FROM: U.S. JUSTICE DEPARTMENT
Wednesday, August 14, 2013
Justice Department Files Lawsuit in Delaware Against Regal Contractors LLC Et Al., to Enforce the Employment Rights of Air Force Reserve Member
The Justice Department and U.S. Attorney for the District of Delaware Charles M. Oberly III announced today the filing of a lawsuit alleging that Regal Contractors LLC, Regal Builders LLC and Noble Pond Homes willfully violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by terminating U.S. Air Force Reserve Member Lon Fluman following his return from required military training with his reserve unit.
Fluman is a Senior Airman with the U.S. Air Force Reserve serving with the 712th Aircraft Maintenance Squadron at Dover Air Force Base. According to the complaint, filed in the U.S. District Court for Delaware, Fluman was scheduled for reserve military duty to begin on Sept. 3, 2012 but was rescheduled on short notice to start one day later. Subsequently, Fluman served weekend reserve duty in early December of 2012. Following his second duty, the defendants terminated Fluman from his position as a maintenance technician. Although Fluman satisfied USERRA’s notification requirements before departing for his military leaves, according to the complaint, the defendants terminated Fluman anyway, claiming the notice provided was not sufficient.
USERRA explicitly protects the rights of members of the uniformed services to retain their employment following absences due to military service obligations. “Congress enacted USERRA to protect our men and women in uniform from experiencing this kind of injustice,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to vigorously enforcing federal laws that protect the employment rights of our servicemembers.”
“Members of the Air Force Reserve sacrifice time away from their jobs to serve their country,” said U.S. Attorney Oberly. “USERRA ensures that they are not discriminated against and that their employment rights are protected.”
This case stems from a referral by the U.S. Department of Labor following an investigation by the Department of Labor’s Veterans’ Employment and Training Service. The case is being handled by the Civil Rights Division and the U.S. Attorney’s Office for the District of Delaware, who work collaboratively with the Department of Labor to protect the jobs and benefits of National Guard and Reserve servicemembers upon their return to civilian life.
Sunday, August 18, 2013
FORMER LIQUOR STORE OWNER PLEADS GUILTY TO SELLING CUTTING AGENTS TO DRUG DEALERS
FROM: DEPARTMENT OF JUSTICE
Tuesday, August 13, 2013
Former Owner of Liquor Store Pleads Guilty to Tax Crime and Selling Cutting Agents to Local Drug Dealers
Southfield, Mich., resident Bashar Saroki pleaded guilty to filing a false tax return and selling drug paraphernalia, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, Saroki controlled and operated Golden Star Party Store, a liquor store that was located in Detroit. From 2007 through 2011, Saroki sold more than $1 million worth of a variety of cutting agents to local narcotics dealers out of Golden Star Party Store and from his residence. The cutting agents were substances used by narcotics dealers to dilute the potency and increase the quantity of the narcotics sold to customers. Despite the significant proceeds from the sale of cutting agents, Saroki reported very little income on his false tax return for 2009.
Saroki faces a maximum sentence of three years in prison, one year of supervised release and a $250,000 fine on each count. U.S. District Judge Robert H. Cleland set sentencing for Dec. 17, 2013.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS-Criminal Investigation, who investigated this case, and Tax Division Trial Attorneys Kenneth C. Vert and Yael T. Epstein, who prosecuted the case.
Tuesday, August 13, 2013
Former Owner of Liquor Store Pleads Guilty to Tax Crime and Selling Cutting Agents to Local Drug Dealers
Southfield, Mich., resident Bashar Saroki pleaded guilty to filing a false tax return and selling drug paraphernalia, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, Saroki controlled and operated Golden Star Party Store, a liquor store that was located in Detroit. From 2007 through 2011, Saroki sold more than $1 million worth of a variety of cutting agents to local narcotics dealers out of Golden Star Party Store and from his residence. The cutting agents were substances used by narcotics dealers to dilute the potency and increase the quantity of the narcotics sold to customers. Despite the significant proceeds from the sale of cutting agents, Saroki reported very little income on his false tax return for 2009.
Saroki faces a maximum sentence of three years in prison, one year of supervised release and a $250,000 fine on each count. U.S. District Judge Robert H. Cleland set sentencing for Dec. 17, 2013.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS-Criminal Investigation, who investigated this case, and Tax Division Trial Attorneys Kenneth C. Vert and Yael T. Epstein, who prosecuted the case.
GSA SAYS 'CITY PAIR PROGRAM' SAVES GOVERNMENT BILLIONS
FROM: U.S. GENERAL SERVICES ADMINISTRATION
City Pair Program Saves Billions for Federal Agencies
Air travel program leverages government’s buying power to save over $2 billion annually
August 16, 2013
WASHINGTON — Today, the U.S. General Services Administration announced the award of its cost-saving air travel contracts for 2014, which will save taxpayers approximately $2.2 billion a year. Under GSA’s City Pair Program, airfare rates for the federal government’s official travel are pre-negotiated and offer up to 59 percent off of commercial airfare for the federal workforce. In addition to offering considerable discounts, the City Pair Program allows the federal government additional flexibility in how it books air travel.
“GSA’s mission is to help federal agencies save money, and that includes getting the best price for government travelers," said Tom Sharpe, Jr. Commissioner of GSA’s Federal Acquisition Service. "By leveraging the government’s buying power, we are able to help federal agencies reduce travel costs and save billions of taxpayer dollars.”
GSA’s data-driven analytical approach to managing the program and negotiating with the carriers is driving greater cost savings and performance for the City Pair Program and the overall rates for 2014 are consistently below corporate benchmark rates in all top markets.
In 2014, the City Pair Program is expanding its reach, increasing available routes by 25 percent to more than 6,300 destinations. Average one-way ticket prices for domestic flights have dropped four percent and international rates have dropped seven percent. Additionally, non-stop flights have been expanded by 20 percent to 1,887 routes.
For the upcoming year, the City Pair Program retained all of the same benefits which contribute to greater savings, beyond ticket cost, for government. The program gives federal travelers the flexibility to book one- way, multi-leg, and round-trip airfare at the lowest cost possible, while retaining the ability to adjust or cancel flights at no additional cost to the government.
Another positive trend for federal travelers is that many secondary markets that were not awarded in 2013, because lower commercial fares were readily available, were awarded and will be available in 2014. Following the 2013 decision to not award the secondary markets, instead directing federal travelers to the lower commercially-available rates, the airlines came back to GSA with competitive pricing in those markets this year, allowing for travelers to book lowest rates and receive the benefits associated with booking through City Pairs.
Ten major U.S. carriers were awarded contracts. When awarding City Pair contracts to airlines, GSA considers a number of criteria, including availability of non-stop service, total number of flights, flight availability, average elapsed flight time, availability of jet service, and price of service. The program also offers dual fare markets to provide flexibility for immediate travel and discounted fares for booking flights early. The 2014 rates will become effective October 1, 2013.
City Pair Program Saves Billions for Federal Agencies
Air travel program leverages government’s buying power to save over $2 billion annually
August 16, 2013
WASHINGTON — Today, the U.S. General Services Administration announced the award of its cost-saving air travel contracts for 2014, which will save taxpayers approximately $2.2 billion a year. Under GSA’s City Pair Program, airfare rates for the federal government’s official travel are pre-negotiated and offer up to 59 percent off of commercial airfare for the federal workforce. In addition to offering considerable discounts, the City Pair Program allows the federal government additional flexibility in how it books air travel.
“GSA’s mission is to help federal agencies save money, and that includes getting the best price for government travelers," said Tom Sharpe, Jr. Commissioner of GSA’s Federal Acquisition Service. "By leveraging the government’s buying power, we are able to help federal agencies reduce travel costs and save billions of taxpayer dollars.”
GSA’s data-driven analytical approach to managing the program and negotiating with the carriers is driving greater cost savings and performance for the City Pair Program and the overall rates for 2014 are consistently below corporate benchmark rates in all top markets.
In 2014, the City Pair Program is expanding its reach, increasing available routes by 25 percent to more than 6,300 destinations. Average one-way ticket prices for domestic flights have dropped four percent and international rates have dropped seven percent. Additionally, non-stop flights have been expanded by 20 percent to 1,887 routes.
For the upcoming year, the City Pair Program retained all of the same benefits which contribute to greater savings, beyond ticket cost, for government. The program gives federal travelers the flexibility to book one- way, multi-leg, and round-trip airfare at the lowest cost possible, while retaining the ability to adjust or cancel flights at no additional cost to the government.
Another positive trend for federal travelers is that many secondary markets that were not awarded in 2013, because lower commercial fares were readily available, were awarded and will be available in 2014. Following the 2013 decision to not award the secondary markets, instead directing federal travelers to the lower commercially-available rates, the airlines came back to GSA with competitive pricing in those markets this year, allowing for travelers to book lowest rates and receive the benefits associated with booking through City Pairs.
Ten major U.S. carriers were awarded contracts. When awarding City Pair contracts to airlines, GSA considers a number of criteria, including availability of non-stop service, total number of flights, flight availability, average elapsed flight time, availability of jet service, and price of service. The program also offers dual fare markets to provide flexibility for immediate travel and discounted fares for booking flights early. The 2014 rates will become effective October 1, 2013.
12 PACIFIC WOMEN LEADERS TO ATTEND CLIMATE CHANGE PROGRAM
FROM: U.S. STATE DEPARTMENT
Women Leaders from Pacific Participate in U.S. Program on Climate Change
Media Note
Office of the Spokesperson
Washington, DC
August 16, 2013
From August 18 – 28, 2013, twelve women climate leaders from across the Pacific region will visit Washington, D.C., Pensacola, Florida, and Honolulu, Hawaii to meet with policymakers, scientists, and innovators to share their experiences and to learn about U.S. efforts to combat climate change. This exchange, a joint initiative of the Secretary's Office of Global Women's Issues and Bureau of Educational and Cultural Affairs, advances the Rarotonga Partnership for the Advancement of Pacific Island Women and broader U.S. efforts to support the critical role of women around the world in combating climate change. It also builds on a 2012 International Visitors Leadership Program of women climate leaders.
In Washington, the group will meet with senior officials from the Department of State, the Environmental Protection Agency, and the Department of Energy; participate in a roundtable discussion with non-governmental organizations and a panel with World Bank experts on climate change; and receive training in social media at George Washington University.
In Pensacola and Honolulu, the participants will engage in a series of meetings and site visits to learn more about topics related to climate change, ranging from disaster risk management and emergency operations to environmental conservation to innovative renewable energy technologies. In Pensacola, the participants will learn more about life in the United States by engaging with local residents during home hospitality visits.
Representing the Cook Islands, Fiji, Micronesia, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, and Vanuatu, these climate leaders will share practical skills and ideas learned with counterparts upon returning home.
Women Leaders from Pacific Participate in U.S. Program on Climate Change
Media Note
Office of the Spokesperson
Washington, DC
August 16, 2013
From August 18 – 28, 2013, twelve women climate leaders from across the Pacific region will visit Washington, D.C., Pensacola, Florida, and Honolulu, Hawaii to meet with policymakers, scientists, and innovators to share their experiences and to learn about U.S. efforts to combat climate change. This exchange, a joint initiative of the Secretary's Office of Global Women's Issues and Bureau of Educational and Cultural Affairs, advances the Rarotonga Partnership for the Advancement of Pacific Island Women and broader U.S. efforts to support the critical role of women around the world in combating climate change. It also builds on a 2012 International Visitors Leadership Program of women climate leaders.
In Washington, the group will meet with senior officials from the Department of State, the Environmental Protection Agency, and the Department of Energy; participate in a roundtable discussion with non-governmental organizations and a panel with World Bank experts on climate change; and receive training in social media at George Washington University.
In Pensacola and Honolulu, the participants will engage in a series of meetings and site visits to learn more about topics related to climate change, ranging from disaster risk management and emergency operations to environmental conservation to innovative renewable energy technologies. In Pensacola, the participants will learn more about life in the United States by engaging with local residents during home hospitality visits.
Representing the Cook Islands, Fiji, Micronesia, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, and Vanuatu, these climate leaders will share practical skills and ideas learned with counterparts upon returning home.
SAVING MILITARY MORALE, WELFARE AND RECREATION UNDER TIGHTENING BUDGETS
FROM: U.S. DEFENSE DEPARTMENT
Officials Strive to Protect MWR Programs Amid Budget Cuts
By Donna Miles
American Forces Press Service
WASHINGTON, Aug. 21, 2013 - Committed to preserving quality-of-life offerings despite ever-tighter budgets, military morale, welfare and recreation officials are scaling back in some areas as they introduce innovative approaches to delivering services and programs.
Military fitness centers, swimming pools, lodging facilities and outdoor recreation offices might sound to some like a footnote among competing budget requirements. But Ed Miles, DOD's MWR policy director, and his counterparts across the military services see a close connection to military readiness.
"We have a direct impact on the readiness and retention and resilience of the troops and their families," Miles told American Forces Press Service. "When you have a healthy and fit force, it has absolute national security implications -- in terms of stress reduction, physical and emotional health and esprit de corps.
Congress has long agreed, authorizing funds since 1989 to cover 85 percent of programs with the most direct link to readiness: fitness centers, community centers and library programs, among them, Miles explained.
