| Markle Report Offers
Recommendations on Homeland Security Information Issues |
10/7. The Markle Foundation
released a report titled "Protecting America's Freedom in
the Information Age". It makes recommendations regarding
the collection, analyzing and use of intelligence and
information for homeland security purposes.
It recommends that the soon to be created Department of
Homeland Security (DHS), rather than the existing Federal Bureau of Investigation
(FBI), should be tasked with taking "the lead in
collecting information that is publicly available or
voluntarily obtained and in analyzing domestic information and
intelligence from all sources and setting overall priorities
for new collection efforts". The report recommends
leaving the FBI with responsibility for "managing
clandestine collection operations, like FISA wiretaps or the
recruitment of undercover agents".
The report elaborates that the Department
of Justice (DOJ) and the FBI "should be the lead
agencies for law enforcement, exercising the power to
investigate crimes, charge people with crimes, perhaps take
away their liberty, and prepare cases for trial and appeal.
The DHS should be the lead agency for shaping domestic
intelligence products to inform policymakers, especially on
the analytical side, so that there is some separation between
the attitudes and priorities of intelligence analysis and the
different, more concentrated, focus of law enforcement
personnel authorized to use force on the street to make
arrests and pursue or detain citizens."
The report further makes detailed recommendations regarding
the structure of the information system. It should not be a
centralized, Washington DC based, mainframe system. Rather, it
should be a decentralized network with no central hub.
The report states that "America will make a mistake,
however, if we create a centralized, ``mainframe´´
information architecture in Washington, D.C., rather than the
networked, decentralized system that is needed to defeat the
challenge of decentralized, sometimes networked adversaries.
The problem is not just information sharing among federal
agencies in Washington, D.C. Most of the people, information,
and action will be in the field -- in regional or local
federal offices, in state, regional, and local governments,
and in private firms. The federal approach and guidelines can
inform and support these local efforts, but information needs
to be available widely and should not be required to flow
through a central hub."
The report elaborates that "Local participants must be
empowered to contribute, access, use, and analyze data."
The report also identifies several technologies. It states
that "appropriate data sharing technologies such as XML
must be identified and evaluated for applicability;
decentralized and comprehensive directories will be required
to ensure that individual participants can identify and access
information; querying systems must be developed and
maintained; network traffic and usage must be tracked and
analyzed".
Also, "the federal government must build an operating
system".
The report further states that while the federal government is
spending much money to improve the information technology of
individual agencies, "almost none of this money is being
spent to solve the problem of how to share this information
and intelligence among those federal agencies."
See, Part I
[46 pages in PDF], which contains the table of content,
overview, and report. See also, Part
II [PDF], which contains working group analyses, and Part
III [PDF], which contains background papers. See also, full
report [1MB in PDF].
Who wrote the report? It states that it is "A Project of
The Markle Foundation ... In Alliance with" the Miller Center for
Public Affairs, the Brookings
Institution, and the Center
for Strategic and International Studies. The Markle
Foundation is co-chaired by Zoe Baird and James Barksdale. |
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| House Passes Federal Agency
Privacy Bill |
10/7. The House passed HR 4561,
the Federal Agency Protection of Privacy Act, by a voice vote.
The bill, which is sponsored by Rep. Bob Barr (R-GA),
would require that rules noticed for public comment by federal
agencies must be accompanied by an initial assessment of the
rule's impact on personal privacy interests.
The bill provides, in part, that "Whenever an agency is
required ... to publish a general notice of proposed
rulemaking for any proposed rule, or publishes a notice of
proposed rulemaking for an interpretative rule involving the
internal revenue laws of the United States, the agency shall
prepare and make available for public comment an initial
privacy impact analysis. Such analysis shall describe the
impact of the proposed rule on the privacy of individuals. The
initial privacy impact analysis or a summary shall be signed
by the senior agency official with primary responsibility for
privacy policy and be published in the Federal Register at the
time of the publication of a general notice of proposed
rulemaking for the rule."
