.S. electricity over the last fifteen years. Since 2010, the U.S. has also blended down 24 MT of excess Highly Enriched Uranium (HEU) from our own weapons program, and assisted in removing or confirming the disposition of over 2400 kilograms of HEU and plutonium from other countries.
Through the Summit process, we have established a global network of experts who work on nuclear security at senior levels in 53 governments and multiple international organizations. We have expanded bilateral cooperation on nuclear security with dozens of countries worldwide. And the trends we’re seeing are very positive:
The number of countries and facilities with HEU and plutonium is decreasing:
Twelve countries have completely eliminated HEU or separated plutonium from within their borders.
Twenty seven countries removed or disposed of nearly 3000 kilograms of HEU and separated plutonium.
Twenty four HEU nuclear reactors in 14 countries were successfully converted to Low Enriched Uranium (LEU) fuel use or verified as shut down.
Security at storage sites is increasing:
The United States has helped secure 218 buildings in 5 countries storing weapons-usable nuclear materials through physical security upgrades.
We responded effectively to security issues at the Y-12 HEU site in Tennessee and are applying those lessons throughout our nuclear complex.
More countries are prepared to counter nuclear smuggling:
The United States is working with 20 countries to enhance their ability to detect, interdict, attribute and prosecute nuclear smugglers.
260 sites and ports have been equipped with radiation detection systems, and 41 mobile radiation detection cans have been deployed to internal checkpoints in 15 partner countries.
We are providing training to U.S. and partner nation officials in law enforcement, customs, and border security.
More countries are seeking international advice:
The United States hosted its first-ever international advisory security review in October 2013.
Twelve other countries have requested international advisory reviews since the first Summit.
The nuclear security architecture is stronger:
Over two dozen countries have ratified the key nuclear security treaties since the 2010 Summit. The United States continues to pursue ratification of these critical instruments.
The IAEA’s nuclear security team has been elevated and better funded, and has a more rigorous standards development process.
INTERPOL’s radnuke support team has been enhanced.
The United States is committed to continuing its leadership on this vitally important issue. With our allies and partners, we will continue to work to put in place a strong and sustainable global nuclear security architecture designed to reduce the dangers of nuclear weapons and nuclear terrorism while allowing countries to more safely and effectively pursue peaceful uses of nuclear energy.
We have fulfilled our commitments, improved security at our facilities, and forged new partnerships. We have removed nuclear materials, and in some cases gotten rid of them entirely. As a result, more of the world’s nuclear materials can never fall into the hands of terrorists who would use them against us. While there is much more to be done, we should be proud of all that we have achieved since the first Summit in 2010, and seize this opportunity to move that progress forward.
FACT SHEET: Advancing Global Nuclear Security
In 2009, President Obama launched an ambitious global agenda to prevent nuclear materials from falling into the wrong hands. During his visit to Prague, the President called on the international community to prevent terrorists from getting access to the building blocks needed for a nuclear bomb by putting an end to dedicated production of weapons-grade materials and securing all of the world’s vulnerable nuclear material within four years. He urged countries to lock down sensitive materials, break up black markets, detect and intercept materials in transit, and use financial tools to disrupt their trade.
Translating ambition into action, the President convened an unprecedented Nuclear Security Summit in Washington, DC in 2010. Forty seven countries from every region in the world committed to work together to ensure that nuclear materials could not be sold or stolen and fashioned into nuclear weapons.
The stakes are high and the threat is real. The danger of nuclear terrorism is one of the greatest threats to our collective security. The hardest part of making a nuclear weapon is getting the material. Even a small amount of nuclear material could kill and injure hundreds of thousands of innocent people. Terrorist networks could acquire the materials to assemble their own nuclear weapon, wreaking havoc on global peace and stability, and resulting in extraordinary loss of life and global economic damage.
Since 2009, the world has made substantial progress. The United Nations Security Council unanimously adopted Resolution 1887, endorsing a comprehensive agenda to secure all nuclear materials. Individual countries have taken specific and concrete actions to secure nuclear materials in their countries and to prevent illicit trafficking and smuggling. The world has worked to strengthen the International Atomic Energy Agency (IAEA) and to ensure it has the resources and authorities it needs to meet its responsibilities. And we have worked to build the Global Initiative to Combat Nuclear Terrorism into a durable international institution.
Earlier this year, the United States and Russia completed implementation of the 1993 U.S.-Russia Highly Enriched Uranium Purchase Agreement, one of the most successful non-proliferation programs in our history. Low-enriched uranium derived from 500 metric tons of highly enriched uranium blended down from 20,000 Russian nuclear warheads, became fuel for U.S. nuclear power reactors. The program supplied nearly ten percent of all U.S. electricity over the last fifteen years. Since 2010, the U.S. has also blended down 24 MT of excess Highly Enriched Uranium (HEU) from our own weapons program, and assisted in removing or confirming the disposition of over 2400 kilograms of HEU and plutonium from other countries.
Through the Summit process, we have established a global network of experts who work on nuclear security at senior levels in 53 governments and multiple international organizations. We have expanded bilateral cooperation on nuclear security with dozens of countries worldwide. And the trends we’re seeing are very positive:
The number of countries and facilities with HEU and plutonium is decreasing:
Twelve countries have completely eliminated HEU or separated plutonium from within their borders.
Twenty seven countries removed or disposed of nearly 3000 kilograms of HEU and separated plutonium.
Twenty four HEU nuclear reactors in 14 countries were successfully converted to Low Enriched Uranium (LEU) fuel use or verified as shut down.
Security at storage sites is increasing:
The United States has helped secure 218 buildings in 5 countries storing weapons-usable nuclear materials through physical security upgrades.
We responded effectively to security issues at the Y-12 HEU site in Tennessee and are applying those lessons throughout our nuclear complex.
More countries are prepared to counter nuclear smuggling:
The United States is working with 20 countries to enhance their ability to detect, interdict, attribute and prosecute nuclear smugglers.
260 sites and ports have been equipped with radiation detection systems, and 41 mobile radiation detection cans have been deployed to internal checkpoints in 15 partner countries.
We are providing training to U.S. and partner nation officials in law enforcement, customs, and border security.
More countries are seeking international advice:
The United States hosted its first-ever international advisory security review in October 2013.
Twelve other countries have requested international advisory reviews since the first Summit.
The nuclear security architecture is stronger:
Over two dozen countries have ratified the key nuclear security treaties since the 2010 Summit. The United States continues to pursue ratification of these critical instruments.
The IAEA’s nuclear security team has been elevated and better funded, and has a more rigorous standards development process.
INTERPOL’s radnuke support team has been enhanced.
The United States is committed to continuing its leadership on this vitally important issue. With our allies and partners, we will continue to work to put in place a strong and sustainable global nuclear security architecture designed to reduce the dangers of nuclear weapons and nuclear terrorism while allowing countries to more safely and effectively pursue peaceful uses of nuclear energy.
We have fulfilled our commitments, improved security at our facilities, and forged new partnerships. We have removed nuclear materials, and in some cases gotten rid of them entirely. As a result, more of the world’s nuclear materials can never fall into the hands of terrorists who would use them against us. While there is much more to be done, we should be proud of all that we have achieved since the first Summit in 2010, and seize this opportunity to move that progress forward.
U.S. CONTINUES SEARCH FOR FLIGHT 370 WITH TOWED PINGER LOCATOR 25
FROM: U.S. DEFENSE DEPARTMENT
Navy Prepares Black Box Locator for Flight 370 Search
From a U.S. 7th Fleet News Release
PHILIPPINE SEA, March 24, 2014 – U.S. Pacific Command has ordered U.S. Pacific Fleet to move a black box locator into the region where searchers are continuing efforts to locate Malaysia Airlines Flight 370, which disappeared March 8 shortly after leaving Kuala Lumpur, Malaysia, bound for Beijing.
Officials said the order is a precautionary measure in case a debris field is located.
If a debris field is confirmed, officials added, the Navy's Towed Pinger Locator 25 will add a significant advantage in locating the missing aircraft's black box.
"In the event a debris field is located, we're moving some specialized locator equipment into the area,” said Navy Cmdr. Chris Budde, U.S. 7th Fleet operations officer. “The Towed Pinger Locator has some highly sensitive listening capability so that if the wreck site is located, we can hear the black box pinger down to a depth of about 20,000 feet. Basically, this super-sensitive hydrophone gets towed behind a commercial vessel very slowly and listens for black box pings.
"This movement is simply a prudent effort to pre-position equipment and trained personnel closer to the search area,” he continued, “so that if debris is found, we will be able to respond as quickly as possible, since the battery life of the black box's pinger is limited."
If found, the acoustic signal of the pinger is transmitted up the cable and is presented audibly, and can be output to either an oscilloscope or a signal processing computer, 7th Fleet officials explained. The operator monitors the greatest signal strength and records the navigation coordinates. This procedure is repeated on multiple track lines until the final position is triangulated.
Navy Prepares Black Box Locator for Flight 370 Search
From a U.S. 7th Fleet News Release
PHILIPPINE SEA, March 24, 2014 – U.S. Pacific Command has ordered U.S. Pacific Fleet to move a black box locator into the region where searchers are continuing efforts to locate Malaysia Airlines Flight 370, which disappeared March 8 shortly after leaving Kuala Lumpur, Malaysia, bound for Beijing.
Officials said the order is a precautionary measure in case a debris field is located.
If a debris field is confirmed, officials added, the Navy's Towed Pinger Locator 25 will add a significant advantage in locating the missing aircraft's black box.
"In the event a debris field is located, we're moving some specialized locator equipment into the area,” said Navy Cmdr. Chris Budde, U.S. 7th Fleet operations officer. “The Towed Pinger Locator has some highly sensitive listening capability so that if the wreck site is located, we can hear the black box pinger down to a depth of about 20,000 feet. Basically, this super-sensitive hydrophone gets towed behind a commercial vessel very slowly and listens for black box pings.
"This movement is simply a prudent effort to pre-position equipment and trained personnel closer to the search area,” he continued, “so that if debris is found, we will be able to respond as quickly as possible, since the battery life of the black box's pinger is limited."
If found, the acoustic signal of the pinger is transmitted up the cable and is presented audibly, and can be output to either an oscilloscope or a signal processing computer, 7th Fleet officials explained. The operator monitors the greatest signal strength and records the navigation coordinates. This procedure is repeated on multiple track lines until the final position is triangulated.
LABOR DEPARTMENT REMINDER REGARDING SAFETY AS SURFACE MINES REOPEN
As Mines Reopen for Spring, Think Safety
by BRIAN GOEPFERT on MARCH 18, 2014
The arrival of spring means it’s time for hundreds of surface mines to reopen after the winter freeze. It’s a busy but potentially dangerous period, as miners return to work and prepare equipment for the new season. There’s no better time to brush up on safety procedures that can carry mining operations through the summer.
Of the 12,000 metal and nonmetal mines overseen by the Mine Safety and Health Administration, nearly half – 5,800 – are operated on an intermittent basis, closing in the winter months when snow and freezing temperatures make operations difficult or impossible. Most of these intermittent mines are crushed stone operations, primarily sand and gravel pits, but they also include limestone, granite and other stone operations.
According to MSHA data, injuries at these aggregate mines typically climb sharply in the spring, then drop in the fall to a mid-winter low, as shown by the chart below.
Through the past decade, overall injury rates have been reduced, but the pattern of increases in the spring remains. MSHA reminds all miners and mine operators to review the safety information at www.msha.gov, particularly this page for metal and nonmetal mines, and attend spring safety workshops if any are offered in your area.
For more information about how to stay safe, and to find out whether spring safety workshops are planned in your area, please contact the nearest district office, which can be found here.
Brian Goepfert is the safety division chief for metal and nonmetal mines within the Mine Safety and Health Administration.
FOREX COMMODITY POOL OPERATOR CHARGED WITH FRAUD, MISAPPROPRIATION, AND REGISTRATION VIOLATIONS
FROM: COMMODITY FUTURES TRADING COMMISSION
CFTC Charges Dallas-based Steven Lyn Scott with Solicitation Fraud, Misappropriation, and Registration Violations in Connection with a Forex Commodity Pool Scheme
Washington, DC The U.S. Commodity Futures Trading Commission (CFTC) filed an enforcement action March 19, 2014 against Defendant Steven Lyn Scott (a/k/a Stevon Lyn Scott) of Dallas, Texas, charging him with solicitation fraud, misappropriation of customer funds, and registration violations in connection with operating a fraudulent commodity pool scheme.
According to the CFTC Complaint, from at least January 5, 2009 and through at least March 30, 2011, Scott fraudulently solicited at least $1,146,000 from at least 43 pool participants to participate in pooled investment vehicles to trade in off-exchange agreements, contracts, or transactions in foreign currency (forex) on a leveraged or margined basis. Scott, directly and by word of mouth, allegedly solicited pool participants located in Texas and solicited at least some pool participants by email. Pool participants allegedly included Scott’s friends, family members, and other members of the general public.
Specifically, according to the Complaint, Scott solicited pool participants to participate in pooled investment vehicles in the name of an entity he owned and controlled, Stewardship Financial Exchange, Inc. In his solicitations, Scott allegedly guaranteed monthly returns between two percent and five percent to pool participants who entered into six-month contracts, purportedly generating such returns by pooling participants’ funds and trading in off-exchange forex transactions on a leveraged or margined basis.
However, instead of trading pool participants’ funds, Scott initially directly misappropriated 50 percent of pool participants’ funds by depositing their funds into his personal and corporate bank accounts, and then using the funds for personal expenses, the Complaint alleges. Scott then subsequently misappropriated the remaining funds throughout the relevant period by trading them in his personal trading accounts.