Amenities such as arts-and-crafts centers, outdoor recreation centers and youth programs that are less directly tied to readiness receive a lower authorization of 65 percent.
Meanwhile, "nice-to-have" offerings such as military golf courses, bowling alleys, campgrounds, food and beverage services and similar services generally must be self-supporting, with user fees covering all costs and overhead.
A variety of factors has thrown this formula off kilter, Miles said. With increased privatization, almost three-quarters of military families now live off installations and tap services and programs in their communities. Many, like their civilian neighbors, have fewer spare dollars to spend on recreation. And with sequestration putting a big dent in already-reduced MWR budgets, the military services find themselves struggling to provide quality-of-life programs and services to their members.
It all converges after 11 years of war -- at a time when safe, affordable options for military members and their families to blow off steam are more important than ever, said Bob Vogt, the Army's division chief for soldier and community recreation.
"If we didn't have the programs offered on an installation for a soldier or his family, they would have to go find a release somewhere else," he said. "We have a safe, controlled environment on our installations, and we can offer a reduced fee for a lot of programs to help them release some of that pent-up stress and frustration.
"So our goal is to try not to reduce or eliminate any services and to try to maintain the current level of services," Vogt said.
In some cases, that has required the Army to borrow from nonappropriated-fund activities to keep fitness centers and other appropriated activities running.
"But we can only do that for so long, because it puts our funding under a lot of strain," Vogt said. "Over the short term, it allows you to maintain your services. But if you start diverting funds from self-sustaining activities for an extended period of time, you lose your ability to recapitalize. When the roof on the club collapses or the freezer blows up, you don't have the funds you need to recapitalize."
Across the services, officials are looking at other ways to keep MWR programs viable.
They're beginning to scale back operating hours at fitness centers to the Defense Department-mandated 90 hours per week. Patrons increasingly find themselves being asked to pay nominal fees for aerobics and other fitness classes taught by paid staffers. Library hours at many installations have been reduced to 40 hours a week. Most bases now operate just one pool to reduce lifeguard salaries and other overhead costs. Outdoor recreation centers are considering charging rental fees for skis and other equipment, rather than the smaller maintenance fee charged in the past. Concerts and other special entertainment have been scaled back or cancelled altogether.
Volunteers, long the backbone of many MWR services and programs, are putting in more time in fitness centers, family support centers and libraries as well as on intramural fields to cover personnel shortfalls.
"It would be a lot tougher for our staff to deliver the quantity and quality of programs they do without those volunteers," Miles said. "And with sequestration, we find that we are depending on them more than ever. Without our volunteers, we would be in a world of hurt."
The decisions to reduce or eliminate services have been tough, Vogt acknowledged.
"With sequestration and the loss of appropriated fund support to continue many of our programs, we are going to have to increase user fees, reduce hours or possibly eliminate services," he said. "But we are doing everything in our power not to let that happen."
As decisions are made, the emphasis remains on readiness, officials emphasized.
The Navy, for example, has put fitness, libraries and the Liberty Program that serves single sailors at the top of its list, reported Lorraine Seidel, Navy recreation program manager.
"Those programs are pretty important to have," she said. "So by curtailing other programs somewhat, but not down to the bone, we are allowing some flexibility to retain those things that we really need to have on the base."
Based on extensive surveys, the Air Force identified fitness, appropriated-fund dining facilities, youth and child care services, outdoor programs and libraries as its most important offerings, said Michael Bensen, the Air Force Personnel Center's deputy director of services.
In some cases, the services are trying new innovations to keep popular programs running.
The Air Force, for example, is testing a pilot program at six bases that gives qualified users 24/7 access to fitness centers, even after the paid staff has left for the day. Based on the results, the initiative could be expanded to more bases, Bensen explained.
The Navy is revamping its community recreation program to bundle services and programs at one location, Seidel reported. A waterfront recreational area at Naval Base San Diego serves as a model, combining outdoor recreation services and the ticket booth for local tours and attractions under one roof, served by a central front desk. Eielson Air Force Base, Alaska, initiated a similar concept, consolidating MWR activities under one overall manager.
New partnerships are helping to keep services going despite budget cuts. In some cases, military patrons now get free or low-cost access to community or commercial services and programs that their installations no longer offer.
For example, Joint Base Andrews in Maryland established a partnership with a popular private-sector company that teaches rappelling, kayaking and other outdoor activities to military patrons. That saves the Air Force the cost of hiring its own instructors while ensuring "a quality experience at a reduced cost," Bensen said.
In other cases, installations are opening their doors to outside patrons. Many Army posts invite local swim teams to their pools and high school golf clubs to their golf courses. One particularly successful arrangement between the Presidio of Monterey and the city of Monterey, Calif., provides free maintenance services on the post's sports fields in exchange for city use of those fields based on availability, Vogt reported.
"We are generating income, working with our partners outside the gate, and offering programs we might not otherwise be able to offer," he said. "We are trying to be creative and tie into municipalities outside the gate, many of them in the same situation we are. So it is a perfect time for us to partner with everybody."
That mindset must continue to sustain morale, welfare and recreation programs through the current budget crunch, officials said. The result, they said, will have a direct impact on military readiness.
"We think MWR makes for an overall healthy living experience," Seidel said. "If we don't take a step back and take care of ourselves, we lose the ability to function and be at our best. That underlies everything MWR strives to provide, so [service members] can live a healthy life and be ready for the job."
Officials Strive to Protect MWR Programs Amid Budget Cuts
By Donna Miles
American Forces Press Service
WASHINGTON, Aug. 21, 2013 - Committed to preserving quality-of-life offerings despite ever-tighter budgets, military morale, welfare and recreation officials are scaling back in some areas as they introduce innovative approaches to delivering services and programs.
Military fitness centers, swimming pools, lodging facilities and outdoor recreation offices might sound to some like a footnote among competing budget requirements. But Ed Miles, DOD's MWR policy director, and his counterparts across the military services see a close connection to military readiness.
"We have a direct impact on the readiness and retention and resilience of the troops and their families," Miles told American Forces Press Service. "When you have a healthy and fit force, it has absolute national security implications -- in terms of stress reduction, physical and emotional health and esprit de corps.
Congress has long agreed, authorizing funds since 1989 to cover 85 percent of programs with the most direct link to readiness: fitness centers, community centers and library programs, among them, Miles explained.
Amenities such as arts-and-crafts centers, outdoor recreation centers and youth programs that are less directly tied to readiness receive a lower authorization of 65 percent.
Meanwhile, "nice-to-have" offerings such as military golf courses, bowling alleys, campgrounds, food and beverage services and similar services generally must be self-supporting, with user fees covering all costs and overhead.
A variety of factors has thrown this formula off kilter, Miles said. With increased privatization, almost three-quarters of military families now live off installations and tap services and programs in their communities. Many, like their civilian neighbors, have fewer spare dollars to spend on recreation. And with sequestration putting a big dent in already-reduced MWR budgets, the military services find themselves struggling to provide quality-of-life programs and services to their members.
It all converges after 11 years of war -- at a time when safe, affordable options for military members and their families to blow off steam are more important than ever, said Bob Vogt, the Army's division chief for soldier and community recreation.
"If we didn't have the programs offered on an installation for a soldier or his family, they would have to go find a release somewhere else," he said. "We have a safe, controlled environment on our installations, and we can offer a reduced fee for a lot of programs to help them release some of that pent-up stress and frustration.
"So our goal is to try not to reduce or eliminate any services and to try to maintain the current level of services," Vogt said.
In some cases, that has required the Army to borrow from nonappropriated-fund activities to keep fitness centers and other appropriated activities running.
"But we can only do that for so long, because it puts our funding under a lot of strain," Vogt said. "Over the short term, it allows you to maintain your services. But if you start diverting funds from self-sustaining activities for an extended period of time, you lose your ability to recapitalize. When the roof on the club collapses or the freezer blows up, you don't have the funds you need to recapitalize."
Across the services, officials are looking at other ways to keep MWR programs viable.
They're beginning to scale back operating hours at fitness centers to the Defense Department-mandated 90 hours per week. Patrons increasingly find themselves being asked to pay nominal fees for aerobics and other fitness classes taught by paid staffers. Library hours at many installations have been reduced to 40 hours a week. Most bases now operate just one pool to reduce lifeguard salaries and other overhead costs. Outdoor recreation centers are considering charging rental fees for skis and other equipment, rather than the smaller maintenance fee charged in the past. Concerts and other special entertainment have been scaled back or cancelled altogether.
Volunteers, long the backbone of many MWR services and programs, are putting in more time in fitness centers, family support centers and libraries as well as on intramural fields to cover personnel shortfalls.
"It would be a lot tougher for our staff to deliver the quantity and quality of programs they do without those volunteers," Miles said. "And with sequestration, we find that we are depending on them more than ever. Without our volunteers, we would be in a world of hurt."
The decisions to reduce or eliminate services have been tough, Vogt acknowledged.
"With sequestration and the loss of appropriated fund support to continue many of our programs, we are going to have to increase user fees, reduce hours or possibly eliminate services," he said. "But we are doing everything in our power not to let that happen."
As decisions are made, the emphasis remains on readiness, officials emphasized.
The Navy, for example, has put fitness, libraries and the Liberty Program that serves single sailors at the top of its list, reported Lorraine Seidel, Navy recreation program manager.
"Those programs are pretty important to have," she said. "So by curtailing other programs somewhat, but not down to the bone, we are allowing some flexibility to retain those things that we really need to have on the base."
Based on extensive surveys, the Air Force identified fitness, appropriated-fund dining facilities, youth and child care services, outdoor programs and libraries as its most important offerings, said Michael Bensen, the Air Force Personnel Center's deputy director of services.
In some cases, the services are trying new innovations to keep popular programs running.
The Air Force, for example, is testing a pilot program at six bases that gives qualified users 24/7 access to fitness centers, even after the paid staff has left for the day. Based on the results, the initiative could be expanded to more bases, Bensen explained.
The Navy is revamping its community recreation program to bundle services and programs at one location, Seidel reported. A waterfront recreational area at Naval Base San Diego serves as a model, combining outdoor recreation services and the ticket booth for local tours and attractions under one roof, served by a central front desk. Eielson Air Force Base, Alaska, initiated a similar concept, consolidating MWR activities under one overall manager.
New partnerships are helping to keep services going despite budget cuts. In some cases, military patrons now get free or low-cost access to community or commercial services and programs that their installations no longer offer.
For example, Joint Base Andrews in Maryland established a partnership with a popular private-sector company that teaches rappelling, kayaking and other outdoor activities to military patrons. That saves the Air Force the cost of hiring its own instructors while ensuring "a quality experience at a reduced cost," Bensen said.
In other cases, installations are opening their doors to outside patrons. Many Army posts invite local swim teams to their pools and high school golf clubs to their golf courses. One particularly successful arrangement between the Presidio of Monterey and the city of Monterey, Calif., provides free maintenance services on the post's sports fields in exchange for city use of those fields based on availability, Vogt reported.
"We are generating income, working with our partners outside the gate, and offering programs we might not otherwise be able to offer," he said. "We are trying to be creative and tie into municipalities outside the gate, many of them in the same situation we are. So it is a perfect time for us to partner with everybody."
That mindset must continue to sustain morale, welfare and recreation programs through the current budget crunch, officials said. The result, they said, will have a direct impact on military readiness.
"We think MWR makes for an overall healthy living experience," Seidel said. "If we don't take a step back and take care of ourselves, we lose the ability to function and be at our best. That underlies everything MWR strives to provide, so [service members] can live a healthy life and be ready for the job."
LABOR DEPARTMENT AWARDS GRANT MONEY FOR HURRICANE SANDY RECOVERY IN R.I.
FROM: U.S. DEPARTMENT OF LABOR
US Department of Labor awards grant increment to continue Hurricane Sandy recovery efforts in Rhode Island
WASHINGTON — The U.S. Department of Labor today announced a $500,000 National Emergency Grant increment to assist Rhode Island with continued cleanup and recovery efforts following the devastation caused by Hurricane Sandy.
"Rhode Island is still cleaning up beaches and other public lands damaged by Hurricane Sandy," said acting Assistant Secretary of Labor for Employment and Training Eric M. Seleznow. "This additional funding will provide much needed cleanup assistance while also providing temporary work for those in need of employment."
On Nov. 3, 2012, the Federal Emergency Management Agency initially declared the Rhode Island counties of Bristol, Newport and Washington as eligible for FEMA's Public Assistance Program. FEMA subsequently declared Kent County as eligible for the program. More information on designated disaster areas in Rhode Island is available from FEMA at http://www.fema.gov/disaster/4089/designated-areas.
The department approved a grant for up to $1.5 million on Nov. 6, 2012, with $500,000 released initially. The department awarded a $500,000 grant increment in May 2013. This latest funding increment brings the total awarded to $1.5 million.
National Emergency Grants are part of the secretary of labor's discretionary fund and are awarded based on a state's ability to meet specific guidelines.
US Department of Labor awards grant increment to continue Hurricane Sandy recovery efforts in Rhode Island
WASHINGTON — The U.S. Department of Labor today announced a $500,000 National Emergency Grant increment to assist Rhode Island with continued cleanup and recovery efforts following the devastation caused by Hurricane Sandy.
