information integrity

2007-01-17T19:48:00.000-08:00

Hi all,
I take pride to announce that our website www.centerforinform ationintegrityre search.org, has been updated and now facilitates students, teachers and researchers all over world to access our lectures. Our aim is to provide a complete e-teaching-learning package for I*I using existing and growing convergent technology.I am looking forward for a cooperate input from all in terms of your innovative ideas and thoughts to make a real difference in e-course development and deliverary. I view this website as a knowledgebase for I*I research and education.It will grow only if we put our minds together. You can revert back to me or Prof Mandke for any other issue regarding the site. I think it is the correct time for all of us to gear-up and internationaly pitch ourself as creators of I*I research area. All the best and I look forward for support in content development and deliverary from all.

Regards,Natasha

information integrity example

2006-05-12T05:21:00.000-07:00

Laura S. Unger

A RECENT example of a case involving a stock-recommendation Web site came a few weeks ago as part of our fifth Internet fraud sweep.

In that case, a former roofer-turned-online-stock-analyst claimed he had access to a proprietary computer trading system, had over 14 years of investing experience, and enjoyed an 85 per cent success rate on trades he had previously made.
The SEC's action against this individual alleges that, in reality, he had limited personal securities trading experience, never received any securities training, never worked for an investment firm, and used a publicly-available software program which could be readily accessed over the Internet.
I have asked the Enforcement Division to be especially watchful for online stock-picking sites, particularly those employing the sort of flamboyant advertising that could signal the use of inflated track records, misleading disclaimers, or other improper techniques calculated to bait investors.
Integrity of financial information
The third area involves the integrity of financial information. Current market conditions may increase the pressure on companies to meet past or projected earnings levels. As a result, management may be tempted to engage in ``not so'' generally accepted accounting principles (NSGAAP). We have already seen a number of NSGAAP trends.
Quality of information: The first is a decreasing ``quality of earnings'' reported by companies. A lack of quality of earnings refers to distortions in financial statements resulting from undisclosed changes in underlying accounting assumptions. The undisclosed changes are being used to improperly inflate operating results. For instance, management may change an accounting estimate (such as the life of an asset), which will have the effect of increasing earnings. If that change is not disclosed, investors may wrongly assume that the earnings increase reflects improved performance by the company instead of a change in an accounting estimate. Using this type of smoke-and-mirrors to mislead investors ultimately will harm a company, as well as investors' confidence in our financial reporting system as a whole.
Pro forma information: A second troubling trend on which we are keeping an eye is the increasing use of pro forma information. Pro forma information is a tool companies have invented to disseminate an idealised version of their performance. It may exclude any cost or expense the company wants, yet it is presented in a form that suggests reliability and soundness. And that is the problem with pro forma financials. You do not really know what you are getting, except that it is what the company wants you to know. In fact, pro forma numbers are not audited and may not even be reconcilable with the financial statements companies have filed with the Commission.
Holes in success: Finally, one more practice for which the staff will be on the lookout. Companies are announcing that they will not meet their year-end earnings targets, apparently because throughout the year they had been, in effect, reaching ahead into next quarter's sales to meet their quarterly targets. Using techniques such as ``channel stuffing'' or offering deep discounts, companies motivate their customers to buy sooner rather than later. Unfortunately, while that may create the appearance of another successful quarter, it guarantees that the company is starting in a hole next quarter. When the end of the year comes, and the auditors discover what has been going on, the result is a shortfall for the fourth quarter and/or the year, and a shock to misled investors.
Integrity of fund advertising
The final area involves the integrity of certain information included in mutual fund advertising. Twenty years ago, only 5.7 per cent of Americans owned mutual funds. Today, some 88 million shareholders, representing 49 per cent of US households, hold mutual funds. These investors are entitled to rely on the integrity of the numbers included in the fund's advertising.
This is particularly important given current market conditions where performance information may change significantly from day to day. The Commission has seen instances where fund advertisements are in technical compliance with Securities Act requirements by disclosing the results of a fund's most recent calendar quarter, but where even more recent, but poorer, performance is not disclosed.
The staff is working on an interpretive bulletin to emphasise that technical compliance with Rule 482, the advertising rule, is not a safe harbour from the antifraud provisions. The bulletin will also point out that additional facts necessary to provide an investor with an accurate picture of the fund's performance may be necessary to avoid noncompliance with the antifraud rules.
The Commission always strives to maintain the integrity of financial and market information. Today I have shared with you how market conditions may impact where we devote resources to most effectively meet this challenge.
(This is the concluding part of the remarks made by Acting Chairman, US Securities and Exchange Commission, Ms Laura S. Unger, on `Protecting the Integrity of Financial Information in Today's Marketplace Remarks')

information integrity

2006-03-02T23:34:00.000-08:00

Laura S. Unger

A RECENT example of a case involving a stock-recommendation Web site came a few weeks ago as part of our fifth Internet fraud sweep.

Information Integrity can be defined as the dependability and trustworthiness of information. More specifically, it is the accuracy, consistency and reliability of the information content, processes and systems. Individuals, organizations and society are becoming increasingly concerned about Information Integrity and seriously impacted by the lack of it. The economic, political and social effects of Information Integrity are as ubiquitous and diverse as errors in supermarket scanners and credit reports, failed corporate mergers and acquisitions, loss of market valuation due to restatement of financial results, deaths caused by medical errors, and debates about the accuracy of ballot counts.
The high-tech industry and the information revolution are causing an explosive growth in the volume of information created, exchanged and stored. Digital information is becoming as pervasive and essential as air, water, electricity and canned food. Increasingly, we rely on such information for our livelihood, lifestyle and even life itself. Ironically, however, information has not been the focus of interest thus far in this information age. Instead, academia, industry and government have been preoccupied with information technology. For us to effectively harness the benefits of the information revolution, and avoid the costs of widespread information pollution, we need to recognize and treat information as a shared, universal resource. We need to develop the science, technology, products and services to measure, monitor and manage its integrity, much like the emergence of the environmental science, technology and industry in the wake of the industrial revolution to answer our need for clean air, pure water, reliable power and safe food.
We need a new paradigm for addressing Information Integrity. The current approach to Information Integrity is unscientific, ad hoc, sporadic and costly. Apart from privacy and security, there has been scant attention on the trustworthiness or integrity of information and of the interconnected, integrated information processes and systems. By and large, Information Integrity is addressed from isolated perspectives within each organization, or as specific issues unique to accounting, finance, law, medicine, engineering, hardware, software and the like. Consequently, industry, government and society are paying an inordinately high price for the level of Information Integrity that there is, and facing enormous, unforeseen risks from catastrophic Information Integrity failures.
The issue of Information Integrity presents a formidable challenge. However, it also offers an enormous and exciting opportunity for academia, industry and government to create a new knowledge and market space. The size and scope of such a space will be very large, spanning many theoretical and applied disciplines as well as a broad spectrum of technologies, products and services. It will encompass a wide array of new research, education, product development, services, standards, legislation and other elements, much like those associated with air quality, water pollution, and food safety. Potentially, it could generate tens of billions of dollars of new economic activity.