Sen. Max Cleland
(D-GA) introduced S 2492,
the companion bill in the Senate, on May 9, 2002. However, the
Senate has taken no action on the bill. |
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| SEC Files Complaint Against
Ex WorldCom Accountant |
10/7. The Securities and
Exchange Commission (SEC) filed a civil complaint
in U.S. District Court (SDNY)
against Buford Yates alleging violation of federal securities
laws in connection with fraudulent financial statements by
WorldCom. See, SEC
release.
Until August 2002, Yates was Director of General Accounting at
WorldCom, which has
already stated that it overstated the income it reported in
its financial statements by over $7 Billion. The complaint
alleges that "Defendant YATES knew, or was reckless in
not knowing, that these accounting entries were made without
supporting documentation, were not in conformity with GAAP,
were not disclosed to the investing public."
The complaint alleges fraud, books and records and internal
controls violations, and reporting violations. Specifically,
the complaint contains four counts alleging violation of
§ 10(b) of the Exchange Act and Rule 10b-5 thereunder,
§ 17(a) of the Securities Act, § 13(b)(5) of
Exchange Act and Rule 13b2-1 thereunder, §§ 13(b)(2)(A)
and 13(b)(2)(B) of the Exchange Act, and § 13(a) of the
Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder.
Also on October 7, Yates plead guilty in U.S. District Court (SDNY)
to related criminal charges. |
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| Greenspan Addresses
Importance of Computing, Databases and Data Mining to Banking
System |
10/7. Federal
Reserve Board Chairman Alan
Greenspan gave a speech
via satellite to the annual convention of the American Bankers
Association in Phoenix, Arizona. He stated that one of the
reasons for the relative health of the U.S. banking system
despite the recent recession is that new computing and
communications technologies have facilitated the creation of
new and complex financial instruments that made it easier for
banks to hedge risks. He also advised that banks should now
take advantage of decreased costs of storage and computing to
collect, data mine, and analyze default and loss data from the
recent and previous recessions in order to further improve
risk management practices.
He spoke about "the apparent incongruity between the
recent substantial losses on corporate credits and the
continued strength of the U.S. banking system." He said
that "the U.S. financial system has suffered a sharp
run-up in corporate bond defaults, business failures, and
investor losses. At commercial banks, troubled loans --
including charge offs, classified loans, and delinquent
credits -- have also climbed to quite high levels. At the same
time, banks in this country remain quite healthy ..."
"Why is this?", he asked. He answered by pointing
out that the recent recession was "less severe" than
prior recessions, that consumers have "maintained their
expenditures", and that "Consumer and mortgage loans
have not suffered the sharp run-up in delinquencies that loans
in the business sector have". He also said that it is
significant that "banks had impressive earnings and
balance sheets going into the current period of stress".
However, he also pointed out that computer and
telecommunications technologies played a role. He said that
the resiliency of the U.S. banking system resulted in part
from "the new techniques in risk management that have
been applied in banking during the past few years". This
includes the use of new financial instruments, such as
"credit default swaps and collateralized debt
obligations".
 He said that "Conceptual
advances in pricing options and other complex financial
products, along with improvements in computer and
telecommunications technologies, have significantly lowered
the costs of, and expanded the opportunities for, hedging
risks that were not readily deflected in earlier decades.
Moreover, the counterparty credit risk associated with the use
of derivative instruments has been mitigated by legally
enforceable netting and through the growing use of collateral
agreements. These increasingly complex financial instruments
have been especial contributors, particularly over the past
couple of stressful years, to the development of a far more
flexible, efficient, and resilient financial system than
existed just a quarter century ago."
Finally, Greenspan said that "Large losses have been
taken, and more are yet to be recognized." Yet, this also
provides an opportunity. He said that the "most recent
credit cycle has created an abundant supply of exactly the
kind of critical information that banks will need to improve
their risk management".