"Rhode Island is still cleaning up beaches and other public lands damaged by Hurricane Sandy," said acting Assistant Secretary of Labor for Employment and Training Eric M. Seleznow. "This additional funding will provide much needed cleanup assistance while also providing temporary work for those in need of employment."
On Nov. 3, 2012, the Federal Emergency Management Agency initially declared the Rhode Island counties of Bristol, Newport and Washington as eligible for FEMA's Public Assistance Program. FEMA subsequently declared Kent County as eligible for the program. More information on designated disaster areas in Rhode Island is available from FEMA at http://www.fema.gov/disaster/4089/designated-areas.
The department approved a grant for up to $1.5 million on Nov. 6, 2012, with $500,000 released initially. The department awarded a $500,000 grant increment in May 2013. This latest funding increment brings the total awarded to $1.5 million.
National Emergency Grants are part of the secretary of labor's discretionary fund and are awarded based on a state's ability to meet specific guidelines.
ASSEMBLY OF THE JAMES WEBB SPACE TELESCOPE
 |
| A crane in a clean room at NASA's Goddard Space Flight Center in Greenbelt, Md., lowers a test mass simulator (center of frame) onto the Ambient Optical Assembly Stand or AOAS to ensure it can support the James Webb Space Telescope's Optical Telescope Element during its assembly. Image Credit: NASA/Chris Gunn |
Dropping in on a James Webb Space Telescope Clean Room Test
The James Webb Space Telescope is a large space telescope, optimized for infrared wavelengths. It is scheduled for launch later in this decade. Webb will find the first galaxies that formed in the early Universe, connecting the Big Bang to our own Milky Way galaxy. Webb will peer through dusty clouds to see stars forming planetary systems, connecting the Milky Way to our own solar system. Webb's instruments will be designed to work primarily in the infrared range of the electromagnetic spectrum, with some capability in the visible range.
Webb will have a large mirror, 6.5 meters (21.3 feet) in diameter, and a sunshield the size of a tennis court. The mirror and sunshade won't fit into a rocket fully open, so both will be folded and open once Webb is in outer space. Webb will reside in an orbit about 1.5 million km (1 million miles) from Earth at the second Lagrange point.
The James Webb Space Telescope was named after a former NASA administrator.
Saturday, August 17, 2013
PRESIDENT OBAMA'S WEEKLY ADRESS
WEEKLY ADDRESS: Working to Implement the Affordable Care Act
WASHINGTON, DC— In this week’s address, President Obama said we are on the way to fully implementing the Affordable Care Act and helping millions of Americans. Unfortunately, a group of Republicans in Congress are working to confuse people and are even suggesting they will shut down the government if they cannot shut down the health care law. Health insurance isn’t something to play politics with, and the President will keep working to make sure the law works as it’s supposed to, and he encourages everyone to visit HealthCare.gov to find out more about the law and how to sign up.
Remarks of President Barack Obama
Weekly Address
The White House
August 17, 2013
Hi, everybody. Over the past few weeks, I’ve been visiting with Americans across the country to talk about what we need to do to secure a better bargain for the middle class.
We need to rebuild an economy that rewards hard work and responsibility; an economy built firmly on the cornerstones of middle-class life. Good jobs. A good education. A home of your own. A secure retirement. And quality, affordable health care that’s there when you need it.
Right now, we’re well on our way to fully implementing the Affordable Care Act. And in the next few months, we’ll reach a couple milestones with real meaning for millions of Americans.
If you’re one of the 85% of Americans who already have insurance, you’ve already got new benefits and protections under this law that you didn’t before. Free checkups, mammograms, and contraceptive care. Discounted prescription medicine on Medicare. The fact you can stay on your parents’ plan until you turn 26. And much, much more. And it’s okay if you’re not a fan of the Affordable Care Act – you can take advantage of these things anyway.
If you don’t have insurance, beginning on October 1st, private plans will actually compete for your business. You can comparison shop in an online marketplace, just like you would for cell phone plans or plane tickets. You may be eligible for new tax credits to help you afford the plan that’s right for you. And if you’re in the up to half of all Americans who’ve been sick or have a preexisting condition, this law means that beginning January 1st, insurance companies have to cover you – and they can’t use your medical history to charge you more than anybody else.
You can find out more about the law, and how to sign up to buy your own coverage right now at HealthCare.gov. Tell your friends and neighbors without insurance about it, too. And tell your kids that there’s a new, easy way to buy affordable plans specifically tailored to young people.
Many Members of Congress, in both parties, are working hard to inform their constituents about these benefits, protections, and affordable plans. But there’s also a group of Republicans in Congress working hard to confuse people, and making empty promises that they’ll either shut down the health care law, or, if they don’t get their way, they’ll shut down the government.
Think about that. They’re actually having a debate between hurting Americans who will no longer be denied affordable care just because they’ve been sick – and harming the economy and millions of Americans in the process. And many Republicans are more concerned with how badly this debate will hurt them politically than they are with how badly it’ll hurt the country.
A lot of Republicans seem to believe that if they can gum up the works and make this law fail, they’ll somehow be sticking it to me. But they’d just be sticking it to you.
Some even say that if you call their office with questions about the law, they’ll refuse to help. Call me old-fashioned – but that’s lousy constituent service. And it’s not what you deserve.
Your health insurance isn’t something to play politics with. Our economy isn’t something to play politics with. This isn’t a game. This is about the economic security of millions of families.
See, in the states where governors and legislatures and insurers are working together to implement this law properly – states like California, New York, Colorado and Maryland – competition and consumer choice are actually making insurance affordable.
So I’m going to keep doing everything in my power to make sure this law works as it’s supposed to. Because in the United States of America, health insurance isn’t a privilege – it is your right. And we’re going to keep it that way.
Thanks. And have a great weekend.
SECRETARY KERRY'S REMARKS ON VIOLENCE AND BLOODSHED IN EGYPT
FROM: U.S. DEPARTMENT OF STATE
Remarks by Secretary of State John Kerry on Egypt
Remarks
John Kerry
Secretary of State
Press Briefing Room
Washington, DC
August 14, 2013
Sorry to keep you waiting, folks. I’ll make a statement and then Jen Psaki will stay and take questions and brief everybody.
The United States strongly condemns today’s violence and bloodshed across Egypt. It’s a serious blow to reconciliation and the Egyptian’s people’s hopes for a transition towards democracy and inclusion. In the past week, at every occasion, perhaps even more than the past week, we and others have urged the government to respect the rights of free assembly and of free expression, and we have also urged all parties to resolve this impasse peacefully and underscored that demonstrators should avoid violence and incitement.
Today’s events are deplorable and they run counter to Egyptian aspirations for peace, inclusion, and genuine democracy. Egyptians inside and outside of the government need to take a step back. They need to calm the situation and avoid further loss of life. We also strongly oppose a return to a state of emergency law and we call on the government to respect basic human rights including freedom of peaceful assembly and due process under the law. And we believe that the state of emergency should end as soon as possible.
Violence is simply not a solution in Egypt or anywhere else. Violence will not create a roadmap for Egypt’s future. Violence only impedes the transition to an inclusive civilian government, a government chosen in free and fair elections that governs democratically, consistent with the goals of the Egyptian revolution. And violence and continued political polarization will only further tear the Egyptian economy apart and prevent it from growing and providing the jobs and the future that the people of Egypt want so badly.
The United States strongly supports the Egyptian people’s hope for a prompt and sustainable transition to an inclusive, tolerant, civilian-led democracy. Deputy Secretary of State Burns, together with our EU colleagues, provided constructive ideas and left them on the table during our talks in Cairo last week. From my many phone calls with many Egyptians, I believe they know full well what a constructive process would look like. The interim government and the military, which together possess the preponderance of power in this confrontation, have a unique responsibility to prevent further violence and to offer constructive options for an inclusive, peaceful process across the entire political spectrum. This includes amending the constitution, holding parliamentary and presidential elections, which the interim government itself has called for.
All of the other parties – all of the opposition, all of civil society, all parties – also share a responsibility to avoid violence and to participate in a productive path towards a political solution. There will not be a solution through further polarization. There can only be a political solution by bringing people together with a political solution.
So this is a pivotal moment for all Egyptians. The path towards violence leads only to greater instability, economic disaster, and suffering. The only sustainable path for either side is one towards a political solution. I am convinced from my conversations today with a number of foreign ministers, including the Foreign Minister of Egypt, I am convinced that that path is, in fact, still open and it is possible, though it has been made much, much harder, much more complicated, by the events of today.
The promise of the 2011 revolution has simply never been fully realized, and the final outcome of that revolution is not yet decided. It will be shaped in the hours ahead, in the days ahead. It will be shaped by the decisions which all of Egypt’s political leaders make now and in these days ahead. The world is closely watching Egypt and is deeply concerned about the events that we have witnessed today. The United States remains at the ready to work with all of the parties and with our partners and with others around the world in order to help achieve a peaceful, democratic way forward.
Now Jen will be happy to answer any questions. Thanks.
Remarks by Secretary of State John Kerry on Egypt
Remarks
John Kerry
Secretary of State
Press Briefing Room
Washington, DC
August 14, 2013
Sorry to keep you waiting, folks. I’ll make a statement and then Jen Psaki will stay and take questions and brief everybody.
The United States strongly condemns today’s violence and bloodshed across Egypt. It’s a serious blow to reconciliation and the Egyptian’s people’s hopes for a transition towards democracy and inclusion. In the past week, at every occasion, perhaps even more than the past week, we and others have urged the government to respect the rights of free assembly and of free expression, and we have also urged all parties to resolve this impasse peacefully and underscored that demonstrators should avoid violence and incitement.
Today’s events are deplorable and they run counter to Egyptian aspirations for peace, inclusion, and genuine democracy. Egyptians inside and outside of the government need to take a step back. They need to calm the situation and avoid further loss of life. We also strongly oppose a return to a state of emergency law and we call on the government to respect basic human rights including freedom of peaceful assembly and due process under the law. And we believe that the state of emergency should end as soon as possible.
Violence is simply not a solution in Egypt or anywhere else. Violence will not create a roadmap for Egypt’s future. Violence only impedes the transition to an inclusive civilian government, a government chosen in free and fair elections that governs democratically, consistent with the goals of the Egyptian revolution. And violence and continued political polarization will only further tear the Egyptian economy apart and prevent it from growing and providing the jobs and the future that the people of Egypt want so badly.
The United States strongly supports the Egyptian people’s hope for a prompt and sustainable transition to an inclusive, tolerant, civilian-led democracy. Deputy Secretary of State Burns, together with our EU colleagues, provided constructive ideas and left them on the table during our talks in Cairo last week. From my many phone calls with many Egyptians, I believe they know full well what a constructive process would look like. The interim government and the military, which together possess the preponderance of power in this confrontation, have a unique responsibility to prevent further violence and to offer constructive options for an inclusive, peaceful process across the entire political spectrum. This includes amending the constitution, holding parliamentary and presidential elections, which the interim government itself has called for.
All of the other parties – all of the opposition, all of civil society, all parties – also share a responsibility to avoid violence and to participate in a productive path towards a political solution. There will not be a solution through further polarization. There can only be a political solution by bringing people together with a political solution.
So this is a pivotal moment for all Egyptians. The path towards violence leads only to greater instability, economic disaster, and suffering. The only sustainable path for either side is one towards a political solution. I am convinced from my conversations today with a number of foreign ministers, including the Foreign Minister of Egypt, I am convinced that that path is, in fact, still open and it is possible, though it has been made much, much harder, much more complicated, by the events of today.
The promise of the 2011 revolution has simply never been fully realized, and the final outcome of that revolution is not yet decided. It will be shaped in the hours ahead, in the days ahead. It will be shaped by the decisions which all of Egypt’s political leaders make now and in these days ahead. The world is closely watching Egypt and is deeply concerned about the events that we have witnessed today. The United States remains at the ready to work with all of the parties and with our partners and with others around the world in order to help achieve a peaceful, democratic way forward.
Now Jen will be happy to answer any questions. Thanks.
USDA RELEASES REPORT ON THE ILLEGAL SALE OF SNAP BENEFITS FOR CASH OR INELIGIBLE ITEMS
FROM: U.S. DEPARTMENT OF AGRICULTURE
USDA Releases New Report on Trafficking and Announces Additional Measures to Improve Integrity in the Supplemental Nutrition Assistance Program
WASHINGTON, August 15, 2013 – Agriculture Undersecretary for Food, Nutrition and Consumer Services Kevin Concannon today released a report that examines the trafficking rate in the Supplemental Nutrition Assistance Program (SNAP) and better pinpoints where the vast majority of SNAP trafficking occurs—smaller stores that typically offer minimal access to the healthier foods encouraged by the Dietary Guidelines for Americans. In response, the U.S. Department of Agriculture (USDA) will begin gathering public input on establishing stricter “depth of stock” requirements for SNAP retailers in order to discourage bad actors from entering and abusing the program. This move also supports USDA’s continuing efforts to improve SNAP recipients’ access to healthy foods.
The report indicates that the vast majority of trafficking – the illegal sale of SNAP benefits for cash or other ineligible items – occurs in smaller-sized retailers that typically stock fewer healthy foods. Over the last five fiscal years, the number of retailers authorized to participate in SNAP has grown by over 40 percent; small- and medium-sized retailers account for the vast majority of that growth. The rate of trafficking in larger grocery stores and supermarkets—where 82 percent of all benefits were redeemed—remained low at less than 0.5 percent.