In soliciting actual and prospective customers, Scott allegedly omitted material facts, including but not limited to (1) that he failed to trade pool participants’ funds as promised, 2) that he misappropriated pool participants’ funds, (3) that he did not generate the monthly “profits” guaranteed to pool participants, and (4) that he was acting as a Commodity Pool Operator without being registered as such, as required by the Commodity Exchange Act and CFTC Regulations. Scott’s omissions were material and operated as a fraud or deceit upon pool participates, according to the Complaint.
In its continuing litigation against Scott, the CFTC seeks civil monetary penalties, restitution, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the federal commodities laws, as charged.
The CFTC thanks the Office of the U.S. Attorney for the Northern District of Texas for its assistance in this matter.
CFTC Division of Enforcement staff responsible for this case are Jason Mahoney, Michael Amakor, George Malas, Timothy J. Mulreany, and Paul Hayeck.
CFTC Charges Dallas-based Steven Lyn Scott with Solicitation Fraud, Misappropriation, and Registration Violations in Connection with a Forex Commodity Pool Scheme
Washington, DC The U.S. Commodity Futures Trading Commission (CFTC) filed an enforcement action March 19, 2014 against Defendant Steven Lyn Scott (a/k/a Stevon Lyn Scott) of Dallas, Texas, charging him with solicitation fraud, misappropriation of customer funds, and registration violations in connection with operating a fraudulent commodity pool scheme.
According to the CFTC Complaint, from at least January 5, 2009 and through at least March 30, 2011, Scott fraudulently solicited at least $1,146,000 from at least 43 pool participants to participate in pooled investment vehicles to trade in off-exchange agreements, contracts, or transactions in foreign currency (forex) on a leveraged or margined basis. Scott, directly and by word of mouth, allegedly solicited pool participants located in Texas and solicited at least some pool participants by email. Pool participants allegedly included Scott’s friends, family members, and other members of the general public.
Specifically, according to the Complaint, Scott solicited pool participants to participate in pooled investment vehicles in the name of an entity he owned and controlled, Stewardship Financial Exchange, Inc. In his solicitations, Scott allegedly guaranteed monthly returns between two percent and five percent to pool participants who entered into six-month contracts, purportedly generating such returns by pooling participants’ funds and trading in off-exchange forex transactions on a leveraged or margined basis.
However, instead of trading pool participants’ funds, Scott initially directly misappropriated 50 percent of pool participants’ funds by depositing their funds into his personal and corporate bank accounts, and then using the funds for personal expenses, the Complaint alleges. Scott then subsequently misappropriated the remaining funds throughout the relevant period by trading them in his personal trading accounts.
In soliciting actual and prospective customers, Scott allegedly omitted material facts, including but not limited to (1) that he failed to trade pool participants’ funds as promised, 2) that he misappropriated pool participants’ funds, (3) that he did not generate the monthly “profits” guaranteed to pool participants, and (4) that he was acting as a Commodity Pool Operator without being registered as such, as required by the Commodity Exchange Act and CFTC Regulations. Scott’s omissions were material and operated as a fraud or deceit upon pool participates, according to the Complaint.
In its continuing litigation against Scott, the CFTC seeks civil monetary penalties, restitution, disgorgement of ill-gotten gains, trading and registration bans, and a permanent injunction against further violations of the federal commodities laws, as charged.
The CFTC thanks the Office of the U.S. Attorney for the Northern District of Texas for its assistance in this matter.
CFTC Division of Enforcement staff responsible for this case are Jason Mahoney, Michael Amakor, George Malas, Timothy J. Mulreany, and Paul Hayeck.
VIRTUAL CHARTER SCHOOL ENTERS AGREEMENT TO COMPLY WITH AMERICANS WITH DISABILITY ACT
FROM: U.S. EDUCATION DEPARTMENT
U.S. Department of Education Announces Resolution of South Carolina Virtual Charter Schools Civil Rights Investigation
MARCH 20, 2014
Contact: Press Office, (202) 401-1576, press@ed.gov
The U.S. Department of Education announced today that its Office for Civil Rights (OCR) has entered into an agreement with South Carolina Charter School District to ensure compliance with Section 504 of the Rehabilitation Act of 1972 and Title II of the Americans with Disabilities Act for students with disabilities in the District.
OCR initiated a compliance review in 2013 to assess whether the seven Internet-based public charter schools that serve more than 8,700 students who live throughout the state of South Carolina provide equal access to persons with disabilities, including students and parents. Specifically, OCR's investigation sought to determine whether persons with disabilities had an equal opportunity to access each school's website and online learning environment.
"All persons—with and without disabilities—must be able to obtain school information on a full, equal and independent basis. This agreement will ensure that persons with disabilities are afforded equal access to the District's internet-based public charter schools and any future District schools that will provide all or a portion of instruction via the internet," said Catherine E. Lhamon, Assistant Secretary for Civil Rights. "I commend the South Carolina Charter School District for addressing these issues as part of its agreement with OCR."
OCR determined that the schools' websites and online learning environments were not readily accessible to persons with disabilities, including those who required assistive technology to access the Internet. The most frequent concerns were lack of alternative text attributes on buttons, especially on video controls; lack of synchronized captioning; inaccessible PDFs; and animations that were not fully labeled. Additionally, some materials provided by third party vendors were inaccessible. These problems prevent persons with disabilities, particularly those with visual, hearing, or manual impairments, or who otherwise require the use of assistive technology to access the website or the online learning environment in an equally effective and equally integrated manner as persons without a disability.
South Carolina Charter School District is the local educational agency for 24 charter schools in South Carolina. Seven of these schools are Internet-based and deliver instruction completely online. These schools include Palmetto State e-Cademy, Provost Academy South Carolina, South Carolina Virtual Charter School, South Carolina Calvert Academy, South Carolina Connections Academy, South Carolina Whitmore School, and Cyber Academy of South Carolina.
Under the agreement, the District will ensure that all websites and on-line learning environments are accessible to persons with disabilities, including those who use assistive technology to access the internet. The agreement provides that:
The District will create a web accessibility committee to direct resources and provide technical assistance as schools work to ensure web accessibility.
The District will develop and implement an accessibility policy that requires all schools that provide instruction via the internet to be readily accessible and useable.
Each school will develop and implement a detailed accessibility plan to ensure that all programs and activities meet the standards in the accessibility policy, including recruiting material, online textbooks, mobile applications, testing, resources for parent/guardians, and audio and video recording recasts.
Each school will regularly complete an accessibility report that measures the school's compliance with the accessibility policy and will submit audit reports annually that describe steps taken to maintain the website's accessibility, as well as steps taken to ensure that new programs and content are accessible.
The District will develop and provide training on how to ensure accessible web design and implementation.
The District will certify to OCR that the District meets the requirements of the accessibility policy.
OCR will closely monitor the District's implementation of the agreement.
U.S. Department of Education Announces Resolution of South Carolina Virtual Charter Schools Civil Rights Investigation
MARCH 20, 2014
Contact: Press Office, (202) 401-1576, press@ed.gov
The U.S. Department of Education announced today that its Office for Civil Rights (OCR) has entered into an agreement with South Carolina Charter School District to ensure compliance with Section 504 of the Rehabilitation Act of 1972 and Title II of the Americans with Disabilities Act for students with disabilities in the District.
OCR initiated a compliance review in 2013 to assess whether the seven Internet-based public charter schools that serve more than 8,700 students who live throughout the state of South Carolina provide equal access to persons with disabilities, including students and parents. Specifically, OCR's investigation sought to determine whether persons with disabilities had an equal opportunity to access each school's website and online learning environment.
"All persons—with and without disabilities—must be able to obtain school information on a full, equal and independent basis. This agreement will ensure that persons with disabilities are afforded equal access to the District's internet-based public charter schools and any future District schools that will provide all or a portion of instruction via the internet," said Catherine E. Lhamon, Assistant Secretary for Civil Rights. "I commend the South Carolina Charter School District for addressing these issues as part of its agreement with OCR."
OCR determined that the schools' websites and online learning environments were not readily accessible to persons with disabilities, including those who required assistive technology to access the Internet. The most frequent concerns were lack of alternative text attributes on buttons, especially on video controls; lack of synchronized captioning; inaccessible PDFs; and animations that were not fully labeled. Additionally, some materials provided by third party vendors were inaccessible. These problems prevent persons with disabilities, particularly those with visual, hearing, or manual impairments, or who otherwise require the use of assistive technology to access the website or the online learning environment in an equally effective and equally integrated manner as persons without a disability.
South Carolina Charter School District is the local educational agency for 24 charter schools in South Carolina. Seven of these schools are Internet-based and deliver instruction completely online. These schools include Palmetto State e-Cademy, Provost Academy South Carolina, South Carolina Virtual Charter School, South Carolina Calvert Academy, South Carolina Connections Academy, South Carolina Whitmore School, and Cyber Academy of South Carolina.
Under the agreement, the District will ensure that all websites and on-line learning environments are accessible to persons with disabilities, including those who use assistive technology to access the internet. The agreement provides that:
The District will create a web accessibility committee to direct resources and provide technical assistance as schools work to ensure web accessibility.
The District will develop and implement an accessibility policy that requires all schools that provide instruction via the internet to be readily accessible and useable.
Each school will develop and implement a detailed accessibility plan to ensure that all programs and activities meet the standards in the accessibility policy, including recruiting material, online textbooks, mobile applications, testing, resources for parent/guardians, and audio and video recording recasts.
Each school will regularly complete an accessibility report that measures the school's compliance with the accessibility policy and will submit audit reports annually that describe steps taken to maintain the website's accessibility, as well as steps taken to ensure that new programs and content are accessible.
The District will develop and provide training on how to ensure accessible web design and implementation.
The District will certify to OCR that the District meets the requirements of the accessibility policy.
OCR will closely monitor the District's implementation of the agreement.
STEMGenetics CURRICULUM WOKRS TO IMPROVE STUDENTS' UNDERSTANDING OF RELEVANCE OF GENETICS
Hooked on STEMGenetics
Genetics curriculum blends teacher-led discussion, online learning and hands-on activities
The study of genetics may not be typical in a fifth-grade classroom. But fifth-, seventh- and ninth-graders are benefiting from an innovative curriculum that combines teacher-led discussion, online learning and hands-on activities to broaden students' understanding of how genetic information moves from one generation to the next.
STEMGenetics was developed by Michelle Williams, an associate professor of science education at Michigan State University and Angela DeBarger, a senior research scientist at SRI International.
Now in the third year of a five-year National Science Foundation (NSF) grant, STEMGenetics focuses on familiarizing students with grade appropriate genetics concepts, assessing their grasp of the concepts and providing professional development for teachers involved in the program.
Williams says she and DeBarger chose genetics because "it's an important topic to society and is personally relevant to people in their everyday lives, even young children." She adds that when it comes to genetics "many students have an array of ideas that are not scientifically accurate. By starting early on, we have an opportunity to build a more coherent understanding of the subject."
The project currently serves almost 2,000 students in nine schools in East Lansing, Mich., and Cedar Hills, Texas.
Over five weeks, each grade tackles a series of "motivating questions" such as "How do plants in the same species vary?" or "How do we breed rice plants for high nutrition?" As teachers guide students through the material, they introduce hands-on activities such as planting seeds and crossing different parent plants.
"These activities stimulate a lot of great conversation," says veteran teacher Rob Voigt. Much of the discussion grows from students making predictions and drawing conclusions about genetic information.
To support classroom concepts, students also engage in online modules that may include a story related to the topic, short videos and interactive sections in which students examine data, reflect on it and input their responses in drop-down dialog boxes. Animal and plant breeding simulations help students visualize how genetic information combines to produce various types of offspring.
"This project demonstrates the value of bringing tools of scientific research to younger students," said NSF Program Director Julia Clark. "Having the opportunity to engage in scientific thinking builds a great foundation for future study."
Collaborating on a curriculum
Developing the STEMGenetics content and supporting technology took a small village of scientists, teachers, technology developers and assessment experts. DeBarger and Williams co-designed the units with teachers from different schools and across grade levels. "We had content experts and mentor teachers look at the learning goals to decide which ones are learned best through an interactive model and which processes are appropriate to learn," says Williams. The teams then developed storyboards to convey the concepts so that programmers at SRI could build the simulations and other visuals for the units.
To package their material, Williams and DeBarger wanted a tool that would bring content to the classroom in a unique and effective way. They turned to the web-based inquiry science environment (WISE) developed at the University of California, Berkeley by Williams' former doctoral mentor Marcia Linn. Specifically designed to promote critical thinking skills, WISE has software tools to help students make and justify predictions, describe observations and develop conclusions supported with evidence.
"Students gain experience constructing a good argument and supporting it," says Williams. "A skill," she points out, "that is crucial not only in science, but across disciplines."
The reflection and writing opportunities also act as an assessment so that teachers can monitor student progress. Based on the answers students provide, teachers can encourage the class to think more deeply about a concept or adjust a lesson if students are struggling with a concept. Teachers track lesson adjustments and supply that information to Williams and DeBarger.
"We get data back each year from the teachers and refine the units over the summer," says DeBarger.
Supporting teachers
While technology enhances classroom activities, supporting teachers as they present scientific concepts is essential to the program.
"Teaching is a profession like medicine, and teachers like doctors must be constantly learning," says Amal Ibourk, a graduate student researcher with STEMGenetics. To assist teachers, STEMGenetics offers a robust professional development program that includes a summer workshop, after-school meetings to discuss program nuances, faculty mentors and co-teaching.
"Our goal is to help teachers build scientific practices and model them to the students," says Ibourk, herself a teacher. These practices include thinking deeply about a passage or critically about data. "If you start at a young age, these practices become a skill."
Fostering lifelong science learning
One of STEMGenetics' strengths is its ability to get students to link ideas in the real world with those in science.
"We want to encourage students to continue linking ideas in life with ideas in science," says Linn. "The goal is for everybody to keep learning science." However, achieving this goal is complicated as Linn notes, because "it's fairly common for people to stop learning science."
