Tracking the cost of a
breach…
Wells Fargo
Adds $1 Billion to Possible Legal Cost
Wells Fargo & Co. added $1 billion in the
third quarter to what it says the bank may face in possible legal
expenses.
Legal costs could potentially be $3.3 billion more
than what the San Francisco-based bank has reserved, Wells Fargo said
Friday in a regulatory filing. While that figure was unchanged from
the previous three-month period, it constitutes a $1 billion increase
because Wells Fargo moved a similar amount into legal reserves during
the period.
The bank announced
a surprise $1 billion charge in the third quarter for a
previously disclosed regulatory investigation into its pre-financial
crisis mortgage activity when it reported third quarter earnings.
Banks typically move funds into an accrual when they determine a cost
is no longer “reasonably possible” and instead becomes probable.
(Related). A new risk for managers who don’t
know what is happening in their corporations? I hope so!
It’s distressingly common for directors of
public companies to skate away from liability when corporate
misconduct occurs on their watch. That’s why a recent ruling by a
federal judge hearing two cases against Wells Fargo’s officers and
directors is both unusual and welcome.
The cases were filed against the bank by
shareholders seeking to recover losses that were sustained, they say,
in the wake of Wells Fargo’s widespread creation of fake or
unauthorized accounts — a scandal that has besieged the bank, hurt
its shares and caused the ouster
of its chief executive last year.
The defendants in the case
recently ruled on by the judge are 15 current or former directors and
four current or former officers. It is a so-called derivative
action, brought on behalf of Wells Fargo on the grounds that it was
harmed by the improprieties.
The officers named in the suit include Timothy J.
Sloan, Wells Fargo’s current chief executive, and Carrie Tolstedt,
the former senior executive vice president of the community banking
unit where the account-opening improprieties originated. The
defendants had asked the judge to dismiss the case; among their
arguments was a claim that the plaintiffs had not presented enough
specificity on what each defendant had done wrong.
But Jon
S. Tigar, the judge hearing the cases in United States District
Court in San Francisco, disagreed. In early October, he allowed the
case to go forward so the plaintiffs would have a chance to prove
their allegations.
While that may
seem an incremental and mostly procedural step, legal experts not
involved in the case said Judge
Tigar’s ruling sent a clear message to public company officers and
directors: be vigilant for bad behavior in your operations, or else.
Senior management needs better ears. Sometimes
the low level worker can see the forest despite all the trees.
Trump's
account was deactivated after years of employees warning Twitter
Last night, a rogue Twitter
employee celebrated their last day with the company by deactivating
President Donald Trump’s account. In response, Twitter said it
has “implemented
safeguards to prevent this from happening again.” But the
company declined to offer any explanation for how it would restrict
access to tools that have been accessible to a range of Twitter
employees, including contractors. Former employees say the company
has known about the risks of rogue employees for years — and that
Trump’s 11-minute deactivation isn’t the first time an employee
targeted an account on their way out of the company.
Another “How To” guide for my Ethical Hackers.
Inside
story: How Russians hacked the Democrats’ emails
… An Associated Press investigation into the
digital break-ins that disrupted the U.S. presidential contest has
sketched out an anatomy of the hack that led to months of damaging
disclosures about the Democratic Party’s nominee. It wasn’t just
a few aides that the hackers went after; it was an all-out blitz
across the Democratic Party. They tried to compromise Clinton’s
inner circle and more than 130 party employees, supporters and
contractors.
… The rogue messages that first flew across
the internet March 10 were dressed up to look like they came from
Google, the company that provided the Clinton campaign’s email
infrastructure. The messages urged users to boost their security or
change their passwords while in fact steering them toward decoy
websites designed to collect their credentials.
Perspective. And another example of
disintermediation.
How the
internet changed the market for sex
… Gregory DeAngelo, an economist at the
University of West Virginia, scraped 17 years’ worth of data from
The Erotic Review, a website that is like the Yelp for illegal sex
services. The dataset features about 1.1 million reviews, which
contain extremely detailed descriptions of encounters, time spent,
features of the sex worker, and price. According to data on the
site, average inflation-adjusted hourly rates increased 38% between
2000 and 2015.
Job advice for my students.
The biggest
roadblock to AI adoption is a lack of skilled workers
In spite of nearly universal agreement that
artificial intelligence promises revolutionary
benefits, Gartner recently found that almost 60 percent of
organizations surveyed have yet to take advantage of these benefits.
Perhaps even more surprisingly, only a little more than 10 percent of
surveyed businesses have deployed or implemented any AI solution at
all.
Further confirmation of this gap between AI’s
promise and enterprises’ ability to implement it is the finding
that close to half of the surveyed organizations stated that they
prefer to buy pre-packaged AI solutions or use AI capabilities
already embedded in their applications.
… A vital factor driving the preference for
pre-packaged AI or AI-embedded applications is that few businesses
have the in-house skills to enact a custom solution themselves.
Gartner’s analysis has concluded that this
skills gap is the most significant barrier to AI
adoption.
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