While the overall trafficking rate has remained relatively steady at approximately one cent on the dollar, the report attributes the change in the rate to 1.3 percent primarily to the growth in small- and medium-sized retailers authorized to accept SNAP that may not provide sufficient healthful offerings to recipients. These retailers accounted for 85 percent of all trafficking redemptions. This finding echoes a Government Accountability Office (GAO) report that suggested minimal stocking requirements in SNAP may contribute to corrupt retailers entering the program.
“USDA has a zero tolerance policy on fraud, and we continue to strengthen our anti-fraud tactics to identify and exclude bad actors. More than any other factor, we know that the change in the trafficking rate is being driven by the growth in the number of smaller retailers where trafficking occurs at ten times the rate of larger grocery stores and supermarkets,” said Concannon. “And while the vast majority of retailers and participants are honest, exploring enhanced retailer requirements reaffirms our commitment to ensuring that everyone plays by the rules.”
In order to begin the process of establishing stricter retailer stocking requirements, USDA will be publishing a Request for Information (RFI) in the Federal Register to solicit feedback from stakeholders and the public.
USDA today also finalized a rule that will provide states the option to require SNAP recipients to make contact with the state when there have been an excessive number of requests for EBT card replacements in a year. Requesting excessive replacement cards can indicate that a client is exchanging SNAP cards for cash or other ineligible items. The rule will provide states the opportunity to determine whether the request is legitimate, or requires further investigation.
“Eliminating waste, fraud and abuse is a shared responsibility between the federal government and the states that administer SNAP,” said Concannon. “This new rule better safeguards the taxpayer investment in this critical nutrition program by providing states with additional tools to investigate potentially fraudulent behavior.”
SNAP continues to have one of the lowest fraud rates for Federal programs. Over the past several years, USDA has taken steps to improve SNAP oversight through its SNAP Stewardship Solutions Project. USDA has seen declines in the rate of trafficking from four percent down to about one percent of benefits over the last 15 years. While fraud is rare in SNAP, no amount is acceptable, and it will not be tolerated. USDA continues to crack down on individuals who violate the program and misuse taxpayer dollars by:
Supporting a Robust Investigation Process that, so far this fiscal year, has led to sanctioning of 549 stores and permanent disqualification of 826 stores for trafficking in SNAP benefits or falsifying an application. In 2012, USDA reviewed more than 15,000 stores and permanently disqualified almost 1,400 for program violations, a 14 percent increase over the 1,215 disqualified permanently in FY 2011. The Administration has requested additional resources for program integrity in the fiscal year 2014 budget request.
Cracking Down on New Forms of Fraud by requiring more frequent reviews of higher risk retailers, and expanding the definition of fraud to include so-called “water dumping” and online schemes to illegally sell benefits through social media sites like Facebook, Craigslist and Twitter.
Establishing Stiffer Penalties including a proposed rule that allows USDA to not only permanently disqualify a retailer who traffics, but to assess a monetary penalty in addition to the disqualification, and a separate proposal that would authorize USDA to immediately suspend payments to retailers suspected of flagrant trafficking violations while the retailer is under investigation.
Strengthening State Partnerships through data-sharing agreements to help states more aggressively target suspicious recipient activity and State Law Enforcement Bureau agreements, including a recently announced partnership with Massachusetts, that expands the power of states to investigate retailer fraud.
Improving Program Administration including ensuring that only eligible individuals participate and that recipients receive the correct amount of benefits with a record-high payment accuracy rate of 96.58 percent.
The SNAP Stewardship Solutions Project is part of the Obama Administration's ongoing Campaign to Cut Waste designed to fight fraud, abuse and misuse in federal programs. For more information about USDA efforts to combat fraud, visit the Stop SNAP fraud website at www.fns.usda.gov/snap/fraud.htm.
SNAP is the nation's first line of defense against hunger and is a vital supplement to the monthly food budget of millions low-income individuals. Nearly half of SNAP participants are children and more than 40 percent of recipients live in households with earnings.
USDA’s Food and Nutrition Service (FNS) oversees the administration of 15 nutrition assistance programs, including the Summer Food Service Program and other child nutrition programs, that touch the lives of one in four Americans over the course of a year. These programs work in concert to form a national safety net against hunger. Visit www.fns.usda.gov for information about FNS and nutrition assistance programs.
USDA Releases New Report on Trafficking and Announces Additional Measures to Improve Integrity in the Supplemental Nutrition Assistance Program
WASHINGTON, August 15, 2013 – Agriculture Undersecretary for Food, Nutrition and Consumer Services Kevin Concannon today released a report that examines the trafficking rate in the Supplemental Nutrition Assistance Program (SNAP) and better pinpoints where the vast majority of SNAP trafficking occurs—smaller stores that typically offer minimal access to the healthier foods encouraged by the Dietary Guidelines for Americans. In response, the U.S. Department of Agriculture (USDA) will begin gathering public input on establishing stricter “depth of stock” requirements for SNAP retailers in order to discourage bad actors from entering and abusing the program. This move also supports USDA’s continuing efforts to improve SNAP recipients’ access to healthy foods.
The report indicates that the vast majority of trafficking – the illegal sale of SNAP benefits for cash or other ineligible items – occurs in smaller-sized retailers that typically stock fewer healthy foods. Over the last five fiscal years, the number of retailers authorized to participate in SNAP has grown by over 40 percent; small- and medium-sized retailers account for the vast majority of that growth. The rate of trafficking in larger grocery stores and supermarkets—where 82 percent of all benefits were redeemed—remained low at less than 0.5 percent.
While the overall trafficking rate has remained relatively steady at approximately one cent on the dollar, the report attributes the change in the rate to 1.3 percent primarily to the growth in small- and medium-sized retailers authorized to accept SNAP that may not provide sufficient healthful offerings to recipients. These retailers accounted for 85 percent of all trafficking redemptions. This finding echoes a Government Accountability Office (GAO) report that suggested minimal stocking requirements in SNAP may contribute to corrupt retailers entering the program.
“USDA has a zero tolerance policy on fraud, and we continue to strengthen our anti-fraud tactics to identify and exclude bad actors. More than any other factor, we know that the change in the trafficking rate is being driven by the growth in the number of smaller retailers where trafficking occurs at ten times the rate of larger grocery stores and supermarkets,” said Concannon. “And while the vast majority of retailers and participants are honest, exploring enhanced retailer requirements reaffirms our commitment to ensuring that everyone plays by the rules.”
In order to begin the process of establishing stricter retailer stocking requirements, USDA will be publishing a Request for Information (RFI) in the Federal Register to solicit feedback from stakeholders and the public.
USDA today also finalized a rule that will provide states the option to require SNAP recipients to make contact with the state when there have been an excessive number of requests for EBT card replacements in a year. Requesting excessive replacement cards can indicate that a client is exchanging SNAP cards for cash or other ineligible items. The rule will provide states the opportunity to determine whether the request is legitimate, or requires further investigation.
“Eliminating waste, fraud and abuse is a shared responsibility between the federal government and the states that administer SNAP,” said Concannon. “This new rule better safeguards the taxpayer investment in this critical nutrition program by providing states with additional tools to investigate potentially fraudulent behavior.”
SNAP continues to have one of the lowest fraud rates for Federal programs. Over the past several years, USDA has taken steps to improve SNAP oversight through its SNAP Stewardship Solutions Project. USDA has seen declines in the rate of trafficking from four percent down to about one percent of benefits over the last 15 years. While fraud is rare in SNAP, no amount is acceptable, and it will not be tolerated. USDA continues to crack down on individuals who violate the program and misuse taxpayer dollars by:
Supporting a Robust Investigation Process that, so far this fiscal year, has led to sanctioning of 549 stores and permanent disqualification of 826 stores for trafficking in SNAP benefits or falsifying an application. In 2012, USDA reviewed more than 15,000 stores and permanently disqualified almost 1,400 for program violations, a 14 percent increase over the 1,215 disqualified permanently in FY 2011. The Administration has requested additional resources for program integrity in the fiscal year 2014 budget request.
Cracking Down on New Forms of Fraud by requiring more frequent reviews of higher risk retailers, and expanding the definition of fraud to include so-called “water dumping” and online schemes to illegally sell benefits through social media sites like Facebook, Craigslist and Twitter.
Establishing Stiffer Penalties including a proposed rule that allows USDA to not only permanently disqualify a retailer who traffics, but to assess a monetary penalty in addition to the disqualification, and a separate proposal that would authorize USDA to immediately suspend payments to retailers suspected of flagrant trafficking violations while the retailer is under investigation.
Strengthening State Partnerships through data-sharing agreements to help states more aggressively target suspicious recipient activity and State Law Enforcement Bureau agreements, including a recently announced partnership with Massachusetts, that expands the power of states to investigate retailer fraud.
Improving Program Administration including ensuring that only eligible individuals participate and that recipients receive the correct amount of benefits with a record-high payment accuracy rate of 96.58 percent.
The SNAP Stewardship Solutions Project is part of the Obama Administration's ongoing Campaign to Cut Waste designed to fight fraud, abuse and misuse in federal programs. For more information about USDA efforts to combat fraud, visit the Stop SNAP fraud website at www.fns.usda.gov/snap/fraud.htm.
SNAP is the nation's first line of defense against hunger and is a vital supplement to the monthly food budget of millions low-income individuals. Nearly half of SNAP participants are children and more than 40 percent of recipients live in households with earnings.
USDA’s Food and Nutrition Service (FNS) oversees the administration of 15 nutrition assistance programs, including the Summer Food Service Program and other child nutrition programs, that touch the lives of one in four Americans over the course of a year. These programs work in concert to form a national safety net against hunger. Visit www.fns.usda.gov for information about FNS and nutrition assistance programs.
COMPANY AND FORMER CFO CHARGED BY SEC WITH FRAUD
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Commission Charges Anchor Bancorp Wisconsin and Former CFO with Fraud
The Securities and Exchange Commission announced today that it filed a settled civil action in the United States District Court for the District of Columbia against Anchor Bancorp Wisconsin, Inc. (Anchor) and Dale C. Ringgenberg, Anchor's former Chief Financial Officer. The Commission's complaint alleged, among other things, that Anchor and Ringgenberg intentionally or recklessly made material misstatements in Anchor's quarterly Report on Form 10 Q for the period ended June 30, 2009.
The Commission's complaint alleges that Ringgenberg took, or failed to take, actions to keep from having to correct earnings that Anchor had already released to its shareholders. Ringgenberg manipulated an estimate to offset an accounting adjustment required by Anchor's external auditors, and he refused or failed to properly account for real estate appraisals and related information that was available after the quarter closed but before Anchor filed its quarterly report.
Without admitting or denying the allegations in the Commission's complaint, Anchor agreed to settle the action against it by consenting to the entry of a final judgment permanently enjoining it from violating Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13a-13 thereunder. Ringgenberg agreed to consent, without admitting or denying the allegations in the Commission's complaint, to the entry of a final judgment: (1) permanently enjoining him from violating Section 10(b) of the Exchange Act and Exchange Act Rules 10b-5, 13a 14, 13b2 1, and 13b2-2(a) and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rule 13a-13 thereunder; (2) imposing a civil penalty of $75,000; and (3) barring him from serving as an officer or director of a public company for five years. The settlement is subject to the approval of the district court.
The Commission acknowledges the assistance and cooperation of the Special Inspector General for the Troubled Asset Relief Program, the Office of the United States Attorney for the Western District of Wisconsin, and the Madison, Wisconsin Office of the Federal Bureau of Investigation.
Commission Charges Anchor Bancorp Wisconsin and Former CFO with Fraud
The Securities and Exchange Commission announced today that it filed a settled civil action in the United States District Court for the District of Columbia against Anchor Bancorp Wisconsin, Inc. (Anchor) and Dale C. Ringgenberg, Anchor's former Chief Financial Officer. The Commission's complaint alleged, among other things, that Anchor and Ringgenberg intentionally or recklessly made material misstatements in Anchor's quarterly Report on Form 10 Q for the period ended June 30, 2009.
The Commission's complaint alleges that Ringgenberg took, or failed to take, actions to keep from having to correct earnings that Anchor had already released to its shareholders. Ringgenberg manipulated an estimate to offset an accounting adjustment required by Anchor's external auditors, and he refused or failed to properly account for real estate appraisals and related information that was available after the quarter closed but before Anchor filed its quarterly report.
Without admitting or denying the allegations in the Commission's complaint, Anchor agreed to settle the action against it by consenting to the entry of a final judgment permanently enjoining it from violating Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13a-13 thereunder. Ringgenberg agreed to consent, without admitting or denying the allegations in the Commission's complaint, to the entry of a final judgment: (1) permanently enjoining him from violating Section 10(b) of the Exchange Act and Exchange Act Rules 10b-5, 13a 14, 13b2 1, and 13b2-2(a) and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rule 13a-13 thereunder; (2) imposing a civil penalty of $75,000; and (3) barring him from serving as an officer or director of a public company for five years. The settlement is subject to the approval of the district court.