As the project moves forward, Williams and DeBarger will focus on two key directions: downward and outward. The team wants to apply what they've learned with middle- and high-school students to students in kindergarten through fourth grade.
"So much that goes on in K-4 helps prepare them for the upper grades," Williams says. "We have a nice opportunity to go downward and enhance other areas of biology."
To raise awareness among policymakers, Williams has been meeting with both state and federal legislators, encouraging them to visit classrooms and see how students and teachers are engaging in science.
"Getting people in the classroom really changes their view about science," says Linn. Adds Williams, "I really want policymakers to see kids excited [about science] and to interact with them. It's crucial to invest in children early on, not just in high school."
Williams' enthusiasm is contagious. When U.S. Sen. Debbie Stabenow (D-Mich.) visited Rob Voigt's fifth-grade classroom at Glencairn Elementary in East Lansing, Mich., she didn't want to leave. The students brimmed with exuberance as they engaged her in a genetics lesson. The same energetic scene played out again in Texas when Reps. Eddie Bernice Johnson (D-Texas) and Mark Veasey (D-Texas) visited West Intermediate in the Cedar Hill School District.
-- Maria Zacharias,
-- Susan Reiss
Investigators
Angela DeBarger
LaTonya Williams
Related Institutions/Organizations
SRI International
Michigan State University
University of California, Berkeley
Genetics curriculum blends teacher-led discussion, online learning and hands-on activities
The study of genetics may not be typical in a fifth-grade classroom. But fifth-, seventh- and ninth-graders are benefiting from an innovative curriculum that combines teacher-led discussion, online learning and hands-on activities to broaden students' understanding of how genetic information moves from one generation to the next.
STEMGenetics was developed by Michelle Williams, an associate professor of science education at Michigan State University and Angela DeBarger, a senior research scientist at SRI International.
Now in the third year of a five-year National Science Foundation (NSF) grant, STEMGenetics focuses on familiarizing students with grade appropriate genetics concepts, assessing their grasp of the concepts and providing professional development for teachers involved in the program.
Williams says she and DeBarger chose genetics because "it's an important topic to society and is personally relevant to people in their everyday lives, even young children." She adds that when it comes to genetics "many students have an array of ideas that are not scientifically accurate. By starting early on, we have an opportunity to build a more coherent understanding of the subject."
The project currently serves almost 2,000 students in nine schools in East Lansing, Mich., and Cedar Hills, Texas.
Over five weeks, each grade tackles a series of "motivating questions" such as "How do plants in the same species vary?" or "How do we breed rice plants for high nutrition?" As teachers guide students through the material, they introduce hands-on activities such as planting seeds and crossing different parent plants.
"These activities stimulate a lot of great conversation," says veteran teacher Rob Voigt. Much of the discussion grows from students making predictions and drawing conclusions about genetic information.
To support classroom concepts, students also engage in online modules that may include a story related to the topic, short videos and interactive sections in which students examine data, reflect on it and input their responses in drop-down dialog boxes. Animal and plant breeding simulations help students visualize how genetic information combines to produce various types of offspring.
"This project demonstrates the value of bringing tools of scientific research to younger students," said NSF Program Director Julia Clark. "Having the opportunity to engage in scientific thinking builds a great foundation for future study."
Collaborating on a curriculum
Developing the STEMGenetics content and supporting technology took a small village of scientists, teachers, technology developers and assessment experts. DeBarger and Williams co-designed the units with teachers from different schools and across grade levels. "We had content experts and mentor teachers look at the learning goals to decide which ones are learned best through an interactive model and which processes are appropriate to learn," says Williams. The teams then developed storyboards to convey the concepts so that programmers at SRI could build the simulations and other visuals for the units.
To package their material, Williams and DeBarger wanted a tool that would bring content to the classroom in a unique and effective way. They turned to the web-based inquiry science environment (WISE) developed at the University of California, Berkeley by Williams' former doctoral mentor Marcia Linn. Specifically designed to promote critical thinking skills, WISE has software tools to help students make and justify predictions, describe observations and develop conclusions supported with evidence.
"Students gain experience constructing a good argument and supporting it," says Williams. "A skill," she points out, "that is crucial not only in science, but across disciplines."
The reflection and writing opportunities also act as an assessment so that teachers can monitor student progress. Based on the answers students provide, teachers can encourage the class to think more deeply about a concept or adjust a lesson if students are struggling with a concept. Teachers track lesson adjustments and supply that information to Williams and DeBarger.
"We get data back each year from the teachers and refine the units over the summer," says DeBarger.
Supporting teachers
While technology enhances classroom activities, supporting teachers as they present scientific concepts is essential to the program.
"Teaching is a profession like medicine, and teachers like doctors must be constantly learning," says Amal Ibourk, a graduate student researcher with STEMGenetics. To assist teachers, STEMGenetics offers a robust professional development program that includes a summer workshop, after-school meetings to discuss program nuances, faculty mentors and co-teaching.
"Our goal is to help teachers build scientific practices and model them to the students," says Ibourk, herself a teacher. These practices include thinking deeply about a passage or critically about data. "If you start at a young age, these practices become a skill."
Fostering lifelong science learning
One of STEMGenetics' strengths is its ability to get students to link ideas in the real world with those in science.
"We want to encourage students to continue linking ideas in life with ideas in science," says Linn. "The goal is for everybody to keep learning science." However, achieving this goal is complicated as Linn notes, because "it's fairly common for people to stop learning science."
As the project moves forward, Williams and DeBarger will focus on two key directions: downward and outward. The team wants to apply what they've learned with middle- and high-school students to students in kindergarten through fourth grade.
"So much that goes on in K-4 helps prepare them for the upper grades," Williams says. "We have a nice opportunity to go downward and enhance other areas of biology."
To raise awareness among policymakers, Williams has been meeting with both state and federal legislators, encouraging them to visit classrooms and see how students and teachers are engaging in science.
"Getting people in the classroom really changes their view about science," says Linn. Adds Williams, "I really want policymakers to see kids excited [about science] and to interact with them. It's crucial to invest in children early on, not just in high school."
Williams' enthusiasm is contagious. When U.S. Sen. Debbie Stabenow (D-Mich.) visited Rob Voigt's fifth-grade classroom at Glencairn Elementary in East Lansing, Mich., she didn't want to leave. The students brimmed with exuberance as they engaged her in a genetics lesson. The same energetic scene played out again in Texas when Reps. Eddie Bernice Johnson (D-Texas) and Mark Veasey (D-Texas) visited West Intermediate in the Cedar Hill School District.
-- Maria Zacharias,
-- Susan Reiss
Investigators
Angela DeBarger
LaTonya Williams
Related Institutions/Organizations
SRI International
Michigan State University
University of California, Berkeley
Sunday, March 23, 2014
GLOBAL CONTRACTOR PLEADS GUILTY TO CONSPIRACY TO DEFRAUD THE U.S. NAVY
FROM: U.S. JUSTICE DEPARTMENT
Tuesday, March 18, 2014
Former Employee of Navy Contractor Pleads Guilty in International Navy Bribery Scandal
Alex Wisidagama, a citizen of Singapore formerly employed by Glenn Defense Marine Asia (GDMA), pleaded guilty today to one count of conspiracy to defraud the United States for his role in a scheme to overbill the U.S. Navy for ship husbanding services. Wisidagama’s plea is the second in an expanding investigation into acts of alleged fraud and bribery committed by GDMA and several United States Navy officers and personnel.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement after the plea was accepted by U.S. Magistrate Judge Jan M. Adler of the Southern District of California. The plea is subject to acceptance by U.S. District Judge Janis Sammartino. Sentencing is set for June 13, 2014, before Judge Sammartino.
Wisidagama, who was arrested in San Diego, Calif., on Sept. 16, 2013, served as the general manager of global government contracts for GDMA, which was owned and operated by his cousin, Leonard Glenn Francis . GDMA was a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States. GDMA provided the U.S. Navy with hundreds of millions of dollars in husbanding services, which involve the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port. These services included providing tugboats; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; and removing trash and collecting liquid waste.
In his plea agreement, Wisidagama admitted to conspiring to defraud the U.S. Navy in different ways. Wisidagama and other GDMA employees generated bills charging the U.S. Navy for port tariffs that were far greater than the tariffs that GDMA actually paid. In some cases, Wisidagama and others created fictitious port authorities for ports visited by U.S. Navy ships, and in other cases, Wisidagama and GDMA created fake invoices from legitimate port authorities purporting to bill the U.S. Navy at inflated tariff rates. Wisidagama and GDMA also overbilled the U.S. Navy for fuel by creating fraudulent invoices which represented that GDMA acquired fuel at the same cost that it charged the U.S. Navy when in fact GDMA sold the fuel to the U.S. Navy for far more than it actually paid. Wisidagama and GDMA also defrauded the U.S. Navy on the provision of incidental items by creating fake price quotes purportedly from other vendors to make it appear that the other vendors’ offering prices were greater than GDMA’s prices.
Wisidagama is the second defendant to plead guilty as part of this investigation. On Dec. 17, 2013, former NCIS Supervisory Special Agent John Bertrand Beliveau Jr. pleaded guilty to conspiracy to commit bribery after admitting to providing Francis with sensitive law enforcement information in exchange for things of value such as cash, travel accommodations, lavish dinners, and prostitutes. In addition to Beliveau and Wisidagama, Francis and U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez have been charged as part of a bribery and fraud scheme designed to defraud the U.S. Navy. The charges against Misiewicz, Sanchez and Francis are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency. Significant assistance was provided by the Criminal Division’s Office of International Affairs, as well as the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Royal Thai Police and the Corrupt Practices Investigation Bureau in Singapore.
The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, and Trial Attorney Wade Weems, on detail to the Fraud Section from the Special Inspector General for Afghan Reconstruction.
Tuesday, March 18, 2014
Former Employee of Navy Contractor Pleads Guilty in International Navy Bribery Scandal
Alex Wisidagama, a citizen of Singapore formerly employed by Glenn Defense Marine Asia (GDMA), pleaded guilty today to one count of conspiracy to defraud the United States for his role in a scheme to overbill the U.S. Navy for ship husbanding services. Wisidagama’s plea is the second in an expanding investigation into acts of alleged fraud and bribery committed by GDMA and several United States Navy officers and personnel.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement after the plea was accepted by U.S. Magistrate Judge Jan M. Adler of the Southern District of California. The plea is subject to acceptance by U.S. District Judge Janis Sammartino. Sentencing is set for June 13, 2014, before Judge Sammartino.
Wisidagama, who was arrested in San Diego, Calif., on Sept. 16, 2013, served as the general manager of global government contracts for GDMA, which was owned and operated by his cousin, Leonard Glenn Francis . GDMA was a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States. GDMA provided the U.S. Navy with hundreds of millions of dollars in husbanding services, which involve the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port. These services included providing tugboats; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; and removing trash and collecting liquid waste.
In his plea agreement, Wisidagama admitted to conspiring to defraud the U.S. Navy in different ways. Wisidagama and other GDMA employees generated bills charging the U.S. Navy for port tariffs that were far greater than the tariffs that GDMA actually paid. In some cases, Wisidagama and others created fictitious port authorities for ports visited by U.S. Navy ships, and in other cases, Wisidagama and GDMA created fake invoices from legitimate port authorities purporting to bill the U.S. Navy at inflated tariff rates. Wisidagama and GDMA also overbilled the U.S. Navy for fuel by creating fraudulent invoices which represented that GDMA acquired fuel at the same cost that it charged the U.S. Navy when in fact GDMA sold the fuel to the U.S. Navy for far more than it actually paid. Wisidagama and GDMA also defrauded the U.S. Navy on the provision of incidental items by creating fake price quotes purportedly from other vendors to make it appear that the other vendors’ offering prices were greater than GDMA’s prices.
Wisidagama is the second defendant to plead guilty as part of this investigation. On Dec. 17, 2013, former NCIS Supervisory Special Agent John Bertrand Beliveau Jr. pleaded guilty to conspiracy to commit bribery after admitting to providing Francis with sensitive law enforcement information in exchange for things of value such as cash, travel accommodations, lavish dinners, and prostitutes. In addition to Beliveau and Wisidagama, Francis and U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez have been charged as part of a bribery and fraud scheme designed to defraud the U.S. Navy. The charges against Misiewicz, Sanchez and Francis are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency. Significant assistance was provided by the Criminal Division’s Office of International Affairs, as well as the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Royal Thai Police and the Corrupt Practices Investigation Bureau in Singapore.
The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, and Trial Attorney Wade Weems, on detail to the Fraud Section from the Special Inspector General for Afghan Reconstruction.
PRESIDENT OBAMA'S STATEMENT ON FOURTH YEAR ANNIVERSARY OF AFFORDABLE CARE ACT
FROM: THE WHITE HOUSE
Statement by the President on the Fourth Anniversary of the Affordable Care Act
Since I signed the Affordable Care Act into law, the share of Americans with insurance is up, and the growth of health care costs is down, to its slowest rate in fifty years – two of the most promising developments for our middle class and our fiscal future in a long time.
More Americans with insurance have gained new benefits and protections – the 100 million Americans who’ve gained the right to free preventive care like mammograms and contraception, the eight million seniors who’ve saved thousands of dollars on their prescription drugs, and the untold number of families who won’t be driven into bankruptcy by out-of-pocket costs, because this law prevents insurers from placing dollar limits on the care you can receive.
More Americans without insurance have gained coverage. Over the past four years, over three million young Americans have been able to stay on their family plans. And over the past five and a half months alone, more than five million Americans have signed up to buy private health insurance plans on HealthCare.gov – plans that can no longer discriminate against preexisting conditions or charge you more just because you’re a woman or a cancer survivor – and millions more have enrolled in Medicaid.