The Commission acknowledges the assistance and cooperation of the Special Inspector General for the Troubled Asset Relief Program, the Office of the United States Attorney for the Western District of Wisconsin, and the Madison, Wisconsin Office of the Federal Bureau of Investigation.
MICROBIAL ASTRONAUTS
FROM: NASA
Spaceflight Alters Bacterial Social Networks
When astronauts launch into space, a microbial entourage follows. And the sheer number of these followers would give celebrities on Twitter a run for their money. The estimate is that normal, healthy adults have ten times as many microbial cells as human cells within their bodies; countless more populate the environment around us. Although invisible to the naked eye, microorganisms – some friend, some foe – are found practically everywhere.
Microorganisms like bacteria often are found attached to surfaces living in communities known as biofilms. Bacteria within biofilms are protected by a slimy matrix that they secrete. Skip brushing your teeth tomorrow morning and you may personally experience what a biofilm feels like.
One of NASA’s goals is to minimize the health risks associated with extended spaceflight, so it is critical that methods for preventing and treating spaceflight-induced illnesses be developed before astronauts embark upon long-duration space missions. It is important for NASA to learn how bacterial communities that play roles in human health and disease are affected by spaceflight.
In two NASA-funded studies – Micro-2 and Micro-2A – biofilms made by the bacteria Pseudomonas aeruginosa were cultured on Earth and aboard space shuttle Atlantis in 2010 and 2011 to determine the impact of microgravity on their behavior. P. aeruginosa is an opportunistic human pathogen that is commonly used for biofilm studies. The research team compared the biofilms grown aboard the International Space Station bound space shuttle with those grown on the ground. The study results show for the first time that spaceflight changes the behavior of bacterial communities.
Although most bacterial biofilms are harmless, some threaten human health and safety. Biofilms can exhibit increased resistance to the immune system’s defenses or treatment with antibiotics. They also can damage vital equipment aboard spacecraft by corroding surfaces or clogging air and water purification systems that provide life support for astronauts. Biofilms cause similar problems on Earth.
“Biofilms were rampant on the Mir space station and continue to be a challenge on the International Space Station, but we still don’t really know what role gravity plays in their growth and development,” said Cynthia Collins, Ph.D., principal investigator for the study and assistant professor in the Department of Chemical and Biological Engineering at the Center for Biotechnology and Interdisciplinary Studies at the Rensselaer Polytechnic Institute in Troy, N.Y. “Before we start sending astronauts to Mars or embarking on other long-term spaceflight missions, we need to be as certain as possible that we have eliminated or significantly reduced the risk that biofilms pose to the human crew and their equipment.”
In 2010 and 2011, during the STS-132 and STS-135 missions aboard space shuttle Atlantis, astronauts in space and scientists on Earth performed nearly simultaneous parallel experiments; both teams cultured samples of P. aeruginosa bacteria using conditions that encouraged biofilm formation.
Identical hardware designed for growing cells during spaceflight were used for both the flight and ground studies. According to Collins, “artificial urine was chosen as a growth medium because it is a physiologically relevant environment for the study of biofilms formed both inside and outside the human body.”
Biofilms were cultured inside specialized fluid processing apparatus composed of glass tubes divided into chambers. The researchers loaded each tube with a membrane that provided a surface on which the bacteria could grow; the artificial urine was used for the bacteria’s nourishment. Samples of P. aeruginosa were loaded into separate chambers within each tube.
The prepared tubes were placed in groups of eight inside another specialized device called a group activation pack (GAP) – designed to activate all of the bacterial cultures at once. The research team prepared identical sets of GAPs for the concurrent spaceflight and ground experiments.
Astronauts aboard the shuttle initiated the flight experiments by operating the GAPs and introducing the bacteria to the artificial urine medium. Scientists on Earth performed the same operations with the control group of GAPs at NASA's Kennedy Space Center in Florida. After activation, the GAPs were housed in incubators on Earth and aboard the shuttle to maintain temperatures appropriate for bacterial growth.
After the microgravity samples returned to Earth, the researchers determined the thickness of the biofilms, the number of living cells and the volume of biofilm per area on the membranes. Additionally, they used a microscopy technique that allowed them to capture high-resolution images at different depths within the biofilms, revealing details of their three-dimensional structures.
What the scientists found was that the P. aeruginosa biofilms grown in space contained more cells, more mass and were thicker than the control biofilms grown on Earth. When they viewed the microscopy images of the space-grown biofilms, the researchers saw a unique, previously unobserved structure consisting of a dense mat-like “canopy” structure supported above the membrane by “columns.” The Earth grown biofilms were uniformly dense, flat structures. These results provide the first evidence that spaceflight affects community-level behavior of bacteria.
Microbes experience “low shear” conditions in microgravity that resemble conditions inside the human body, but are difficult to study. According to Collins, “Beyond its importance for astronauts and future space explorers, this research also could lead to novel methods for preventing and treating human disease on Earth. Examining the effects of spaceflight on biofilm formation can provide new insights into how different factors, such as gravity, fluid dynamics and nutrient availability affect biofilm formation on Earth. Additionally, the research findings one day could help inform new, innovative approaches for curbing the spread of infections in hospitals.”
NASA’s Space Biology Program funded the Micro-2 and Micro-2A investigations. Related space biology research continues aboard the space station, including recently selected studies that are planned for future launch to the orbiting laboratory.
Wherever we go, microbial communities will faithfully follow, making this evidence of the effects of spaceflight on bacterial physiology relevant to human health. That bacterial biofilms exhibit different behavior in space versus on Earth is critical information as NASA strives to keep astronauts healthy and safe during future long-duration space missions.
by Gianine M. Figliozzi
Spaceflight Alters Bacterial Social Networks
When astronauts launch into space, a microbial entourage follows. And the sheer number of these followers would give celebrities on Twitter a run for their money. The estimate is that normal, healthy adults have ten times as many microbial cells as human cells within their bodies; countless more populate the environment around us. Although invisible to the naked eye, microorganisms – some friend, some foe – are found practically everywhere.
Microorganisms like bacteria often are found attached to surfaces living in communities known as biofilms. Bacteria within biofilms are protected by a slimy matrix that they secrete. Skip brushing your teeth tomorrow morning and you may personally experience what a biofilm feels like.
One of NASA’s goals is to minimize the health risks associated with extended spaceflight, so it is critical that methods for preventing and treating spaceflight-induced illnesses be developed before astronauts embark upon long-duration space missions. It is important for NASA to learn how bacterial communities that play roles in human health and disease are affected by spaceflight.
In two NASA-funded studies – Micro-2 and Micro-2A – biofilms made by the bacteria Pseudomonas aeruginosa were cultured on Earth and aboard space shuttle Atlantis in 2010 and 2011 to determine the impact of microgravity on their behavior. P. aeruginosa is an opportunistic human pathogen that is commonly used for biofilm studies. The research team compared the biofilms grown aboard the International Space Station bound space shuttle with those grown on the ground. The study results show for the first time that spaceflight changes the behavior of bacterial communities.
Although most bacterial biofilms are harmless, some threaten human health and safety. Biofilms can exhibit increased resistance to the immune system’s defenses or treatment with antibiotics. They also can damage vital equipment aboard spacecraft by corroding surfaces or clogging air and water purification systems that provide life support for astronauts. Biofilms cause similar problems on Earth.
“Biofilms were rampant on the Mir space station and continue to be a challenge on the International Space Station, but we still don’t really know what role gravity plays in their growth and development,” said Cynthia Collins, Ph.D., principal investigator for the study and assistant professor in the Department of Chemical and Biological Engineering at the Center for Biotechnology and Interdisciplinary Studies at the Rensselaer Polytechnic Institute in Troy, N.Y. “Before we start sending astronauts to Mars or embarking on other long-term spaceflight missions, we need to be as certain as possible that we have eliminated or significantly reduced the risk that biofilms pose to the human crew and their equipment.”
In 2010 and 2011, during the STS-132 and STS-135 missions aboard space shuttle Atlantis, astronauts in space and scientists on Earth performed nearly simultaneous parallel experiments; both teams cultured samples of P. aeruginosa bacteria using conditions that encouraged biofilm formation.
Identical hardware designed for growing cells during spaceflight were used for both the flight and ground studies. According to Collins, “artificial urine was chosen as a growth medium because it is a physiologically relevant environment for the study of biofilms formed both inside and outside the human body.”
Biofilms were cultured inside specialized fluid processing apparatus composed of glass tubes divided into chambers. The researchers loaded each tube with a membrane that provided a surface on which the bacteria could grow; the artificial urine was used for the bacteria’s nourishment. Samples of P. aeruginosa were loaded into separate chambers within each tube.
The prepared tubes were placed in groups of eight inside another specialized device called a group activation pack (GAP) – designed to activate all of the bacterial cultures at once. The research team prepared identical sets of GAPs for the concurrent spaceflight and ground experiments.
Astronauts aboard the shuttle initiated the flight experiments by operating the GAPs and introducing the bacteria to the artificial urine medium. Scientists on Earth performed the same operations with the control group of GAPs at NASA's Kennedy Space Center in Florida. After activation, the GAPs were housed in incubators on Earth and aboard the shuttle to maintain temperatures appropriate for bacterial growth.
After the microgravity samples returned to Earth, the researchers determined the thickness of the biofilms, the number of living cells and the volume of biofilm per area on the membranes. Additionally, they used a microscopy technique that allowed them to capture high-resolution images at different depths within the biofilms, revealing details of their three-dimensional structures.
What the scientists found was that the P. aeruginosa biofilms grown in space contained more cells, more mass and were thicker than the control biofilms grown on Earth. When they viewed the microscopy images of the space-grown biofilms, the researchers saw a unique, previously unobserved structure consisting of a dense mat-like “canopy” structure supported above the membrane by “columns.” The Earth grown biofilms were uniformly dense, flat structures. These results provide the first evidence that spaceflight affects community-level behavior of bacteria.
Microbes experience “low shear” conditions in microgravity that resemble conditions inside the human body, but are difficult to study. According to Collins, “Beyond its importance for astronauts and future space explorers, this research also could lead to novel methods for preventing and treating human disease on Earth. Examining the effects of spaceflight on biofilm formation can provide new insights into how different factors, such as gravity, fluid dynamics and nutrient availability affect biofilm formation on Earth. Additionally, the research findings one day could help inform new, innovative approaches for curbing the spread of infections in hospitals.”
NASA’s Space Biology Program funded the Micro-2 and Micro-2A investigations. Related space biology research continues aboard the space station, including recently selected studies that are planned for future launch to the orbiting laboratory.
Wherever we go, microbial communities will faithfully follow, making this evidence of the effects of spaceflight on bacterial physiology relevant to human health. That bacterial biofilms exhibit different behavior in space versus on Earth is critical information as NASA strives to keep astronauts healthy and safe during future long-duration space missions.
by Gianine M. Figliozzi
Friday, August 16, 2013
VA HAS IDENTIFIED RESPIRATORY CANCERS ASSOCIATED WITH AGENT ORANGE
FROM: U.S. DEPARTMENT OF VETERANS AFFAIRS
Veterans' Diseases Associated with Agent Orange » Respiratory Cancers
Veterans who develop respiratory cancer (lung, bronchus, larynx, or trachea) and
were exposed to Agent Orange or other herbicides during military service do not have to prove a connection between their disease and service to be eligible to receive VA health care and disability compensation.
About respiratory cancers
Respiratory cancers are cancers of the lung, larynx, trachea, and bronchus.
Symptoms vary, depending on the location of the cancer:
Lung cancer—a new cough or cough that doesn't go away, coughing up blood, shortness of breath, chest pain, hoarseness
Cancer of the trachea—dry cough, hoarseness, breathlessness, difficulty swallowing
Cancer of the larynx (at the top of the trachea)—hoarseness, voice changes, sore throat or earache, feeling of a lump in the throat
Cancer of the bronchus—cough, chest pain, coughing blood
Visit Medline Plus to learn more about treatment of cancer and the latest research from the National Institutes of Health.
Guard against lung cancer
Number one rule: Don’t smoke and avoid second-hand smoke. VA can help you every step of the way to quit smoking.
VA benefits for respiratory cancers
Veterans with respiratory cancers (lung, bronchus, larynx, or trachea) who were exposed to Agent Orange or other herbicides during service may be eligible for disability compensation and health care.
Veterans who served in Vietnam, the Korean demilitarized zone or another area where Agent Orange was sprayed may be eligible for an Agent Orange Registry health exam, a free, comprehensive examination.
Surviving spouses, dependent children and dependent parents of Veterans who were exposed to herbicides during military service and died as the result of respiratory cancers may be eligible for survivors' benefits.
Research on respiratory cancers and herbicides used in Vietnam
The Institute of Medicine (IOM) of the National Academy of Sciences concluded in its 1994 report "Veterans and Agent Orange: Health Effects of Herbicides Used in Vietnam" and in future updates that there is limited/suggestive evidence of an association between exposure to herbicides (2,4-D; 2,4,5-T and its contaminant TCDD; cacodylic acid; and picloram) and respiratory cancers.
In updates to this report, IOM noted that associations linking development of respiratory cancers and exposure to dioxin were found consistently only when herbicide exposures appeared to be high and prolonged.
Veterans' Diseases Associated with Agent Orange » Respiratory Cancers
Veterans who develop respiratory cancer (lung, bronchus, larynx, or trachea) and
were exposed to Agent Orange or other herbicides during military service do not have to prove a connection between their disease and service to be eligible to receive VA health care and disability compensation.
About respiratory cancers
Respiratory cancers are cancers of the lung, larynx, trachea, and bronchus.
Symptoms vary, depending on the location of the cancer:
Lung cancer—a new cough or cough that doesn't go away, coughing up blood, shortness of breath, chest pain, hoarseness
Cancer of the trachea—dry cough, hoarseness, breathlessness, difficulty swallowing
Cancer of the larynx (at the top of the trachea)—hoarseness, voice changes, sore throat or earache, feeling of a lump in the throat
Cancer of the bronchus—cough, chest pain, coughing blood
Visit Medline Plus to learn more about treatment of cancer and the latest research from the National Institutes of Health.
Guard against lung cancer
Number one rule: Don’t smoke and avoid second-hand smoke. VA can help you every step of the way to quit smoking.
VA benefits for respiratory cancers
Veterans with respiratory cancers (lung, bronchus, larynx, or trachea) who were exposed to Agent Orange or other herbicides during service may be eligible for disability compensation and health care.
Veterans who served in Vietnam, the Korean demilitarized zone or another area where Agent Orange was sprayed may be eligible for an Agent Orange Registry health exam, a free, comprehensive examination.
Surviving spouses, dependent children and dependent parents of Veterans who were exposed to herbicides during military service and died as the result of respiratory cancers may be eligible for survivors' benefits.
Research on respiratory cancers and herbicides used in Vietnam
The Institute of Medicine (IOM) of the National Academy of Sciences concluded in its 1994 report "Veterans and Agent Orange: Health Effects of Herbicides Used in Vietnam" and in future updates that there is limited/suggestive evidence of an association between exposure to herbicides (2,4-D; 2,4,5-T and its contaminant TCDD; cacodylic acid; and picloram) and respiratory cancers.
In updates to this report, IOM noted that associations linking development of respiratory cancers and exposure to dioxin were found consistently only when herbicide exposures appeared to be high and prolonged.
SECRETARY OF STATE KERRY'S REMARKS AT DIPLOMATIC AND POLITICAL JOINT COORDINATING COMMITTEE
FROM: U.S. STATE DEPARTMENT
Remarks at the Diplomatic and Political Joint Coordinating Committee Meeting
Remarks
John Kerry
Secretary of State
Iraqi Foreign Minister Hoshyar Zebari
Deputy Secretary Conference Room
Washington, DC
August 15, 2013
SECRETARY KERRY: Well, good morning, everyone, and welcome. We’re very, very happy to welcome Foreign Minister Zebari and Ambassador Faily from Iraq, and the rest of the Iraqi delegation who we just met with and will be coming in here for a meeting following our opening comments. We’ve just had a very good bilateral meeting in which we discussed the challenges that Iraq faces, the importance of Iraq and its relationship with the United States, and we are going to continue those discussions this morning in the Joint Coordination Committee.
I want to start just by noting that since the time that this committee met last September, Iraq has taken a number of noteworthy diplomatic strides. I visited Iraq last March, and at that time, there was great division. Parties within Iraq were not talking to each other; there’d been a two-year hiatus in meetings. Since then, a host of progress has been made. First of all, Iraq has settled a number of difficult issues with Kuwait stemming from the 1991 Gulf War. Iraq has dramatically improved relations with Jordan. It has improved its relations with Turkey. In addition, it has also begun to stabilize broader relationships in the region, and we welcome Foreign Minister Zebari’s plan to meet with Foreign Minister Davutoglu of Turkey in the very near future in order to discuss issues of mutual interest.
We also welcome the fact that they have renewed relations with Kuwait and are currently paying very serious amounts of money as a matter of settling the claims from 1991. So there are significant things that are being achieved. We also welcome the internal political process that Iraq has made over the last months. But they – nobody should make any mistake, and we haven’t this morning. We know there are very significant challenges that still remain, and we must face them together.
Iraq sits at the intersection of regional currents of increasingly turbulent, violent, and unpredictable actions. Sunni and Shia extremists on both sides of the sectarian divide throughout the region have an ability to be able to threaten Iraq’s stability if they’re not checked. And al-Qaida, as we have seen, has launched a horrific series of assaults on innocent Iraqis, even taking credit for the deplorable bombings this past weekend that targeted families that were celebrating the Eid holiday. And this al-Qaida network, we know, stretches well beyond Iraq’s borders. With many al-Qaida leaders now operating in Syria, we all need to accelerate our work in order to set the conditions for a diplomatic settlement to the Syrian crisis. Iraq was in Geneva at the first meeting of Geneva, and the Foreign Minister himself made significant contributions to that process. I know that Iraqis support the vision of a stable and peaceful Syria, and we look forward to discussing how we can work to make that a reality.
We hope also to discuss this morning the issue of weapons flowing from the Syrian conflict into Iraq for use against Iraqis or weapons flowing through Iraq and going into Syria. It’s a two-way street and it’s a dangerous street. There has been some progress in this area since my visit to Iraq in March, but Foreign Minister Zardari – Zebari agrees there is very significant progress yet to be made.
So this morning, we will discuss the ongoing efforts of Iran and Hezbollah that are trying to fuel the dangerous conflict in the region from the other side. And we agreed that we cannot allow them to play on the sectarian divides that recruit young Iraqis to go fight in a foreign war, the same way that we cannot allow al-Qaida and other extremists to recruit young men from Iraq and elsewhere to join into their twisted version of jihad. So we are committed to helping Iraq to withstand these pressures and to bolster the moderate forces throughout the region.
Finally, I want to reiterate: Everyone at this table and all of the people who will share in this discussion this morning share a determination to succeed in overcoming the challenges that we face today despite their seriousness. The United States remains very committed to working together with the Iraqi Government to address regional challenges, and we welcome the steps that have been taken by the Iraqis to build a strong, democratic, and inclusive state. The Foreign Minister agrees with me that there is much that yet can be done internally in Iraq in order to meet some of those internal political challenges, and that progress cannot be made on security issues alone. There needs to be progress within Iraq on political issues, on economic issues, as well as on the larger constitutional issues that have been outstanding for too long. The Foreign Minister agrees that these are challenges we need to beat together.
Our common roadmap in this endeavor is the Strategic Framework Agreement, and that is what has brought us here today. So with this said, I again welcome the Iraqi delegation. We look forward to having a very constructive and successful conversation over the course of the morning and the day.
Thank you, Mr. Foreign Minister, and welcome.
FOREIGN MINISTER ZEBARI: Thank you. Thank you, Mr. Secretary. I appreciate very much what you have said. And we are here with our delegation, in fact, to reaffirm our commitment to our Strategic Framework Agreement with you, also to start meeting on the Joint Coordination Committee on political and diplomatic relations, which is a subcommittee of this SFA.
We have together endured many challenges together, Mr. Secretary, and our mutual relationship have continued engagement of the United States. We’ve always emphasized the importance, the significance, of continued U.S. engagement, which is critical for the success of Iraq and the Iraqi people on our ongoing transformation to a stable, inclusive, democratic, and prosperous country in the heart of the Middle East.
In recent months, as we have seen – and in recent days, in fact – we have seen the new violence or terrorist attacks by al-Qaida more frequently, and it has cost many, many lives. But despite all these attacks, the Iraqi people have not succumbed, in fact, to these atrocities, and I’m here to inform you and the Administration that Iraq is not heading – is not crashing, and it’s not heading to civil or sectarian war. There is a clear determination by the Iraqi leadership that really we’ve been there before in 2007, 2008, we are not going to go there again, and a great deal of self-respect.
The key message here: We’ve come here to seek your help and support and security cooperation with the Iraqi Government, and in fact, in counterterrorism and to have the capacity building for our security forces to stand up to face to this increasing threat from the nexus of al-Qaida and Al-Nusrah Front, as a spillover coming over from Syria, let’s say, into Iraq. And we’ve worked before on these issues. We look forward to your continued support. Al-Qaida is not a local threat; it’s a global threat, as we’ve seen by the recent closures of so many of your diplomatic missions in the region and in North Africa.
Mr. Secretary, I would like to confirm that really Iraq is having an independent and neutral position vis-a-vis the Syrian crisis, and we have said all along we believe that a political solution is the most viable way forward for Syria. We kept our distance on both sides of the conflict, and Iraq has not provided arms, money, or oil to the Syrian regimes. We have kept equidistant with the opposition and with the regime in order to play a helpful role, but our position is difficult. We’ve taken your positions, your views on the overfly, definitely taken some steps but we will do more to make sure that Iraq is independent of its actions and there’s no influence whatsoever here and there.
No volunteers are going – no Iraqi volunteers are going to Syria with the consent of the Iraqi Government at all. I mean, any volunteers who are going may be encouraged by some militias, by some people who want to fuel the conflict and the violence. But believe me, this is not the government policy as such, and we live in a region that we cannot disassociate from what is going on in Syria.
And we’ve seen the terrible event and atrocities that happened yesterday in Egypt. We have ongoing demonstrations in cities in many parts of Iraq, and really they have been going on for the last eight months, and neither the government or even the demonstrators have reached such a level of violence.
So once again, we look forward to our meeting with you and your teams. And Mr. Secretary, I want to say that Iraq is a reliable and dependable ally and partner to the United States. Thank you.
SECRETARY KERRY: Thank you. Thank you very much, Hoshyar, and we look forward to working with you on this, and we’ll work through these issues this morning --
FOREIGN MINISTER ZEBARI: Thank you, sir.
SECRETARY KERRY: -- and obviously for some time to come.
FOREIGN MINISTER ZEBARI: Thank you.
SECRETARY KERRY: Thank you, sir.
Remarks at the Diplomatic and Political Joint Coordinating Committee Meeting
Remarks
John Kerry
Secretary of State
Iraqi Foreign Minister Hoshyar Zebari
Deputy Secretary Conference Room
Washington, DC
August 15, 2013
SECRETARY KERRY: Well, good morning, everyone, and welcome. We’re very, very happy to welcome Foreign Minister Zebari and Ambassador Faily from Iraq, and the rest of the Iraqi delegation who we just met with and will be coming in here for a meeting following our opening comments. We’ve just had a very good bilateral meeting in which we discussed the challenges that Iraq faces, the importance of Iraq and its relationship with the United States, and we are going to continue those discussions this morning in the Joint Coordination Committee.
I want to start just by noting that since the time that this committee met last September, Iraq has taken a number of noteworthy diplomatic strides. I visited Iraq last March, and at that time, there was great division. Parties within Iraq were not talking to each other; there’d been a two-year hiatus in meetings. Since then, a host of progress has been made. First of all, Iraq has settled a number of difficult issues with Kuwait stemming from the 1991 Gulf War. Iraq has dramatically improved relations with Jordan. It has improved its relations with Turkey. In addition, it has also begun to stabilize broader relationships in the region, and we welcome Foreign Minister Zebari’s plan to meet with Foreign Minister Davutoglu of Turkey in the very near future in order to discuss issues of mutual interest.
We also welcome the fact that they have renewed relations with Kuwait and are currently paying very serious amounts of money as a matter of settling the claims from 1991. So there are significant things that are being achieved. We also welcome the internal political process that Iraq has made over the last months. But they – nobody should make any mistake, and we haven’t this morning. We know there are very significant challenges that still remain, and we must face them together.
Iraq sits at the intersection of regional currents of increasingly turbulent, violent, and unpredictable actions. Sunni and Shia extremists on both sides of the sectarian divide throughout the region have an ability to be able to threaten Iraq’s stability if they’re not checked. And al-Qaida, as we have seen, has launched a horrific series of assaults on innocent Iraqis, even taking credit for the deplorable bombings this past weekend that targeted families that were celebrating the Eid holiday. And this al-Qaida network, we know, stretches well beyond Iraq’s borders. With many al-Qaida leaders now operating in Syria, we all need to accelerate our work in order to set the conditions for a diplomatic settlement to the Syrian crisis. Iraq was in Geneva at the first meeting of Geneva, and the Foreign Minister himself made significant contributions to that process. I know that Iraqis support the vision of a stable and peaceful Syria, and we look forward to discussing how we can work to make that a reality.
We hope also to discuss this morning the issue of weapons flowing from the Syrian conflict into Iraq for use against Iraqis or weapons flowing through Iraq and going into Syria. It’s a two-way street and it’s a dangerous street. There has been some progress in this area since my visit to Iraq in March, but Foreign Minister Zardari – Zebari agrees there is very significant progress yet to be made.
So this morning, we will discuss the ongoing efforts of Iran and Hezbollah that are trying to fuel the dangerous conflict in the region from the other side. And we agreed that we cannot allow them to play on the sectarian divides that recruit young Iraqis to go fight in a foreign war, the same way that we cannot allow al-Qaida and other extremists to recruit young men from Iraq and elsewhere to join into their twisted version of jihad. So we are committed to helping Iraq to withstand these pressures and to bolster the moderate forces throughout the region.