It is these numbers, and the stories behind each one of them, that will ultimately determine the fate of this law. It is the measurable outcomes – in savings for families and businesses, healthier kids with better performance in schools, seniors with more money to spend because they’re paying less for their medicine, and young entrepreneurs who’ll have the freedom to try new jobs or chase that new idea – that will ultimately offer more security and peace of mind to more Americans who work hard to get ahead.
Last month, after her first wellness visit under her new insurance plan, a woman from Colorado shared with me what that peace of mind meant to her. “After using my new insurance for the first time, you probably heard my sigh of relief from the White House,” she wrote. “I felt like a human being again. I felt that I had value.”
This is what’s at stake any time anyone, out of some outdated obsession, pledges to repeal or undermine the Affordable Care Act. And that’s why my administration will spend the fifth year of this law and beyond working to implement and improve on it.
If you’re an American who wants to get covered – or if you know someone who should – it’s now last call for 2014. March 31st is the deadline to get covered this year. So check out HealthCare.gov or call 1-800-318-2596 to see what new choices are available to you, and get covered today.
CFTC COMMISSION O'MALIA'S SPEAKS ABOUT FINANCIALIZATION OF COMMODITY MARKETS
FROM: COMMODITY FUTURES TRADING COMMISSION
Keynote Address by Commissioner Scott D. O’Malia, 2014 Bank of Canada International Economic Analysis Workshop on Financialization of Commodity Markets
Impact of the Dodd-Frank Act on Commodity Futures and Swaps Markets
March 21, 2014
I want to thank Bahattin for inviting me to speak at this workshop. The topic of today’s workshop is “Financialization of Commodity Markets.” As we all know, commodity prices have experienced an unprecedented rise from the early 2000s. During this time, investors poured large amounts of investment capital into the commodity markets. As such, there has been much written about whether the increased presence of financial investors in the commodity markets led to higher commodity prices and volatility, the so-called “financialization of commodities” debate. Many of today’s distinguished panelists have and will offer their insights on speculative activity in the commodity markets and its relationship to the financialization of these markets.
I would like to use this speech to frame the discussion of the impact of the Dodd-Frank Act and Commission regulations on commercial end-users who have historically used the commodity futures and swaps markets for risk mitigation and hedging. In this regard, I will first discuss the importance of hedging in the commodity markets, especially given volatile commodity prices. Next, I will discuss the impact that Dodd-Frank and Commission reforms have had on hedging in the commodity markets, including the “futurization” of swaps. I will then discuss the potential impact on hedging of upcoming Commission rulemakings. Finally, I will touch on the importance of the Commission’s utilization of data in its oversight of the commodity markets.
Importance of Hedging in the Commodity Markets
It is important to remember that the futures markets originated as a way for buyers and sellers to hedge price risk in the grain markets.1 Today, notwithstanding investor participants in the commodity markets, participants from producers to manufacturers to commercial end-users continue to rely on the futures and swaps markets in order to hedge their commodity price risk, which is essential in order to operate, invest, and grow their businesses.
As we all know, commodity prices are not static. A good example of this price risk is natural gas. Even with the boom in natural gas production,2 this long and harsh winter reminds us that increased demand and supply disruptions can result in regional price spikes despite what seems to be an endless supply of natural gas. For example, the extreme cold temperatures this winter greatly increased demand and impacted production, storage, and transportation supplies for natural gas, causing cash prices in the Northeastern U.S. to hit record levels in late January.3 Chart 1 shows that ICE day-ahead cash prices for Northeast natural gas spiked to over $120 per million British thermal units at the end of January before falling back to more reasonable levels. The March – April natural gas spread has been similarly volatile this winter as shown in Chart 2. This spread widened to $1.208 on February 20 before narrowing. Given the increased demand and supply issues for natural gas, storage levels of natural gas are the lowest in 11 years as shown in Chart 3. As of March 7, working gas in storage was 49 percent below last year’s level and 46 percent below the five-year average.
Weather also brought the worst drought in decades to Brazil this winter, causing coffee crop losses of up to 30 percent.4 May coffee futures peaked at $2.0975 a pound on March 12, the highest level since February 2012.5 Weather is not the only factor that can cause volatility in commodity prices. The PED6 virus, which has killed an estimated 5 million pigs in the U.S,7 has sent lean hog futures prices to record highs.8 Even the Crimean conflict contributed to increased wheat and corn prices this month.9
Given the volatility in commodity prices, hedging is an important function in the commodity markets so that participants can efficiently operate their businesses. Chart 4 provides an example of a potential consequence when a business does not hedge its exposure.10 Unfortunately, in this example, Clean Currents closed its business because this past winter’s “extreme weather … sent the wholesale electricity market into unchartered territories” and Clean Currents did not hedge this exposure.11 In this regard, the Commission must be mindful of the impact of its rules on the cost of hedging for end-users so that they are able to engage in legitimate hedging activities. I will next discuss the impact of the Commission’s swaps rules on hedging in the commodity markets.
Dodd-Frank Impact on the Commodity Markets
As you know, over the past several years the Commission has been busy implementing the Dodd-Frank Act. The Commission has completed 68 final rulemakings and 8 exemptive orders and the Commission staff has issued approximately 172 no-action relief letters and 34 guidance and advisories. The Commission now has 98 provisionally registered swap dealers, 19 temporarily registered swap execution facilities, and 4 provisionally registered swap data repositories. In a rush to complete the rulemaking process, the Commission preferred speed over precision. As a result, the Commission’s swaps rules have introduced unnecessary complexity, vagueness, and costs into the markets, including the commodity markets. These consequences have, in certain instances, led some hedgers to seek out alternatives, such as swap futures. This trend is commonly referred to as the “futurization of swaps.”
On October 12, 2012, the joint CFTC-SEC rule defining the term “swap” became effective,12 which triggered compliance requirements for a number of Commission swaps regulations. To avoid compliance with burdensome and costly swaps regulations, customers of both CME and ICE demanded that the commodity markets move to listed futures instead of swaps. In response, on October 15, 2012, ICE converted its cleared energy swaps into futures and CME began listing energy futures contracts.
Following this shift, CME Group and Eris Exchange launched interest rate swap futures in December 2012.13 Singapore Exchange began offering commodity futures for trading in April 2013.14 ICE launched credit index futures in June 2013.15 Earlier this year, Greenwich Associates noted that “a clear trend exists towards growing demand for FX futures in lieu of traditionally bilateral FX derivatives.”16 Market participants have cited the complexity and cost of complying with the new swaps rules as major drivers to the futures markets.17 Unlike the swaps markets, the futures markets have clear rules and provide market participants with regulatory certainty.
The Commission’s unjustifiably complicated swap dealer definition18 and unjustifiably expensive compliance requirements for market participants that meet this definition is one example of a Commission rule that has pushed market participants to the futures markets. In addition to brokers, many other market participants, including energy, agricultural, and commodity firms have to worry about being subject to this definition. Rather than providing a bright line test for determining whether a market participant is a swap dealer, the rule broadly applies the swap dealer definition to all market participants and then provides some limited conditional relief, but only if participants navigate through the complex set of hedging factors on a trade-by-trade basis and fall below the $8 billion de minimis level.
In a few years, the $8 billion de minimis level will fall to $3 billion if the Commission does not vote to change the threshold. Earlier this month, I asked the Commission staff how many additional entities would have to register as a swap dealer if the de minimis level moved to $3 billion today. The Commission staff could not answer this question. If the Commission cannot determine if an entity falls within the swap dealer definition, how can it expect end-users to navigate this complex rule?
Think about this in another way. If the Commission cannot identify swap dealers, how can it enforce this rule? The Commission’s data rules do not require a market participant to flag a trade as a dealing trade or a hedging trade. So, how will the Commission conduct compliance and oversight of this rule regardless of the de minimis level? I suspect that the Commission will add all trades executed by a market participant and see how close the total is to the de minimis level, and then ask questions to determine whether the economic purpose of each trade was dealing or hedging. This solution will be a nightmare for both the Commission and the end-users.
To provide end-users greater certainty, I propose a modest fix that would allow end-users to exclude all cleared trades from the calculation towards the de minimis threshold. This fix would encourage end-users to clear their trades and would reduce regulatory compliance costs for those end-users who choose to do so.
Moreover, as I noted before, once an entity is subject to the swap dealer definition, the cost of complying with the swap dealer regulations is high. Swap dealers must comply with an array of complex and costly rules in areas such as minimum capital requirements, business conduct, and trade reporting – giving participants a strong incentive to stay away from being labeled as a swap dealer. Participants in the futures markets do not have to comply with such onerous rules.
The downside of futurization for participants in the commodity markets is reduced hedging flexibility because futures contracts, unlike swaps, cannot be individually tailored to meet specific risk needs. Given the volatility of prices in the commodity markets, and the different needs, risks, time horizons, and incentives for end-users in these markets, customized hedging is especially important.19 Because of the Commission’s rules, these participants will have to accept imperfect hedges, endure the higher cost of swaps, or forego hedging all together. All of these alternatives are unacceptable.
For example, smaller natural gas producers rely on customized hedging solutions to mitigate their exposure to volatile natural gas prices, which enables them to invest in their drilling programs.20 There are more than 120 natural gas delivery locations in the U.S., which can vary significantly from the Henry Hub benchmark price traded on exchanges.21 In addition, producers may need the flexibility to enter into long-dated hedges; however, approximately 80% of Henry Hub futures volume is traded within a two-year maturation date.22 The lack of delivery locations and liquidity in long-dated hedges in the futures markets requires customized hedging solutions in many cases.23 If end-users are forced to use swap futures because the cost of using swaps is too high, these participants will have a less perfect hedge, which could result in additional risk or reduced capital investment.24
Upcoming Changes to the Commodity Markets
There are several upcoming Commission rulemakings that will impact hedging in the commodity markets. First, the Commission is considering a proposed futures block rule that will limit the availability of block trades, especially for energy futures. Exchanges have facilitated the transition from swaps to futures in the commodity markets by establishing extremely low threshold sizes for block trades in futures contracts. These thresholds are unlikely to stay at these levels with a Commission futures block rule. It remains to be seen how Commission rules would affect futurization in the commodity and other markets and the cost of hedging to end-users.
Second, the OTC margin and capital rules for uncleared swaps will increase the cost of hedging. It is important to note that the effort to establish a margin regime for uncleared swaps is a global effort. In September 2013, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions released their final policy framework on margin requirements for uncleared derivatives.25 These rules will spare end-users from mandatory initial and variation margin exchange. However, banks will be hit with new capital charges to offset the risk posed by OTC trades. Banks will pass these costs on to end-users. The Commission will need to finalize these rules, which will increase the cost of hedging for end-users in the commodity markets.
Third, the Commission staff is working on mandatory clearing determinations for additional interest rate swap contracts and non-deliverable forward (“NDF”) contracts. As I previously mentioned, it appears that there is already growing demand for FX futures in lieu of traditionally bilateral FX derivatives. Only time will tell if mandatory clearing and trading accelerate the move of NDFs to futures. While mandatory clearing for commodity swaps is likely a year or more away, commodity market participants should keep a close eye on clearing and trading in the interest rate, credit default, and NDF markets to determine how commodity markets may react in the future with the advent of mandatory clearing and trading. Commodity market participants should also watch for any impacts on the cost of hedging.
Finally, the position limits re-proposal has the potential to negatively impact end-users legitimate hedging activities. Setting position limits is not an easy task, especially with unusable data as I will discuss next. The Commission is supposed to stop excessive speculation and manipulation, but must also protect the essential price discovery process and hedging function in the markets. Unfortunately, the Commission’s position limits re-proposal may curtail end-users hedging activities as it scales back the bona fide hedging exemption. The current bona fide hedging exemption has been in effect since the 1970s and, from my understanding, has worked well in the markets. In developing a final position limits rule, the Commission must ensure that it does not impact longstanding and legitimate hedging activities.
Commission’s View into the Commodity Markets
I would like to next discuss the importance of the Commission’s utilization of data in its oversight of the commodity markets. Two fundamental goals of the Dodd-Frank Act were to increase the transparency and integrity of the swaps markets. To achieve these goals, Dodd-Frank required market participants to report information about each swap transaction to a swap data repository.26 The Commission promulgated swap data reporting rules and swap dealers began reporting their trades in December 2012.27
As important as data is, the Commission does not have a clear picture into the commodity swaps markets or financial markets, for that matter. Let me be clear. The data is extraordinarily difficult to use and the Commission is not utilizing this data effectively, or as it was intended. Without usable data, the Commission cannot conduct surveillance, set appropriate position limits, or analyze systemic risk in these markets. The swaps data is not merged with futures data and cannot be analyzed together. Despite the fact that market participants trade across markets and across jurisdictions with little effort; the Commission continues to struggle to develop its own oversight capacity, unless the Commission makes this a top priority.
However, I am pleased that the Commission is taking steps to improve the quality and consistency of its data. The Commission’s Technology Advisory Committee, which I chair, started to perform work on data harmonization back in 2011. Based on this effort, the Commission is currently working with the swap data repositories to harmonize the data within the credit asset class and will then move on to the interest rate asset class. Commodities, unfortunately, are well down the road.
In addition, based on my suggestion, the Commission formed a cross-divisional data team in January of this year to identify and fix our data problems. The Commission, based on the data team’s work, this past Wednesday put out for comment approximately 70 questions addressing several swap data reporting issues. Based on the comments and its own self-evaluation of the current reporting regime, the cross-divisional data team will make recommendations to improve swap data reporting to the Commission this summer.
I cannot emphasize enough how important it is for the Commission to improve its data quality and utilization so that the Commission has an accurate and complete picture of the swaps markets. Without this view, the Commission cannot surveil the markets for manipulation and other abusive trading practices. In addition, the Commission will not be able to set credible position limits or determine whether end-users are hedging or speculating. The Commission’s ability to perform vital risk analysis will also be compromised.