Finally, I want to reiterate: Everyone at this table and all of the people who will share in this discussion this morning share a determination to succeed in overcoming the challenges that we face today despite their seriousness. The United States remains very committed to working together with the Iraqi Government to address regional challenges, and we welcome the steps that have been taken by the Iraqis to build a strong, democratic, and inclusive state. The Foreign Minister agrees with me that there is much that yet can be done internally in Iraq in order to meet some of those internal political challenges, and that progress cannot be made on security issues alone. There needs to be progress within Iraq on political issues, on economic issues, as well as on the larger constitutional issues that have been outstanding for too long. The Foreign Minister agrees that these are challenges we need to beat together.
Our common roadmap in this endeavor is the Strategic Framework Agreement, and that is what has brought us here today. So with this said, I again welcome the Iraqi delegation. We look forward to having a very constructive and successful conversation over the course of the morning and the day.
Thank you, Mr. Foreign Minister, and welcome.
FOREIGN MINISTER ZEBARI: Thank you. Thank you, Mr. Secretary. I appreciate very much what you have said. And we are here with our delegation, in fact, to reaffirm our commitment to our Strategic Framework Agreement with you, also to start meeting on the Joint Coordination Committee on political and diplomatic relations, which is a subcommittee of this SFA.
We have together endured many challenges together, Mr. Secretary, and our mutual relationship have continued engagement of the United States. We’ve always emphasized the importance, the significance, of continued U.S. engagement, which is critical for the success of Iraq and the Iraqi people on our ongoing transformation to a stable, inclusive, democratic, and prosperous country in the heart of the Middle East.
In recent months, as we have seen – and in recent days, in fact – we have seen the new violence or terrorist attacks by al-Qaida more frequently, and it has cost many, many lives. But despite all these attacks, the Iraqi people have not succumbed, in fact, to these atrocities, and I’m here to inform you and the Administration that Iraq is not heading – is not crashing, and it’s not heading to civil or sectarian war. There is a clear determination by the Iraqi leadership that really we’ve been there before in 2007, 2008, we are not going to go there again, and a great deal of self-respect.
The key message here: We’ve come here to seek your help and support and security cooperation with the Iraqi Government, and in fact, in counterterrorism and to have the capacity building for our security forces to stand up to face to this increasing threat from the nexus of al-Qaida and Al-Nusrah Front, as a spillover coming over from Syria, let’s say, into Iraq. And we’ve worked before on these issues. We look forward to your continued support. Al-Qaida is not a local threat; it’s a global threat, as we’ve seen by the recent closures of so many of your diplomatic missions in the region and in North Africa.
Mr. Secretary, I would like to confirm that really Iraq is having an independent and neutral position vis-a-vis the Syrian crisis, and we have said all along we believe that a political solution is the most viable way forward for Syria. We kept our distance on both sides of the conflict, and Iraq has not provided arms, money, or oil to the Syrian regimes. We have kept equidistant with the opposition and with the regime in order to play a helpful role, but our position is difficult. We’ve taken your positions, your views on the overfly, definitely taken some steps but we will do more to make sure that Iraq is independent of its actions and there’s no influence whatsoever here and there.
No volunteers are going – no Iraqi volunteers are going to Syria with the consent of the Iraqi Government at all. I mean, any volunteers who are going may be encouraged by some militias, by some people who want to fuel the conflict and the violence. But believe me, this is not the government policy as such, and we live in a region that we cannot disassociate from what is going on in Syria.
And we’ve seen the terrible event and atrocities that happened yesterday in Egypt. We have ongoing demonstrations in cities in many parts of Iraq, and really they have been going on for the last eight months, and neither the government or even the demonstrators have reached such a level of violence.
So once again, we look forward to our meeting with you and your teams. And Mr. Secretary, I want to say that Iraq is a reliable and dependable ally and partner to the United States. Thank you.
SECRETARY KERRY: Thank you. Thank you very much, Hoshyar, and we look forward to working with you on this, and we’ll work through these issues this morning --
FOREIGN MINISTER ZEBARI: Thank you, sir.
SECRETARY KERRY: -- and obviously for some time to come.
FOREIGN MINISTER ZEBARI: Thank you.
SECRETARY KERRY: Thank you, sir.
OPENING STATEMENT BY SEC CHAIRMAN WHITE AT OPEN MEETING
FROM: SECURITIES AND EXCHANGE COMMISSION
Opening Statement at the SEC Open Meeting
Chairman Mary Jo White
U.S. Securities and Exchange Commission
Washington, D.C.
June 5, 2013
This is an open meeting of the Securities and Exchange Commission on June 5, 2013.
Today, the Commission will consider proposals that would reform the way money market funds operate in order to make them less susceptible to runs.
As many people know, money market funds are investment vehicles that hold a pool of high-quality, short-term securities. In the early 1980s, the Commission provided money market funds with an exemption making them distinct from mutual funds and certain other investment products. That exemptive rule (Rule 2a-7) allowed these funds generally to maintain a stable share price of $1.00 instead of changing their share prices according to the market value of the securities held by the fund.
The industry has changed substantially since that time. Money market funds are now a significant piece of the nation's financial system. Over the years, money market funds have become a popular investment product for both retail and institutional investors. They also have become an important provider of short-term financing to corporations, banks and governments. All told, money market funds hold nearly $3 trillion in assets, the majority of which are in institutional funds.
While money market funds have thus long served as an important investment vehicle, the financial crisis of 2008 highlighted the susceptibility of these products to runs. In September of that year - at the height of the financial crisis - a money market fund called the Reserve Primary Fund "broke the buck" - a term used when the value of a fund drops and investors are no longer able to get back the full dollar they put in.
Within the same week of that occurrence, investors pulled approximately $300 billion from other institutional prime money market funds. The contagion effect was rapid. The short term credit market dried up, and corporations had trouble borrowing to run their businesses. This reaction contributed to the significant disruption that already was consuming the financial system.
To stop this run, the government stepped in with unprecedented support in the form of the Treasury temporary money market fund guarantee program and Federal Reserve liquidity facilities.
In the aftermath of that experience, the Commission - in 2010 - adopted a series of reforms that increased the resiliency of money market funds. But, as the Commission stated at that time, those reforms were only a first step. Today's proposal takes the critical additional step of addressing the stable value pricing of institutional prime funds - at the heart of the 2008 run - and proposing methods to stop a money market fund run before such a run becomes a systemically destabilizing event.
It has been a journey to get to this point. Commission staff has spent literally years studying different reform alternatives and performing extensive economic analysis in arriving at these recommendations.
These proposals are important in and of themselves and because they advance the public debate that will shape the final rules to address one of the most prominent events arising from the financial crisis.
Today's proposal contains two alternative reforms that could be adopted separately or combined into a single reform package to address run risk in money market funds.
Floating NAV
The first proposed alternative would require that all institutional prime money market funds operate with a floating net asset value (NAV). That is, they could no longer value their entire portfolio at amortized cost and they could not round their share prices to the nearest penny. The set "dollar" would be replaced by a share price that actually fluctuates, reflecting the changing values in these money market funds.
This floating NAV proposal specifically targets the funds where the problems during the financial crisis occurred: institutional, prime money market funds.
Retail and government money market funds - which have not historically faced runs in even the worst of times - would be exempt from the proposed floating NAV requirement.
This approach would thus preserve the stable value fund product for those retail investors who have found it to be convenient and beneficial. It also would allow municipal and corporate investors to have access to government money market funds - a stable value product - if they need it, although it would be a product that holds federal government securities as opposed to the higher-yielding investments of a prime fund.
We are soliciting commenters' views regarding the impact of targeting the floating NAV reform to institutional prime funds and whether government and retail money market funds also should operate with a floating NAV, as well as commenters' views regarding whether today's proposal would effectively differentiate retail funds from institutional funds by imposing a $1 million redemption limit. These and other important questions are specifically posed in the proposal.
I believe the floating NAV reform proposal is important for a number of reasons:
First, by eliminating the ability of early redeemers to receive $1.00 - even when the fund has experienced a loss and its shares are worth somewhat less - this proposal should reduce incentives for shareholders to redeem from institutional prime money market funds in times of stress.
Second, the proposal increases transparency and highlights investment risk because shareholders would experience price changes as an institutional prime money market fund's value fluctuates.
And, third, the proposal is targeted, by focusing reform on the segment of the market that experienced the run in the financial crisis.
Fees & Gates
The second proposed alternative seeks to directly counter potentially harmful redemption behavior during times of stress.
Under this alternative, non-government money market funds would be required to impose a 2 percent liquidity fee if the fund's level of weekly liquid assets fell below 15 percent of its total assets, unless the fund's board determined that it was not in the best interest of the fund. That determination would be subject to the board's fiduciary duty, and we believe it would be a high hurdle. After falling below the 15 percent weekly liquid assets threshold, the fund's board would also be able to temporarily suspend redemptions in the fund for up to 30 days - or "gate" the fund.
This "fees and gates" alternative potentially could enhance our regulation in several ways:
First, it could more equitably allocate liquidity risk by assigning liquidity costs in times of stress (when liquidity is expensive) to redeeming shareholders - the ones who create the liquidity costs and disruption.
Second, this alternative would provide new tools to allow funds to better manage redemptions in times of stress, and thereby potentially prevent harmful contagion effects on investors, other funds, and the broader markets. If the beginning of a run or significantly heightened redemptions occur, they would no longer continue unchecked, potentially spiraling into a crisis. The imposition of liquidity fees or gates would be an available tool to directly counteract a run.
And, third, this approach also is targeted, focusing the potential limitations on a money market fund investor's experience to times of stress when unfettered liquidity can have real costs.
The two alternative approaches in today's proposal target the common goal of reducing the incentive to redeem in times of stress, albeit in different ways. Accordingly, the proposal requests comment on whether a better reform approach would be to combine the two alternatives into a single reform package - requiring that prime institutional funds have a floating NAV and be able to impose fees and gates in times of stress, and that retail funds be able to impose fees and gates. We specifically solicit and I am interested in commenters' views on this combined approach.
Greater Diversification, Disclosure and Reporting
Importantly, the staff's recommendations also contain a number of other significant reform proposals - tightening diversification requirements, enhancing disclosure requirements, strengthening stress testing and improving reporting on both money market funds and unregistered liquidity funds that could serve as alternatives to money market funds for some investors. These proposed reforms should further enhance the resiliency and transparency of this important product and are significant complements to the other proposals.
Today's proposal is the product of very hard work by all those who have sought to meaningfully reform this investment product that is such a critical piece of the nation's financial fabric.
There have been important and thoughtful comments throughout this process, including suggestions and recommendations from investors, the industry, and fellow regulators. We have given them all very careful consideration and they have proven invaluable to us formulating the important proposals we are voting on today.
In this regard I especially would like to thank all of my fellow Commissioners for their contributions and the spirit of cooperation in which we worked leading up to today's meeting.
I want to reiterate that our goal is to implement an effective reform that decreases the susceptibility of money market funds to run risk and prevents money market fund events similar to those that occurred in 2008 from repeating themselves. With this goal in mind, I very much look forward to the comments and am very pleased that, with my fellow Commissioners, we are moving this reform process forward.
Before I ask Norm Champ, Director of the Division of Investment Management, to discuss the proposed reforms, I would like to thank Norm and his team: Diane Blizzard, Sarah ten Siethoff, Thoreau Bartmann, Brian Johnson, Adam Bolter, Amanda Wagner, Kay Vobis, Jaime Eichen, and Megan Monroe for their tireless work on this rulemaking.
This rulemaking was a true team effort between the Division of Investment Management and the Division of Risk, Strategy and Financial Innovation, so I want to also express my gratitude for the work of Craig Lewis, Kathleen Hanley, Jennifer Marietta-Westberg, Woodrow Johnson, Jennifer Bethel, Virginia Meany, Dan Hiltgen, and Mila Sherman. I also would like to acknowledge the critical work and analysis included in the staff's economic study published late last year, which was highly influential in developing today's proposed reforms.
Thanks as well to Anne Small, Meridith Mitchell, Lori Price, Cathy Ahn, Jill Felker, and Kevin Christy from the Office of the General Counsel; Jim Burns, David Blass, Haime Workie, and Natasha Greiner from the Division of Trading and Markets; and Paul Beswick, Rachel Mincin, and Jeff Minton from the Office of the Chief Accountant.
And now I'll turn the meeting over to Norm Champ to provide a fuller explanation of the proposed reforms we are considering today.
Opening Statement at the SEC Open Meeting
Chairman Mary Jo White
U.S. Securities and Exchange Commission
Washington, D.C.
June 5, 2013
This is an open meeting of the Securities and Exchange Commission on June 5, 2013.
Today, the Commission will consider proposals that would reform the way money market funds operate in order to make them less susceptible to runs.
As many people know, money market funds are investment vehicles that hold a pool of high-quality, short-term securities. In the early 1980s, the Commission provided money market funds with an exemption making them distinct from mutual funds and certain other investment products. That exemptive rule (Rule 2a-7) allowed these funds generally to maintain a stable share price of $1.00 instead of changing their share prices according to the market value of the securities held by the fund.
The industry has changed substantially since that time. Money market funds are now a significant piece of the nation's financial system. Over the years, money market funds have become a popular investment product for both retail and institutional investors. They also have become an important provider of short-term financing to corporations, banks and governments. All told, money market funds hold nearly $3 trillion in assets, the majority of which are in institutional funds.