Conclusion
It is probably appropriate that I conclude my remarks by emphasizing that it is crucially important for the Commission to improve and effectively utilize its data so that the Commission develops a complete picture of both the swaps and the futures markets. In many respects, many of the questions regarding the impact of financialization on the commodity markets would be answerable if the Commission had a complete picture of market participants and their trading strategies.
In addition, the Commission must be mindful of the impact that its regulations have on the cost of hedging in the markets. This is especially true in the commodity markets where a wide range of participants hedge because of the volatility in commodity prices and specialized business needs. If the cost of hedging becomes too expensive, these participants may choose not to hedge or enter into less perfect hedges, which impairs efficient business operations.
Therefore, looking forward, the Commission must strive to issue clear, consistent, and cost effective rules that are informed by data and that do not interfere with hedging in the markets. Finally, the Commission must re-visit rules that have proved unworkable or overly burdensome. I am encouraged that the Commission has taken the first step by re-visiting its data rules. I encourage the Commission to not stop there and continue to re-visit rules that have impacted legitimate hedging activities.
Thank you very much for your time.
Note: Presentation is available under Related Links.
1 See Timeline of CME Achievements, available at http://www.cmegroup.com/company/history/timeline-of-achievements.html.
2 Annual Energy Outlook 2013, U.S. Energy Information Administration, April 2013, page 79, available at, http://www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf. The EIA report shows an increase in natural gas production since the mid-2000s and predicts a further 44 percent increase in production from 2011 to 2040, with shale gas providing the largest source of growth.
3 Freezes hit U.S. natural gas output, California supply, Reuters, February 3, 2014, available at, http://www.reuters.com/article/2014/02/06/energy-natgas-weather-idUSL2N0LB1I420140206. Supply constraints also contributed to price spikes. Northeastern Winter Natural Gas and Electricity Issues, U.S. Energy Information Administration, January 7, 2014, available at, http://www.eia.gov/special/alert/east_coast/pdf/energy_market_alert_Jan_7_2014.pdf.
4 Rains to end Brazil coffee drought, but damage done, Reuters, February, 13, 2014, available at http://www.reuters.com/article/2014/02/13/brazil-coffee-rains-idUSL2N0LI1DY20140213.
5 Coffee, sugar fall on producer selling, cocoa eyes expiry, Reuters, March 14, 2014, available at http://www.cnbc.com/id/101494777.
6 Porcine epidemic diarrhea virus.
7 Pork Industry Launches Three-Prong Strategy to Stem PEDV Spread, National Pork Board, March 11, 2014, available at, http://www.pork.org/News/4575/PorkIndustryLaunchesThreeProngStrategytoStemPEDVSpread.aspx.
8 Is virus-inflated U.S. hog market bubble about to burst?, Reuters, March 14, 2014, available at, http://www.reuters.com/article/2014/03/14/us-usa-pork-hogs-analysis-idUSBREA2D1YW20140314.
9 Wheat jumps 2 pct on U.S. weather, Ukraine concerns, Reuters, March, 14, 2014, available at, http://www.reuters.com/article/2014/03/14/markets-grains-idUSL3N0MB3CX20140314.
10 See Clean Current’s website, available at, http://www.cleancurrents.com/; Clean Currents turns off its lights after January’s polar vortex spiked energy prices, The Washington Post, February 3, 2014, available at, http://www.washingtonpost.com/business/capitalbusiness/clean-currents-turns-off-its-lights-after-januarys-polar-vortex-spiked-energy-prices/2014/02/03/8f9cde1e-8cf6-11e3-98ab-fe5228217bd1_story.html.
11 Id.
12 Further Definition of “Swap,” “Security-Based Swap,” and “Security-Based Swap Agreement”; Mixed Swaps; Security-Based Swap Agreement Recordkeeping, 77 FR 48208 (Aug. 13, 2012).
13 Deliverable Interest Rate Swap Futures, CME Group, available at, http://www.cmegroup.com/trading/interest-rates/files/dsf-overview.pdf. Eris Exchange to Launch New, Margin-Efficient Interest Rate Swap Futures, Eris Exchange, December 5, 2012, available at, http://www.erisfutures.com/EE/Eris_Exchange_to_Launch_New_Margin_Efficient_Interest_Rate_Swap_Futures.pdf.
14 SGX to Introduce Iron Ore Futures as Investors Bet on China, Bloomberg, April 5, 2013, available at, http://www.bloomberg.com/news/2013-04-05/sgx-to-introduce-iron-ore-futures-as-investors-wager-on-china.html.
15 Credit Index Futures on ICE, available at, https://www.theice.com/credit.jhtml.
16 Futurization of FX Derivatives, Greenwich Associates, January 14, 2014, available at, https://www.greenwich.com/greenwich-research/research-documents/greenwich-reports/2014/jan/is-spl-futfx-2013-gr. Why Regulatory Changes Will Drive FX Trading Volume to Futures, kevinonthestreet, January 14, 2014, available at, http://kevinonthestreet.com/why-regulatory-changes-will-drive-fx-trading-volumes-to-futures/.
17 Id. Futurization: Dodd-Frank Drives Swaps-to-Futures Migration, futuresINDUSTRY, January 2013, available at, http://www.futuresindustry.org/futures-industry.asp?iss=209&a=1531. Swaps Futurization Means Added Choice, Market Media, March 12, 2014, available at, http://marketsmedia.com/swaps-futurization-means-added-choice/.
18 Further Definition of “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap Participant,” and “Eligible Contract Participant,” 77 FR 30595 (May 23, 2012).
19 The Role of Banks in Physical Commodities, HIS Global Inc., 2013, at pages 4-5.
20 Id. at 24-25.
21 Id. at 24.
22 Id. at 25.
23 Id.
24 Id.
25 Basel Committee on Banking Supervision and Board of the International Organization of Securities Commissions, Margin requirements for non-centrally cleared derivatives, September 2013, available at, http://www.bis.org/publ/bcbs261.pdf.
26 Sections 727 and 728 of the Dodd-Frank Act. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).
27 17 C.F.R. parts 43, 45, and 46.
Keynote Address by Commissioner Scott D. O’Malia, 2014 Bank of Canada International Economic Analysis Workshop on Financialization of Commodity Markets
Impact of the Dodd-Frank Act on Commodity Futures and Swaps Markets
March 21, 2014
I want to thank Bahattin for inviting me to speak at this workshop. The topic of today’s workshop is “Financialization of Commodity Markets.” As we all know, commodity prices have experienced an unprecedented rise from the early 2000s. During this time, investors poured large amounts of investment capital into the commodity markets. As such, there has been much written about whether the increased presence of financial investors in the commodity markets led to higher commodity prices and volatility, the so-called “financialization of commodities” debate. Many of today’s distinguished panelists have and will offer their insights on speculative activity in the commodity markets and its relationship to the financialization of these markets.
I would like to use this speech to frame the discussion of the impact of the Dodd-Frank Act and Commission regulations on commercial end-users who have historically used the commodity futures and swaps markets for risk mitigation and hedging. In this regard, I will first discuss the importance of hedging in the commodity markets, especially given volatile commodity prices. Next, I will discuss the impact that Dodd-Frank and Commission reforms have had on hedging in the commodity markets, including the “futurization” of swaps. I will then discuss the potential impact on hedging of upcoming Commission rulemakings. Finally, I will touch on the importance of the Commission’s utilization of data in its oversight of the commodity markets.
Importance of Hedging in the Commodity Markets
It is important to remember that the futures markets originated as a way for buyers and sellers to hedge price risk in the grain markets.1 Today, notwithstanding investor participants in the commodity markets, participants from producers to manufacturers to commercial end-users continue to rely on the futures and swaps markets in order to hedge their commodity price risk, which is essential in order to operate, invest, and grow their businesses.
As we all know, commodity prices are not static. A good example of this price risk is natural gas. Even with the boom in natural gas production,2 this long and harsh winter reminds us that increased demand and supply disruptions can result in regional price spikes despite what seems to be an endless supply of natural gas. For example, the extreme cold temperatures this winter greatly increased demand and impacted production, storage, and transportation supplies for natural gas, causing cash prices in the Northeastern U.S. to hit record levels in late January.3 Chart 1 shows that ICE day-ahead cash prices for Northeast natural gas spiked to over $120 per million British thermal units at the end of January before falling back to more reasonable levels. The March – April natural gas spread has been similarly volatile this winter as shown in Chart 2. This spread widened to $1.208 on February 20 before narrowing. Given the increased demand and supply issues for natural gas, storage levels of natural gas are the lowest in 11 years as shown in Chart 3. As of March 7, working gas in storage was 49 percent below last year’s level and 46 percent below the five-year average.
Weather also brought the worst drought in decades to Brazil this winter, causing coffee crop losses of up to 30 percent.4 May coffee futures peaked at $2.0975 a pound on March 12, the highest level since February 2012.5 Weather is not the only factor that can cause volatility in commodity prices. The PED6 virus, which has killed an estimated 5 million pigs in the U.S,7 has sent lean hog futures prices to record highs.8 Even the Crimean conflict contributed to increased wheat and corn prices this month.9
Given the volatility in commodity prices, hedging is an important function in the commodity markets so that participants can efficiently operate their businesses. Chart 4 provides an example of a potential consequence when a business does not hedge its exposure.10 Unfortunately, in this example, Clean Currents closed its business because this past winter’s “extreme weather … sent the wholesale electricity market into unchartered territories” and Clean Currents did not hedge this exposure.11 In this regard, the Commission must be mindful of the impact of its rules on the cost of hedging for end-users so that they are able to engage in legitimate hedging activities. I will next discuss the impact of the Commission’s swaps rules on hedging in the commodity markets.
Dodd-Frank Impact on the Commodity Markets
As you know, over the past several years the Commission has been busy implementing the Dodd-Frank Act. The Commission has completed 68 final rulemakings and 8 exemptive orders and the Commission staff has issued approximately 172 no-action relief letters and 34 guidance and advisories. The Commission now has 98 provisionally registered swap dealers, 19 temporarily registered swap execution facilities, and 4 provisionally registered swap data repositories. In a rush to complete the rulemaking process, the Commission preferred speed over precision. As a result, the Commission’s swaps rules have introduced unnecessary complexity, vagueness, and costs into the markets, including the commodity markets. These consequences have, in certain instances, led some hedgers to seek out alternatives, such as swap futures. This trend is commonly referred to as the “futurization of swaps.”
On October 12, 2012, the joint CFTC-SEC rule defining the term “swap” became effective,12 which triggered compliance requirements for a number of Commission swaps regulations. To avoid compliance with burdensome and costly swaps regulations, customers of both CME and ICE demanded that the commodity markets move to listed futures instead of swaps. In response, on October 15, 2012, ICE converted its cleared energy swaps into futures and CME began listing energy futures contracts.
Following this shift, CME Group and Eris Exchange launched interest rate swap futures in December 2012.13 Singapore Exchange began offering commodity futures for trading in April 2013.14 ICE launched credit index futures in June 2013.15 Earlier this year, Greenwich Associates noted that “a clear trend exists towards growing demand for FX futures in lieu of traditionally bilateral FX derivatives.”16 Market participants have cited the complexity and cost of complying with the new swaps rules as major drivers to the futures markets.17 Unlike the swaps markets, the futures markets have clear rules and provide market participants with regulatory certainty.
The Commission’s unjustifiably complicated swap dealer definition18 and unjustifiably expensive compliance requirements for market participants that meet this definition is one example of a Commission rule that has pushed market participants to the futures markets. In addition to brokers, many other market participants, including energy, agricultural, and commodity firms have to worry about being subject to this definition. Rather than providing a bright line test for determining whether a market participant is a swap dealer, the rule broadly applies the swap dealer definition to all market participants and then provides some limited conditional relief, but only if participants navigate through the complex set of hedging factors on a trade-by-trade basis and fall below the $8 billion de minimis level.
In a few years, the $8 billion de minimis level will fall to $3 billion if the Commission does not vote to change the threshold. Earlier this month, I asked the Commission staff how many additional entities would have to register as a swap dealer if the de minimis level moved to $3 billion today. The Commission staff could not answer this question. If the Commission cannot determine if an entity falls within the swap dealer definition, how can it expect end-users to navigate this complex rule?
Think about this in another way. If the Commission cannot identify swap dealers, how can it enforce this rule? The Commission’s data rules do not require a market participant to flag a trade as a dealing trade or a hedging trade. So, how will the Commission conduct compliance and oversight of this rule regardless of the de minimis level? I suspect that the Commission will add all trades executed by a market participant and see how close the total is to the de minimis level, and then ask questions to determine whether the economic purpose of each trade was dealing or hedging. This solution will be a nightmare for both the Commission and the end-users.
To provide end-users greater certainty, I propose a modest fix that would allow end-users to exclude all cleared trades from the calculation towards the de minimis threshold. This fix would encourage end-users to clear their trades and would reduce regulatory compliance costs for those end-users who choose to do so.
Moreover, as I noted before, once an entity is subject to the swap dealer definition, the cost of complying with the swap dealer regulations is high. Swap dealers must comply with an array of complex and costly rules in areas such as minimum capital requirements, business conduct, and trade reporting – giving participants a strong incentive to stay away from being labeled as a swap dealer. Participants in the futures markets do not have to comply with such onerous rules.
The downside of futurization for participants in the commodity markets is reduced hedging flexibility because futures contracts, unlike swaps, cannot be individually tailored to meet specific risk needs. Given the volatility of prices in the commodity markets, and the different needs, risks, time horizons, and incentives for end-users in these markets, customized hedging is especially important.19 Because of the Commission’s rules, these participants will have to accept imperfect hedges, endure the higher cost of swaps, or forego hedging all together. All of these alternatives are unacceptable.