While money market funds have thus long served as an important investment vehicle, the financial crisis of 2008 highlighted the susceptibility of these products to runs. In September of that year - at the height of the financial crisis - a money market fund called the Reserve Primary Fund "broke the buck" - a term used when the value of a fund drops and investors are no longer able to get back the full dollar they put in.
Within the same week of that occurrence, investors pulled approximately $300 billion from other institutional prime money market funds. The contagion effect was rapid. The short term credit market dried up, and corporations had trouble borrowing to run their businesses. This reaction contributed to the significant disruption that already was consuming the financial system.
To stop this run, the government stepped in with unprecedented support in the form of the Treasury temporary money market fund guarantee program and Federal Reserve liquidity facilities.
In the aftermath of that experience, the Commission - in 2010 - adopted a series of reforms that increased the resiliency of money market funds. But, as the Commission stated at that time, those reforms were only a first step. Today's proposal takes the critical additional step of addressing the stable value pricing of institutional prime funds - at the heart of the 2008 run - and proposing methods to stop a money market fund run before such a run becomes a systemically destabilizing event.
It has been a journey to get to this point. Commission staff has spent literally years studying different reform alternatives and performing extensive economic analysis in arriving at these recommendations.
These proposals are important in and of themselves and because they advance the public debate that will shape the final rules to address one of the most prominent events arising from the financial crisis.
Today's proposal contains two alternative reforms that could be adopted separately or combined into a single reform package to address run risk in money market funds.
Floating NAV
The first proposed alternative would require that all institutional prime money market funds operate with a floating net asset value (NAV). That is, they could no longer value their entire portfolio at amortized cost and they could not round their share prices to the nearest penny. The set "dollar" would be replaced by a share price that actually fluctuates, reflecting the changing values in these money market funds.
This floating NAV proposal specifically targets the funds where the problems during the financial crisis occurred: institutional, prime money market funds.
Retail and government money market funds - which have not historically faced runs in even the worst of times - would be exempt from the proposed floating NAV requirement.
This approach would thus preserve the stable value fund product for those retail investors who have found it to be convenient and beneficial. It also would allow municipal and corporate investors to have access to government money market funds - a stable value product - if they need it, although it would be a product that holds federal government securities as opposed to the higher-yielding investments of a prime fund.
We are soliciting commenters' views regarding the impact of targeting the floating NAV reform to institutional prime funds and whether government and retail money market funds also should operate with a floating NAV, as well as commenters' views regarding whether today's proposal would effectively differentiate retail funds from institutional funds by imposing a $1 million redemption limit. These and other important questions are specifically posed in the proposal.
I believe the floating NAV reform proposal is important for a number of reasons:
First, by eliminating the ability of early redeemers to receive $1.00 - even when the fund has experienced a loss and its shares are worth somewhat less - this proposal should reduce incentives for shareholders to redeem from institutional prime money market funds in times of stress.
Second, the proposal increases transparency and highlights investment risk because shareholders would experience price changes as an institutional prime money market fund's value fluctuates.
And, third, the proposal is targeted, by focusing reform on the segment of the market that experienced the run in the financial crisis.
Fees & Gates
The second proposed alternative seeks to directly counter potentially harmful redemption behavior during times of stress.
Under this alternative, non-government money market funds would be required to impose a 2 percent liquidity fee if the fund's level of weekly liquid assets fell below 15 percent of its total assets, unless the fund's board determined that it was not in the best interest of the fund. That determination would be subject to the board's fiduciary duty, and we believe it would be a high hurdle. After falling below the 15 percent weekly liquid assets threshold, the fund's board would also be able to temporarily suspend redemptions in the fund for up to 30 days - or "gate" the fund.
This "fees and gates" alternative potentially could enhance our regulation in several ways:
First, it could more equitably allocate liquidity risk by assigning liquidity costs in times of stress (when liquidity is expensive) to redeeming shareholders - the ones who create the liquidity costs and disruption.
Second, this alternative would provide new tools to allow funds to better manage redemptions in times of stress, and thereby potentially prevent harmful contagion effects on investors, other funds, and the broader markets. If the beginning of a run or significantly heightened redemptions occur, they would no longer continue unchecked, potentially spiraling into a crisis. The imposition of liquidity fees or gates would be an available tool to directly counteract a run.
And, third, this approach also is targeted, focusing the potential limitations on a money market fund investor's experience to times of stress when unfettered liquidity can have real costs.
The two alternative approaches in today's proposal target the common goal of reducing the incentive to redeem in times of stress, albeit in different ways. Accordingly, the proposal requests comment on whether a better reform approach would be to combine the two alternatives into a single reform package - requiring that prime institutional funds have a floating NAV and be able to impose fees and gates in times of stress, and that retail funds be able to impose fees and gates. We specifically solicit and I am interested in commenters' views on this combined approach.
Greater Diversification, Disclosure and Reporting
Importantly, the staff's recommendations also contain a number of other significant reform proposals - tightening diversification requirements, enhancing disclosure requirements, strengthening stress testing and improving reporting on both money market funds and unregistered liquidity funds that could serve as alternatives to money market funds for some investors. These proposed reforms should further enhance the resiliency and transparency of this important product and are significant complements to the other proposals.
Today's proposal is the product of very hard work by all those who have sought to meaningfully reform this investment product that is such a critical piece of the nation's financial fabric.
There have been important and thoughtful comments throughout this process, including suggestions and recommendations from investors, the industry, and fellow regulators. We have given them all very careful consideration and they have proven invaluable to us formulating the important proposals we are voting on today.
In this regard I especially would like to thank all of my fellow Commissioners for their contributions and the spirit of cooperation in which we worked leading up to today's meeting.
I want to reiterate that our goal is to implement an effective reform that decreases the susceptibility of money market funds to run risk and prevents money market fund events similar to those that occurred in 2008 from repeating themselves. With this goal in mind, I very much look forward to the comments and am very pleased that, with my fellow Commissioners, we are moving this reform process forward.
Before I ask Norm Champ, Director of the Division of Investment Management, to discuss the proposed reforms, I would like to thank Norm and his team: Diane Blizzard, Sarah ten Siethoff, Thoreau Bartmann, Brian Johnson, Adam Bolter, Amanda Wagner, Kay Vobis, Jaime Eichen, and Megan Monroe for their tireless work on this rulemaking.
This rulemaking was a true team effort between the Division of Investment Management and the Division of Risk, Strategy and Financial Innovation, so I want to also express my gratitude for the work of Craig Lewis, Kathleen Hanley, Jennifer Marietta-Westberg, Woodrow Johnson, Jennifer Bethel, Virginia Meany, Dan Hiltgen, and Mila Sherman. I also would like to acknowledge the critical work and analysis included in the staff's economic study published late last year, which was highly influential in developing today's proposed reforms.
Thanks as well to Anne Small, Meridith Mitchell, Lori Price, Cathy Ahn, Jill Felker, and Kevin Christy from the Office of the General Counsel; Jim Burns, David Blass, Haime Workie, and Natasha Greiner from the Division of Trading and Markets; and Paul Beswick, Rachel Mincin, and Jeff Minton from the Office of the Chief Accountant.
And now I'll turn the meeting over to Norm Champ to provide a fuller explanation of the proposed reforms we are considering today.
TWO FORMER TRADERS AT JPMORGAN & CHASE CO. CHARGED WITH FRAUD
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission v. Javier Martin-Artajo and Julien G. Grout, Civil Action No. 13-CV-5677 (S.D.N.Y.)
The Securities and Exchange Commission announced today that it charged two former traders at JPMorgan Chase & Co. with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.
The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio's investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan's internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan's reported first quarter income before income tax expense to be overstated by $660 million.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Martin-Artajo and Grout.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Martin-Artajo and Grout worked in JPMorgan's chief investment office (CIO), which created the portfolio known as Synthetic Credit Portfolio (SCP) as a hedge against adverse credit events. The portfolio was primarily invested in credit derivative indices and tranches. The market value of SCP's positions began to steadily decline in early 2012 due to improving credit conditions and a recent change in investment strategy. Martin-Artajo and Grout began concealing the losses in March 2012 by providing management with fraudulent valuations of SCP's investments.
The SEC alleges that Martin-Artajo directed Grout to revise the manner in which he marked SCP's investments. Instead of continuing to price the portfolio's positions based on the mid-market prices contained in dealer quotes the CIO received, SCP's positions were instead marked at the most aggressive end of the dealers' bid-offer spread. On several occasions, Martin-Artajo provided a desired daily loss target that would enable the concealment of the extent of the losses. Grout entered the marks every day into JPMorgan's books and records, and sent daily profit and loss reports to CIO management in which he understated SCP's losses. For a period, Grout maintained a spreadsheet to track the difference between his marks and the mid-market prices previously used to value SCP's positions. By mid-March, this spreadsheet showed that the difference had grown to $432 million.
The SEC alleges that contrary to JPMorgan's accounting policy, Martin-Artajo instructed Grout on March 30 to wait for better prices after the close of trading in London in the hope that activity in the U.S. markets could support better marks for SCP's positions. The concealment of losses continued beyond the first quarter. By late April, trading counterparties raised collateral disputes over SCP positions totaling more than a half-billion dollars. Shortly thereafter, JPMorgan's management stripped the SCP traders of their marking authority and began valuing the book at the consensus mid-market prices.
The SEC's complaint alleges that Martin-Artajo and Grout violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1, and aided and abetted pursuant to Section 20(e) of the Exchange Act violations of Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-11 and 13a-13.
The SEC's investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Daniel Michael, Kapil Agrawal, Eli Bass, Daniel Nigro, Sharon Bryant, and Christopher Mele of the New York Regional Office. The litigation will be led by Joseph Boryshansky.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York, Federal Bureau of Investigation, United Kingdom Financial Conduct Authority, Office of the Comptroller of the Currency, Federal Reserve Bank of New York, and Commodity Futures Trading Commission.
Securities and Exchange Commission v. Javier Martin-Artajo and Julien G. Grout, Civil Action No. 13-CV-5677 (S.D.N.Y.)
The Securities and Exchange Commission announced today that it charged two former traders at JPMorgan Chase & Co. with fraudulently overvaluing investments in order to hide massive losses in a portfolio they managed.
The SEC alleges that Javier Martin-Artajo and Julien Grout were required to mark the portfolio's investments at fair value in accordance with U.S. generally accepted accounting principles and JPMorgan's internal accounting policy. But when the portfolio began experiencing mounting losses in early 2012, Martin-Artajo and Grout schemed to deliberately mismark hundreds of positions by maximizing their value instead of marking them at the mid-market prices that would reveal the losses. Their mismarking scheme caused JPMorgan's reported first quarter income before income tax expense to be overstated by $660 million.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York today announced criminal charges against Martin-Artajo and Grout.
According to the SEC's complaint filed in the U.S. District Court for the Southern District of New York, Martin-Artajo and Grout worked in JPMorgan's chief investment office (CIO), which created the portfolio known as Synthetic Credit Portfolio (SCP) as a hedge against adverse credit events. The portfolio was primarily invested in credit derivative indices and tranches. The market value of SCP's positions began to steadily decline in early 2012 due to improving credit conditions and a recent change in investment strategy. Martin-Artajo and Grout began concealing the losses in March 2012 by providing management with fraudulent valuations of SCP's investments.
The SEC alleges that Martin-Artajo directed Grout to revise the manner in which he marked SCP's investments. Instead of continuing to price the portfolio's positions based on the mid-market prices contained in dealer quotes the CIO received, SCP's positions were instead marked at the most aggressive end of the dealers' bid-offer spread. On several occasions, Martin-Artajo provided a desired daily loss target that would enable the concealment of the extent of the losses. Grout entered the marks every day into JPMorgan's books and records, and sent daily profit and loss reports to CIO management in which he understated SCP's losses. For a period, Grout maintained a spreadsheet to track the difference between his marks and the mid-market prices previously used to value SCP's positions. By mid-March, this spreadsheet showed that the difference had grown to $432 million.
The SEC alleges that contrary to JPMorgan's accounting policy, Martin-Artajo instructed Grout on March 30 to wait for better prices after the close of trading in London in the hope that activity in the U.S. markets could support better marks for SCP's positions. The concealment of losses continued beyond the first quarter. By late April, trading counterparties raised collateral disputes over SCP positions totaling more than a half-billion dollars. Shortly thereafter, JPMorgan's management stripped the SCP traders of their marking authority and began valuing the book at the consensus mid-market prices.
The SEC's complaint alleges that Martin-Artajo and Grout violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1, and aided and abetted pursuant to Section 20(e) of the Exchange Act violations of Sections 13(a) and 13(b)(2)(A) and Rules 12b-20, 13a-11 and 13a-13.
The SEC's investigation, which is continuing, has been conducted by Michael Osnato, Steven Rawlings, Peter Altenbach, Joshua Brodsky, Daniel Michael, Kapil Agrawal, Eli Bass, Daniel Nigro, Sharon Bryant, and Christopher Mele of the New York Regional Office. The litigation will be led by Joseph Boryshansky.
The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of New York, Federal Bureau of Investigation, United Kingdom Financial Conduct Authority, Office of the Comptroller of the Currency, Federal Reserve Bank of New York, and Commodity Futures Trading Commission.
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