For example, smaller natural gas producers rely on customized hedging solutions to mitigate their exposure to volatile natural gas prices, which enables them to invest in their drilling programs.20 There are more than 120 natural gas delivery locations in the U.S., which can vary significantly from the Henry Hub benchmark price traded on exchanges.21 In addition, producers may need the flexibility to enter into long-dated hedges; however, approximately 80% of Henry Hub futures volume is traded within a two-year maturation date.22 The lack of delivery locations and liquidity in long-dated hedges in the futures markets requires customized hedging solutions in many cases.23 If end-users are forced to use swap futures because the cost of using swaps is too high, these participants will have a less perfect hedge, which could result in additional risk or reduced capital investment.24
Upcoming Changes to the Commodity Markets
There are several upcoming Commission rulemakings that will impact hedging in the commodity markets. First, the Commission is considering a proposed futures block rule that will limit the availability of block trades, especially for energy futures. Exchanges have facilitated the transition from swaps to futures in the commodity markets by establishing extremely low threshold sizes for block trades in futures contracts. These thresholds are unlikely to stay at these levels with a Commission futures block rule. It remains to be seen how Commission rules would affect futurization in the commodity and other markets and the cost of hedging to end-users.
Second, the OTC margin and capital rules for uncleared swaps will increase the cost of hedging. It is important to note that the effort to establish a margin regime for uncleared swaps is a global effort. In September 2013, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions released their final policy framework on margin requirements for uncleared derivatives.25 These rules will spare end-users from mandatory initial and variation margin exchange. However, banks will be hit with new capital charges to offset the risk posed by OTC trades. Banks will pass these costs on to end-users. The Commission will need to finalize these rules, which will increase the cost of hedging for end-users in the commodity markets.
Third, the Commission staff is working on mandatory clearing determinations for additional interest rate swap contracts and non-deliverable forward (“NDF”) contracts. As I previously mentioned, it appears that there is already growing demand for FX futures in lieu of traditionally bilateral FX derivatives. Only time will tell if mandatory clearing and trading accelerate the move of NDFs to futures. While mandatory clearing for commodity swaps is likely a year or more away, commodity market participants should keep a close eye on clearing and trading in the interest rate, credit default, and NDF markets to determine how commodity markets may react in the future with the advent of mandatory clearing and trading. Commodity market participants should also watch for any impacts on the cost of hedging.
Finally, the position limits re-proposal has the potential to negatively impact end-users legitimate hedging activities. Setting position limits is not an easy task, especially with unusable data as I will discuss next. The Commission is supposed to stop excessive speculation and manipulation, but must also protect the essential price discovery process and hedging function in the markets. Unfortunately, the Commission’s position limits re-proposal may curtail end-users hedging activities as it scales back the bona fide hedging exemption. The current bona fide hedging exemption has been in effect since the 1970s and, from my understanding, has worked well in the markets. In developing a final position limits rule, the Commission must ensure that it does not impact longstanding and legitimate hedging activities.
Commission’s View into the Commodity Markets
I would like to next discuss the importance of the Commission’s utilization of data in its oversight of the commodity markets. Two fundamental goals of the Dodd-Frank Act were to increase the transparency and integrity of the swaps markets. To achieve these goals, Dodd-Frank required market participants to report information about each swap transaction to a swap data repository.26 The Commission promulgated swap data reporting rules and swap dealers began reporting their trades in December 2012.27
As important as data is, the Commission does not have a clear picture into the commodity swaps markets or financial markets, for that matter. Let me be clear. The data is extraordinarily difficult to use and the Commission is not utilizing this data effectively, or as it was intended. Without usable data, the Commission cannot conduct surveillance, set appropriate position limits, or analyze systemic risk in these markets. The swaps data is not merged with futures data and cannot be analyzed together. Despite the fact that market participants trade across markets and across jurisdictions with little effort; the Commission continues to struggle to develop its own oversight capacity, unless the Commission makes this a top priority.
However, I am pleased that the Commission is taking steps to improve the quality and consistency of its data. The Commission’s Technology Advisory Committee, which I chair, started to perform work on data harmonization back in 2011. Based on this effort, the Commission is currently working with the swap data repositories to harmonize the data within the credit asset class and will then move on to the interest rate asset class. Commodities, unfortunately, are well down the road.
In addition, based on my suggestion, the Commission formed a cross-divisional data team in January of this year to identify and fix our data problems. The Commission, based on the data team’s work, this past Wednesday put out for comment approximately 70 questions addressing several swap data reporting issues. Based on the comments and its own self-evaluation of the current reporting regime, the cross-divisional data team will make recommendations to improve swap data reporting to the Commission this summer.
I cannot emphasize enough how important it is for the Commission to improve its data quality and utilization so that the Commission has an accurate and complete picture of the swaps markets. Without this view, the Commission cannot surveil the markets for manipulation and other abusive trading practices. In addition, the Commission will not be able to set credible position limits or determine whether end-users are hedging or speculating. The Commission’s ability to perform vital risk analysis will also be compromised.
Conclusion
It is probably appropriate that I conclude my remarks by emphasizing that it is crucially important for the Commission to improve and effectively utilize its data so that the Commission develops a complete picture of both the swaps and the futures markets. In many respects, many of the questions regarding the impact of financialization on the commodity markets would be answerable if the Commission had a complete picture of market participants and their trading strategies.
In addition, the Commission must be mindful of the impact that its regulations have on the cost of hedging in the markets. This is especially true in the commodity markets where a wide range of participants hedge because of the volatility in commodity prices and specialized business needs. If the cost of hedging becomes too expensive, these participants may choose not to hedge or enter into less perfect hedges, which impairs efficient business operations.
Therefore, looking forward, the Commission must strive to issue clear, consistent, and cost effective rules that are informed by data and that do not interfere with hedging in the markets. Finally, the Commission must re-visit rules that have proved unworkable or overly burdensome. I am encouraged that the Commission has taken the first step by re-visiting its data rules. I encourage the Commission to not stop there and continue to re-visit rules that have impacted legitimate hedging activities.
Thank you very much for your time.
Note: Presentation is available under Related Links.
1 See Timeline of CME Achievements, available at http://www.cmegroup.com/company/history/timeline-of-achievements.html.
2 Annual Energy Outlook 2013, U.S. Energy Information Administration, April 2013, page 79, available at, http://www.eia.gov/forecasts/aeo/pdf/0383(2013).pdf. The EIA report shows an increase in natural gas production since the mid-2000s and predicts a further 44 percent increase in production from 2011 to 2040, with shale gas providing the largest source of growth.
3 Freezes hit U.S. natural gas output, California supply, Reuters, February 3, 2014, available at, http://www.reuters.com/article/2014/02/06/energy-natgas-weather-idUSL2N0LB1I420140206. Supply constraints also contributed to price spikes. Northeastern Winter Natural Gas and Electricity Issues, U.S. Energy Information Administration, January 7, 2014, available at, http://www.eia.gov/special/alert/east_coast/pdf/energy_market_alert_Jan_7_2014.pdf.
4 Rains to end Brazil coffee drought, but damage done, Reuters, February, 13, 2014, available at http://www.reuters.com/article/2014/02/13/brazil-coffee-rains-idUSL2N0LI1DY20140213.
5 Coffee, sugar fall on producer selling, cocoa eyes expiry, Reuters, March 14, 2014, available at http://www.cnbc.com/id/101494777.
6 Porcine epidemic diarrhea virus.
7 Pork Industry Launches Three-Prong Strategy to Stem PEDV Spread, National Pork Board, March 11, 2014, available at, http://www.pork.org/News/4575/PorkIndustryLaunchesThreeProngStrategytoStemPEDVSpread.aspx.
8 Is virus-inflated U.S. hog market bubble about to burst?, Reuters, March 14, 2014, available at, http://www.reuters.com/article/2014/03/14/us-usa-pork-hogs-analysis-idUSBREA2D1YW20140314.
9 Wheat jumps 2 pct on U.S. weather, Ukraine concerns, Reuters, March, 14, 2014, available at, http://www.reuters.com/article/2014/03/14/markets-grains-idUSL3N0MB3CX20140314.
10 See Clean Current’s website, available at, http://www.cleancurrents.com/; Clean Currents turns off its lights after January’s polar vortex spiked energy prices, The Washington Post, February 3, 2014, available at, http://www.washingtonpost.com/business/capitalbusiness/clean-currents-turns-off-its-lights-after-januarys-polar-vortex-spiked-energy-prices/2014/02/03/8f9cde1e-8cf6-11e3-98ab-fe5228217bd1_story.html.
11 Id.
12 Further Definition of “Swap,” “Security-Based Swap,” and “Security-Based Swap Agreement”; Mixed Swaps; Security-Based Swap Agreement Recordkeeping, 77 FR 48208 (Aug. 13, 2012).
13 Deliverable Interest Rate Swap Futures, CME Group, available at, http://www.cmegroup.com/trading/interest-rates/files/dsf-overview.pdf. Eris Exchange to Launch New, Margin-Efficient Interest Rate Swap Futures, Eris Exchange, December 5, 2012, available at, http://www.erisfutures.com/EE/Eris_Exchange_to_Launch_New_Margin_Efficient_Interest_Rate_Swap_Futures.pdf.
14 SGX to Introduce Iron Ore Futures as Investors Bet on China, Bloomberg, April 5, 2013, available at, http://www.bloomberg.com/news/2013-04-05/sgx-to-introduce-iron-ore-futures-as-investors-wager-on-china.html.
15 Credit Index Futures on ICE, available at, https://www.theice.com/credit.jhtml.
16 Futurization of FX Derivatives, Greenwich Associates, January 14, 2014, available at, https://www.greenwich.com/greenwich-research/research-documents/greenwich-reports/2014/jan/is-spl-futfx-2013-gr. Why Regulatory Changes Will Drive FX Trading Volume to Futures, kevinonthestreet, January 14, 2014, available at, http://kevinonthestreet.com/why-regulatory-changes-will-drive-fx-trading-volumes-to-futures/.
17 Id. Futurization: Dodd-Frank Drives Swaps-to-Futures Migration, futuresINDUSTRY, January 2013, available at, http://www.futuresindustry.org/futures-industry.asp?iss=209&a=1531. Swaps Futurization Means Added Choice, Market Media, March 12, 2014, available at, http://marketsmedia.com/swaps-futurization-means-added-choice/.
18 Further Definition of “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap Participant,” and “Eligible Contract Participant,” 77 FR 30595 (May 23, 2012).
19 The Role of Banks in Physical Commodities, HIS Global Inc., 2013, at pages 4-5.
20 Id. at 24-25.
21 Id. at 24.
22 Id. at 25.
23 Id.
24 Id.
25 Basel Committee on Banking Supervision and Board of the International Organization of Securities Commissions, Margin requirements for non-centrally cleared derivatives, September 2013, available at, http://www.bis.org/publ/bcbs261.pdf.
26 Sections 727 and 728 of the Dodd-Frank Act. Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010).
27 17 C.F.R. parts 43, 45, and 46.
A SEYFERT GALAXY IN THE CONSTELLATION LIBRA
This new Hubble image is centered on NGC 5793, a spiral galaxy over 150 million light-years away in the constellation of Libra. This galaxy has two particularly striking features: a beautiful dust lane and an intensely bright center — much brighter than that of our own galaxy, or indeed those of most spiral galaxies we observe. NGC 5793 is a Seyfert galaxy. These galaxies have incredibly luminous centers that are thought to be caused by hungry supermassive black holes — black holes that can be billions of times the size of the sun — that pull in and devour gas and dust from their surroundings.
This galaxy is of great interest to astronomers for many reasons. For one, it appears to house objects known as masers. Whereas lasers emit visible light, masers emit microwave radiation. The term "masers" comes from the acronym Microwave Amplification by Stimulated Emission of Radiation. Maser emission is caused by particles that absorb energy from their surroundings and then re-emit this in the microwave part of the spectrum. Naturally occurring masers, like those observed in NGC 5793, can tell us a lot about their environment; we see these kinds of masers in areas where stars are forming. In NGC 5793 there are also intense mega-masers, which are thousands of times more luminous than the sun. Credit: NASA, ESA, and E. Perlman (Florida Institute of Technology)
REMARKS BY FIRST LADY MICHELLE OBAMA AT STANFORD CENTER AT PEKING UNIVERSITY
FROM: THE WHITE HOUSE
Beijing, China
MRS. OBAMA: (Applause.) Thank you. Well, ni-hao. (Laughter.) It is such a pleasure and an honor to be here with all of you at this great university, so thank you so much for having me.
Now, before I get started today, on behalf of myself and my husband, I just want to say a few very brief words about Malaysia Airlines Flight 370. As my husband has said, the United States is offering as many resources as possible to assist in the search. And please know that we are keeping all of the families and loved ones of those on this flight in our thoughts and prayers at this very difficult time.
Now with that, I want to start by recognizing our new Ambassador to China, Ambassador Baucus; President Wang; Chairman Zhu; Vice President Li; Director Cueller; Professor Oi, and the Stanford Center; President Sexton from New York University, which is an excellent study abroad program in Shanghai; and John Thornton, Director of the Global Leadership Program at Tsinghua University. Thank you all for joining us.
But most of all, I want to thank all of the students who are here today. And I particularly want to thank Eric Schaefer and Zhu Xuanhao for that extraordinary English and Chinese introduction. That was a powerful symbol of everything that I want to talk with you about today.
See, by learning each other’s languages, and by showing such curiosity and respect for each other’s cultures, Mr. Schafer and Ms. Zhu and all of you are building bridges of understanding that will lead to so much more. And I’m here today because I know that our future depends on connections like these among young people like you across the globe.
That’s why when my husband and I travel abroad, we don’t just visit palaces and parliaments and meet with heads of state. We also come to schools like this one to meet with students like you, because we believe that relationships between nations aren’t just about relationships between governments or leaders -- they’re about relationships between people, particularly young people. So we view study abroad programs not just as an educational opportunity for students, but also as a vital part of America’s foreign policy.
Through the wonders of modern technology, our world is more connected than ever before. Ideas can cross oceans with the click of a button. Companies can do business and compete with companies across the globe. And we can text, email, Skype with people on every continent.
So studying abroad isn’t just a fun way to spend a semester; it is quickly becoming the key to success in our global economy. Because getting ahead in today’s workplaces isn’t just about getting good grades or test scores in school, which are important. It’s also about having real experience with the world beyond your borders –- experience with languages, cultures and societies very different from your own. Or, as the Chinese saying goes: “It is better to travel ten thousand miles than to read ten thousand books.”
But let’s be clear, studying abroad is about so much more than improving your own future. It’s also about shaping the future of your countries and of the world we all share. Because when it comes to the defining challenges of our time -– whether it’s climate change or economic opportunity or the spread of nuclear weapons -- these are shared challenges. And no one country can confront them alone. The only way forward is together.
That’s why it is so important for young people like you to live and study in each other’s countries, because that’s how you develop that habit of cooperation. You do it by immersing yourself in one another’s culture, by learning each other’s stories, by getting past the stereotypes and misconceptions that too often divide us.
That’s how you come to understand how much we all share. That’s how you realize that we all have a stake in each other’s success -- that cures discovered here in Beijing could save lives in America, that clean energy technologies from Silicon Valley in California could improve the environment here in China, that the architecture of an ancient temple in Xi’an could inspire the design of new buildings in Dallas or Detroit.
And that’s when the connections you make as classmates or labmates can blossom into something more. That’s what happened when Abigail Coplin became an American Fulbright Scholar here at Peking University. She and her colleagues published papers together in top science journals, and they built research partnerships that lasted long after they returned to their home countries. And Professor Niu Ke from Peking University was a Fulbright Scholarship -- Scholar in the U.S. last year, and he reported -- and this is a quote from him -- he said, “The most memorable experiences were with my American friends.”
These lasting bonds represent the true value of studying abroad. And I am thrilled that more and more students are getting this opportunity. As you’ve heard, China is currently the fifth most popular destination for Americans studying abroad, and today, the highest number of exchange students in the U.S. are from China.
But still, too many students never have this chance, and some that do are hesitant to take it. They may feel like studying abroad is only for wealthy students or students from certain kinds of universities. Or they may think to themselves, well, that sounds fun but how will it be useful in my life? And believe me, I understand where these young people are coming from because I felt the same way back when I was in college.
See, I came from a working-class family, and it never occurred to me to study abroad -- never. My parents didn’t get a chance to attend college, so I was focused on getting into a university, earning my degree so that I could get a good job to support myself and help my family. And I know for a lot of young people like me who are struggling to afford a regular semester of school, paying for plane tickets or living expenses halfway around the world just isn’t possible. And that’s not acceptable, because study abroad shouldn’t just be for students from certain backgrounds.
Our hope is to build connections between people of all races and socioeconomic backgrounds, because it is that diversity that truly will change the face of our relationships. So we believe that diversity makes our country vibrant and strong. And our study abroad programs should reflect the true spirit of America to the world.
And that’s why when my husband visited China back in 2009, he announced the 100,000 Strong initiative to increase the number and diversity of American students studying in China. And this year, as we mark the 35th anniversary of the normalization of relationships between our two countries, the U.S. government actually supports more American students in China than in any other country in the world.
We are sending high school, college and graduate students here to study Chinese. We’re inviting teachers from China to teach Mandarin in American schools. We’re providing free online advising for students in China who want to study in the U.S. And the U.S.-China Fulbright program is still going strong with more than 3,000 alumni.
And the private sector is stepping up as well. For example, Steve Schwarzman, who is the head of an American company called Blackstone, is funding a new program at Tsinghua University modeled on the Rhodes Scholarship. And today, students from all kinds of backgrounds are studying here in China.
Take the example of Royale Nicholson, who’s from Cleveland, Ohio. She attends New York University’s program in Shanghai. Now, like me, Royale is a first-generation college student. And her mother worked two full-time jobs while her father worked nights to support their family. And of her experience in Shanghai, Royale said -- and this is her quote -- she said, “This city oozes persistence and inspires me to accomplish all that I can.” And happy birthday, Royale. It was her birthday yesterday. (Laughter.)
And then there’s Philmon Haile from the University of Washington, whose family came to the U.S. as refugees from Eritrea when he was a child. And of his experience studying in China, he said, “Study abroad is a powerful vehicle for people-to-people exchange as we move into a new era of citizen diplomacy.”
“A new era of citizen diplomacy.” I could not have said it better myself, because that’s really what I’m talking about. I am talking about ordinary citizens reaching out to the world. And as I always tell young people back in America, you don’t need to get on a plane to be a citizen diplomat. I tell them that if you have an Internet connection in your home, school, or library, within seconds you can be transported anywhere in the world and meet people on every continent.
And that’s why I’m posting a daily travel blog with videos and photos of my experiences here in China, because I want young people in America to be part of this visit. And that’s really the power of technology –- how it can open up the entire world and expose us to ideas and innovations we never could have imagined.
And that’s why it’s so important for information and ideas to flow freely over the Internet and through the media, because that’s how we discover the truth. That’s how we learn what’s really happening in our communities and our country and our world. And that’s how we decide which values and ideas we think are best –- by questioning and debating them vigorously, by listening to all sides of an argument, and by judging for ourselves.
And believe me, I know how this can be a messy and frustrating process. My husband and I are on the receiving end of plenty of questioning and criticism from our media and our fellow citizens. And it’s not always easy, but we wouldn’t trade it for anything in the world. Because time and again, we have seen that countries are stronger and more prosperous when the voices of and opinions of all their citizens can be heard.
And as my husband has said, we respect the uniqueness of other cultures and societies, but when it comes to expressing yourself freely and worshipping as you choose and having open access to information, we believe those universal rights -- they are universal rights that are the birthright of every person on this planet. We believe that all people deserve the opportunity to fulfill their highest potential as I was able to do in the United States.
And as you learn about new cultures and form new friendships during your time here in China and in the United States, all of you are the living, breathing embodiment of those values. So I guarantee you that in studying abroad, you’re not just changing your own life, you are changing the lives of everyone you meet.
And as the great American President John F. Kennedy once said about foreign students studying in the U.S., he said “I think they teach more than they learn.” And that is just as true of young Americans who study abroad. All of you are America’s best face, and China’s best face, to the world -- you truly are.
Every day, you show the world your countries’ energy and creativity and optimism and unwavering belief in the future. And every day, you remind us -- and me in particular -- of just how much we can achieve if we reach across borders, and learn to see ourselves in each other, and confront our shared challenges with shared resolve.
So I hope you all will keep seeking these kinds of experiences. And I hope you’ll keep teaching each other, and learning from each other, and building bonds of friendship that will enrich your lives and enrich our world for decades to come.
You all have so much to offer, and I cannot wait to see all that you achieve together in the years ahead.
Thank you so much. Xie-Xie. (Applause.)
END 11:48 A.M. CST
Beijing, China
MRS. OBAMA: (Applause.) Thank you. Well, ni-hao. (Laughter.) It is such a pleasure and an honor to be here with all of you at this great university, so thank you so much for having me.
Now, before I get started today, on behalf of myself and my husband, I just want to say a few very brief words about Malaysia Airlines Flight 370. As my husband has said, the United States is offering as many resources as possible to assist in the search. And please know that we are keeping all of the families and loved ones of those on this flight in our thoughts and prayers at this very difficult time.
Now with that, I want to start by recognizing our new Ambassador to China, Ambassador Baucus; President Wang; Chairman Zhu; Vice President Li; Director Cueller; Professor Oi, and the Stanford Center; President Sexton from New York University, which is an excellent study abroad program in Shanghai; and John Thornton, Director of the Global Leadership Program at Tsinghua University. Thank you all for joining us.
But most of all, I want to thank all of the students who are here today. And I particularly want to thank Eric Schaefer and Zhu Xuanhao for that extraordinary English and Chinese introduction. That was a powerful symbol of everything that I want to talk with you about today.
See, by learning each other’s languages, and by showing such curiosity and respect for each other’s cultures, Mr. Schafer and Ms. Zhu and all of you are building bridges of understanding that will lead to so much more. And I’m here today because I know that our future depends on connections like these among young people like you across the globe.
That’s why when my husband and I travel abroad, we don’t just visit palaces and parliaments and meet with heads of state. We also come to schools like this one to meet with students like you, because we believe that relationships between nations aren’t just about relationships between governments or leaders -- they’re about relationships between people, particularly young people. So we view study abroad programs not just as an educational opportunity for students, but also as a vital part of America’s foreign policy.
Through the wonders of modern technology, our world is more connected than ever before. Ideas can cross oceans with the click of a button. Companies can do business and compete with companies across the globe. And we can text, email, Skype with people on every continent.
So studying abroad isn’t just a fun way to spend a semester; it is quickly becoming the key to success in our global economy. Because getting ahead in today’s workplaces isn’t just about getting good grades or test scores in school, which are important. It’s also about having real experience with the world beyond your borders –- experience with languages, cultures and societies very different from your own. Or, as the Chinese saying goes: “It is better to travel ten thousand miles than to read ten thousand books.”
But let’s be clear, studying abroad is about so much more than improving your own future. It’s also about shaping the future of your countries and of the world we all share. Because when it comes to the defining challenges of our time -– whether it’s climate change or economic opportunity or the spread of nuclear weapons -- these are shared challenges. And no one country can confront them alone. The only way forward is together.
That’s why it is so important for young people like you to live and study in each other’s countries, because that’s how you develop that habit of cooperation. You do it by immersing yourself in one another’s culture, by learning each other’s stories, by getting past the stereotypes and misconceptions that too often divide us.
That’s how you come to understand how much we all share. That’s how you realize that we all have a stake in each other’s success -- that cures discovered here in Beijing could save lives in America, that clean energy technologies from Silicon Valley in California could improve the environment here in China, that the architecture of an ancient temple in Xi’an could inspire the design of new buildings in Dallas or Detroit.
And that’s when the connections you make as classmates or labmates can blossom into something more. That’s what happened when Abigail Coplin became an American Fulbright Scholar here at Peking University. She and her colleagues published papers together in top science journals, and they built research partnerships that lasted long after they returned to their home countries. And Professor Niu Ke from Peking University was a Fulbright Scholarship -- Scholar in the U.S. last year, and he reported -- and this is a quote from him -- he said, “The most memorable experiences were with my American friends.”
These lasting bonds represent the true value of studying abroad. And I am thrilled that more and more students are getting this opportunity. As you’ve heard, China is currently the fifth most popular destination for Americans studying abroad, and today, the highest number of exchange students in the U.S. are from China.
But still, too many students never have this chance, and some that do are hesitant to take it. They may feel like studying abroad is only for wealthy students or students from certain kinds of universities. Or they may think to themselves, well, that sounds fun but how will it be useful in my life? And believe me, I understand where these young people are coming from because I felt the same way back when I was in college.
See, I came from a working-class family, and it never occurred to me to study abroad -- never. My parents didn’t get a chance to attend college, so I was focused on getting into a university, earning my degree so that I could get a good job to support myself and help my family. And I know for a lot of young people like me who are struggling to afford a regular semester of school, paying for plane tickets or living expenses halfway around the world just isn’t possible. And that’s not acceptable, because study abroad shouldn’t just be for students from certain backgrounds.
Our hope is to build connections between people of all races and socioeconomic backgrounds, because it is that diversity that truly will change the face of our relationships. So we believe that diversity makes our country vibrant and strong. And our study abroad programs should reflect the true spirit of America to the world.
And that’s why when my husband visited China back in 2009, he announced the 100,000 Strong initiative to increase the number and diversity of American students studying in China. And this year, as we mark the 35th anniversary of the normalization of relationships between our two countries, the U.S. government actually supports more American students in China than in any other country in the world.
We are sending high school, college and graduate students here to study Chinese. We’re inviting teachers from China to teach Mandarin in American schools. We’re providing free online advising for students in China who want to study in the U.S. And the U.S.-China Fulbright program is still going strong with more than 3,000 alumni.
And the private sector is stepping up as well. For example, Steve Schwarzman, who is the head of an American company called Blackstone, is funding a new program at Tsinghua University modeled on the Rhodes Scholarship. And today, students from all kinds of backgrounds are studying here in China.
Take the example of Royale Nicholson, who’s from Cleveland, Ohio. She attends New York University’s program in Shanghai. Now, like me, Royale is a first-generation college student. And her mother worked two full-time jobs while her father worked nights to support their family. And of her experience in Shanghai, Royale said -- and this is her quote -- she said, “This city oozes persistence and inspires me to accomplish all that I can.” And happy birthday, Royale. It was her birthday yesterday. (Laughter.)
And then there’s Philmon Haile from the University of Washington, whose family came to the U.S. as refugees from Eritrea when he was a child. And of his experience studying in China, he said, “Study abroad is a powerful vehicle for people-to-people exchange as we move into a new era of citizen diplomacy.”
“A new era of citizen diplomacy.” I could not have said it better myself, because that’s really what I’m talking about. I am talking about ordinary citizens reaching out to the world. And as I always tell young people back in America, you don’t need to get on a plane to be a citizen diplomat. I tell them that if you have an Internet connection in your home, school, or library, within seconds you can be transported anywhere in the world and meet people on every continent.
And that’s why I’m posting a daily travel blog with videos and photos of my experiences here in China, because I want young people in America to be part of this visit. And that’s really the power of technology –- how it can open up the entire world and expose us to ideas and innovations we never could have imagined.
And that’s why it’s so important for information and ideas to flow freely over the Internet and through the media, because that’s how we discover the truth. That’s how we learn what’s really happening in our communities and our country and our world. And that’s how we decide which values and ideas we think are best –- by questioning and debating them vigorously, by listening to all sides of an argument, and by judging for ourselves.
And believe me, I know how this can be a messy and frustrating process. My husband and I are on the receiving end of plenty of questioning and criticism from our media and our fellow citizens. And it’s not always easy, but we wouldn’t trade it for anything in the world. Because time and again, we have seen that countries are stronger and more prosperous when the voices of and opinions of all their citizens can be heard.
And as my husband has said, we respect the uniqueness of other cultures and societies, but when it comes to expressing yourself freely and worshipping as you choose and having open access to information, we believe those universal rights -- they are universal rights that are the birthright of every person on this planet. We believe that all people deserve the opportunity to fulfill their highest potential as I was able to do in the United States.
And as you learn about new cultures and form new friendships during your time here in China and in the United States, all of you are the living, breathing embodiment of those values. So I guarantee you that in studying abroad, you’re not just changing your own life, you are changing the lives of everyone you meet.
And as the great American President John F. Kennedy once said about foreign students studying in the U.S., he said “I think they teach more than they learn.” And that is just as true of young Americans who study abroad. All of you are America’s best face, and China’s best face, to the world -- you truly are.
Every day, you show the world your countries’ energy and creativity and optimism and unwavering belief in the future. And every day, you remind us -- and me in particular -- of just how much we can achieve if we reach across borders, and learn to see ourselves in each other, and confront our shared challenges with shared resolve.
So I hope you all will keep seeking these kinds of experiences. And I hope you’ll keep teaching each other, and learning from each other, and building bonds of friendship that will enrich your lives and enrich our world for decades to come.
You all have so much to offer, and I cannot wait to see all that you achieve together in the years ahead.
Thank you so much. Xie-Xie. (Applause.)
END 11:48 A.M. CST
ODOMETER FRAUDSTER PLEADS GUILTY IN ROLLBACK SCHEME
FROM: U.S. JUSTICE DEPARTMENT
Thursday, March 20, 2014
Massapequa, N.Y., Man Pleads Guilty to Rolling Back Odometers in Scheme That Defrauded Dozens of Car Buyers
A Massapequa, N.Y., man pleaded guilty today in U.S. District Court in Allentown, Pa., to conspiracy to commit odometer tampering, the Department of Justice announced. The defendant, Edward Capicchioni, 53, pleaded guilty to one count of conspiracy to tamper with odometers and make false odometer certifications. Capicchioni rolled back odometers on used cars and trucks to make the vehicles appear more valuable. Doing business under the company name of The General’s Auto Sales, Capicchioni sold more than 50 vehicles with rolled back odometers.
“Tampering with a car’s odometer in order to trick a would-be buyer is not only pernicious, it is a federal crime,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “A car is an expensive purchase – indeed, for many of us, the most expensive purchase of our lives – and we have a right to know that the car we are buying is what it appears to be. The Department of Justice will continue to take action against those who seek to defraud consumers.”
Capicchioni admitted to purchasing high-mileage cars, sport-utility vehicles and trucks from individual sellers in New York, Pennsylvania, Rhode Island and Maryland. Capicchioni then worked with a co-conspirator to roll back and alter the odometers and resold the vehicles at a wholesale auto auction in Pennsylvania. Capicchioni also took steps to hide his odometer fraud scheme. He checked the Carfax public database to see if it included a mileage entry that was higher than the false, lower mileage to which he reset the odometer. When Carfax included a higher mileage, Capicchioni submitted to Carfax fraudulent documentation in the name of the vehicle’s prior owner, in order to have the higher mileage reading removed.
After Carfax discovered Capicchioni’s fraud scheme through an internal investigation, Carfax personnel alerted the Office of Odometer Fraud Investigation at the National Highway Traffic Safety Administration (NHTSA). NHTSA conducted additional investigation into the full scope of Capicchioni’s criminal activities, and Carfax continued to provide information and assistance throughout NHTSA’s investigation.
This case is being prosecuted by Trial Attorney John W. Burke with the Consumer Protection Branch of the U.S. Department of Justice.
Thursday, March 20, 2014
Massapequa, N.Y., Man Pleads Guilty to Rolling Back Odometers in Scheme That Defrauded Dozens of Car Buyers
A Massapequa, N.Y., man pleaded guilty today in U.S. District Court in Allentown, Pa., to conspiracy to commit odometer tampering, the Department of Justice announced. The defendant, Edward Capicchioni, 53, pleaded guilty to one count of conspiracy to tamper with odometers and make false odometer certifications. Capicchioni rolled back odometers on used cars and trucks to make the vehicles appear more valuable. Doing business under the company name of The General’s Auto Sales, Capicchioni sold more than 50 vehicles with rolled back odometers.
“Tampering with a car’s odometer in order to trick a would-be buyer is not only pernicious, it is a federal crime,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “A car is an expensive purchase – indeed, for many of us, the most expensive purchase of our lives – and we have a right to know that the car we are buying is what it appears to be. The Department of Justice will continue to take action against those who seek to defraud consumers.”
Capicchioni admitted to purchasing high-mileage cars, sport-utility vehicles and trucks from individual sellers in New York, Pennsylvania, Rhode Island and Maryland. Capicchioni then worked with a co-conspirator to roll back and alter the odometers and resold the vehicles at a wholesale auto auction in Pennsylvania. Capicchioni also took steps to hide his odometer fraud scheme. He checked the Carfax public database to see if it included a mileage entry that was higher than the false, lower mileage to which he reset the odometer. When Carfax included a higher mileage, Capicchioni submitted to Carfax fraudulent documentation in the name of the vehicle’s prior owner, in order to have the higher mileage reading removed.
After Carfax discovered Capicchioni’s fraud scheme through an internal investigation, Carfax personnel alerted the Office of Odometer Fraud Investigation at the National Highway Traffic Safety Administration (NHTSA). NHTSA conducted additional investigation into the full scope of Capicchioni’s criminal activities, and Carfax continued to provide information and assistance throughout NHTSA’s investigation.
This case is being prosecuted by Trial Attorney John W. Burke with the Consumer Protection Branch of the U.S. Department of Justice.
STUDY SHOWS ROCKY MOUNTAIN WILDFLOWER SEASON HAS LENGTHENED
FROM: NATIONAL SCIENCE FOUNDATION
Rocky Mountain wildflower season lengthens by more than a month
39-year bloom count reveals changes attributed to warmer climate
A 39-year study of wildflower blooms in a Colorado Rocky Mountain meadow shows that more than two-thirds of alpine flowers have changed their blooming patterns in response to climate change.
Not only are half the flowers beginning to bloom weeks earlier, but more than a third are reaching their peak blooms earlier, and others are producing their last blooms later in the year.
The blooming season, which used to run from late May through early September, now lasts from late April to late September, according to University of Maryland ecologist David Inouye.
The wildflower records, made up of more than two million blooms, suggest that flowering plants' responses to climate change are more complex than previously believed, with different species responding in unexpected ways.
The combinations of flowering species that bloom together are changing, too, with potential effects on insects and birds.
Studies that focus only on the date of flowers' first blooms--as most do--understate these changes, says Inouye, co-author of a paper published in this week's issue of the journal Proceedings of the National Academy of Sciences (PNAS).
"Long-term data are essential to understanding every environmental challenge the world faces," says Saran Twombly, a program director in the National Science Foundation's (NSF) Division of Environmental Biology, which funded the research.
"This study relies on long-term data to drive home the fact that species' responses to climate change are complex."
Phenology, the study of the timing of seasonal events, is crucial to knowing how climate change affects plants, animals and the relationships that bind them into natural communities.
To answer these questions, phenologists are collecting new data and poring through old records, such as amateur naturalists' notebooks.
"Most studies rely on first dates of events like flowering or migration because they use historical data sets that were not intended as scientific studies," Inouye says.
"First flowering is easy to observe. You don't have to take the time to count flowers. So that's often the only information available.
"It's taken a lot of effort to get the comprehensive insights needed for this analysis, which helps us understand how ecological communities may change in the future."
By counting blooms in each of 30 plots every other day, up to five months per year, for four decades, Inouye and colleagues amassed a data set including more than two million flowers.
For the study, University of Arizona biologist Paul CaraDonna, University of Maryland biologist Amy Iler and Inouye analyzed data on the 60 most common species.
Bloom times are changing fast, the researchers found.
The date the first spring flower appears has advanced by more than six days per decade over the course of the study.
The spring peak, when masses of wildflowers burst into bloom, has moved up by five days per decade.
And the last flower of fall occurred about three days later every decade. "The flowering season is about one month longer than it used to be," Iler says, "which is a big change for a mountain ecosystem with a short growing season."
Of all the species that have changed their flowering schedules in some way, only 17 percent shifted their entire bloom cycles earlier. The rest showed more complicated changes.
"First flowering isn't always the best predictor of all the changes we find," CaraDonna says.
"There's a lot more going on than you can get from this single, simple measure. So, it's important to take a closer look to understand all the ways climate change affects these wildflower communities."
As the plants' bloom patterns continue to change, researchers expect that some plants that bloomed simultaneously will no longer overlap, and others will start blooming together for the first time.
Ecologists refer to these new combinations as "'no-analog' communities."
"We usually think of no-analog communities as something that happens when plants or animals move into areas where they haven't lived before, creating novel combinations of species," Iler says.
"For example, we have red foxes at our study site now. It used to be too cold for them in winter. Now the marmots that live there have to deal with a new predator.
"But this study shows that even when species don't actually move, changes in the timing of key events in their life cycles may also result in no-analog communities, where species may interact differently than before."
The changes are likely to have a strong effect--for better or worse--on pollinating insects and migratory birds.
For example, Inouye says, hummingbirds that summer in the Rocky Mountains time their nesting so their eggs hatch at peak wildflower bloom, when there is plenty of flower nectar for hungry chicks.
But as the bloom season lengthens, the plants are not producing more flowers. The same number of blooms is spread out over more days, so at peak bloom there may be fewer flowers.
Will there be enough food for the hummingbirds' young?
To find out, Inouye plans to fit adult hummingbirds with radio transmitters to study how they interact with this summer's blooms.
-NSF-
Rocky Mountain wildflower season lengthens by more than a month
39-year bloom count reveals changes attributed to warmer climate
A 39-year study of wildflower blooms in a Colorado Rocky Mountain meadow shows that more than two-thirds of alpine flowers have changed their blooming patterns in response to climate change.
Not only are half the flowers beginning to bloom weeks earlier, but more than a third are reaching their peak blooms earlier, and others are producing their last blooms later in the year.
The blooming season, which used to run from late May through early September, now lasts from late April to late September, according to University of Maryland ecologist David Inouye.
The wildflower records, made up of more than two million blooms, suggest that flowering plants' responses to climate change are more complex than previously believed, with different species responding in unexpected ways.
The combinations of flowering species that bloom together are changing, too, with potential effects on insects and birds.
Studies that focus only on the date of flowers' first blooms--as most do--understate these changes, says Inouye, co-author of a paper published in this week's issue of the journal Proceedings of the National Academy of Sciences (PNAS).
"Long-term data are essential to understanding every environmental challenge the world faces," says Saran Twombly, a program director in the National Science Foundation's (NSF) Division of Environmental Biology, which funded the research.
"This study relies on long-term data to drive home the fact that species' responses to climate change are complex."
Phenology, the study of the timing of seasonal events, is crucial to knowing how climate change affects plants, animals and the relationships that bind them into natural communities.
To answer these questions, phenologists are collecting new data and poring through old records, such as amateur naturalists' notebooks.
"Most studies rely on first dates of events like flowering or migration because they use historical data sets that were not intended as scientific studies," Inouye says.
"First flowering is easy to observe. You don't have to take the time to count flowers. So that's often the only information available.
"It's taken a lot of effort to get the comprehensive insights needed for this analysis, which helps us understand how ecological communities may change in the future."
By counting blooms in each of 30 plots every other day, up to five months per year, for four decades, Inouye and colleagues amassed a data set including more than two million flowers.
For the study, University of Arizona biologist Paul CaraDonna, University of Maryland biologist Amy Iler and Inouye analyzed data on the 60 most common species.
Bloom times are changing fast, the researchers found.
The date the first spring flower appears has advanced by more than six days per decade over the course of the study.
The spring peak, when masses of wildflowers burst into bloom, has moved up by five days per decade.
And the last flower of fall occurred about three days later every decade. "The flowering season is about one month longer than it used to be," Iler says, "which is a big change for a mountain ecosystem with a short growing season."
Of all the species that have changed their flowering schedules in some way, only 17 percent shifted their entire bloom cycles earlier. The rest showed more complicated changes.
"First flowering isn't always the best predictor of all the changes we find," CaraDonna says.
"There's a lot more going on than you can get from this single, simple measure. So, it's important to take a closer look to understand all the ways climate change affects these wildflower communities."
As the plants' bloom patterns continue to change, researchers expect that some plants that bloomed simultaneously will no longer overlap, and others will start blooming together for the first time.
Ecologists refer to these new combinations as "'no-analog' communities."
"We usually think of no-analog communities as something that happens when plants or animals move into areas where they haven't lived before, creating novel combinations of species," Iler says.
"For example, we have red foxes at our study site now. It used to be too cold for them in winter. Now the marmots that live there have to deal with a new predator.
"But this study shows that even when species don't actually move, changes in the timing of key events in their life cycles may also result in no-analog communities, where species may interact differently than before."
The changes are likely to have a strong effect--for better or worse--on pollinating insects and migratory birds.
For example, Inouye says, hummingbirds that summer in the Rocky Mountains time their nesting so their eggs hatch at peak wildflower bloom, when there is plenty of flower nectar for hungry chicks.
But as the bloom season lengthens, the plants are not producing more flowers. The same number of blooms is spread out over more days, so at peak bloom there may be fewer flowers.
Will there be enough food for the hummingbirds' young?
To find out, Inouye plans to fit adult hummingbirds with radio transmitters to study how they interact with this summer's blooms.
-NSF-
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