So, he advised that "Now is the time to collect and
maintain these default and loss data in a disciplined and
uniform fashion. Most banks missed that opportunity in the
early 1990s, and some are going back at great cost to mine
these data today. A decade ago, one might have been excused
from undertaking such data collection efforts because of the
technology then existing and the cost of data storage. These
reasons are no longer justified. Further, the collection of
data on defaulting credits, both from past cycles and on a
continuing basis, is required to link internal default and
loss estimates with the minimum regulatory requirements under
the new Basel Capital Accord now being developed for the large
internationally active banks."
He specifically addressed the importance of improving credit
scoring models, and "continually updating the database on
which the model operates", such as through "longer
and larger database[s]". |
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| 1st Circuit Rules on
Insurer's Duty to Defend Open Software Foundation |
10/4. The U.S.
Court of Appeals (1stCir) issued its opinion
in Open
Software Foundation v. U.S. Fidelity & Guaranty,
a case regarding a general commercial liability insurer's duty
to defend its insured under "personal injury" or
"advertising injury" clauses of an insurance
contract, where the insured was sued for alleged violations
for antitrust and unfair competition laws for its alleged
refusal to bundle software. The Appeals Court affirmed the
District Court's summary judgment for the insurer; that is,
there is no coverage under the policy.
Background. The Open Software Foundation was formed in
1988 by eight computer and software companies (including DEC
and HP) to design and market a UNIX based operating system
known as OSF/1. Addamax Corporation, a software maker, wanted
the OSF to incorporate its security software into OSF/1. OSF
declined. Addamax filed a complaint in U.S. District Court (DMass)
against the OSF, HP and DEC alleging violation of federal and
state antitrust and unfair competition laws.
OSF held a general commercial liability policy issued by U.S.
Fidelity & Guarantee (USF&G) which covered, among
other things, "personal injury" and
"advertising injury". OSF requested that USF&G
defend it. USF&G refused. OSF and defended itself and
prevailed. Hence, there is no duty to indemnify issue in this
appeal.
District Court. OSF and HP then brought the present
action. They filed a complaint in U.S. District Court (DMass)
against USF&G alleging breach of the duty to defend under
the insurance contract. The District Court granted summary
judgment to USF&G. This appeal followed.
Appeals Court. The Court of Appeals affirmed.
Jurisdiction in this case was based upon diversity of
citizenship. So, the Court applied Massachusetts law regarding
the duty to defend. The Court wrote that "the insurer
must accept tender of a defense if the complaints state or
adumbrate a covered claim when read in light of extrinsic
facts bearing some relevance to the allegations that the
plaintiff did not specifically include in the complaint, but
were nonetheless known or readily knowable by the insurer when
the defense was tendered". However, upon reviewing the
policy, the complaint, and extrinsic facts, the Court
concluded that complaint against OSF did not state or
adumbrate a covered claim. |
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| More News |
10/7. The Department of
Justice (DOJ) stated in a release
that Charles
James, Assistant Attorney General for the Antitrust Division, wrote
a letter to a consortium proposing to offer free electronic
tax services. The release stated that the consortium
"should pose no threat to competition in the market for
providing tax services to individuals".
10/4. The Office of the U.S.
Trade Representative (USTR) issued a release
in which it stated that USTR Robert
Zoellick met with Bahraini Minister of Finance and
National Economy Abdallah Saif. The release states that the
two discussed "intellectual property rights", and
that "They agreed that the two sides would follow up on
the day's discussions, including on issues such as science
based consideration of biotechnology and legislation to open
Bahrain's telecommunications market ..."
10/7. The Supreme Court is back from its summer recess, which
it began on June 28, 2002.
10/3. The U.S.
District Court (NDIll) entered judgment in SEC v. System
Software Associates, Roger Covey and Joseph Skadra. The Securities and Exchange Commission
(SEC) filed a civil complaint against System Software
Associates (SSA), and Covey, a former Ch/CEO, and Skadra, a
former CFO, in July of 2000 alleging that Covey and Skadra
caused SSA to misstate its financial results for several years
by improperly reporting revenue on sales of a UNIX language
software product before the product was developed sufficiently
to support revenue recognition under Generally Accepted
Accounting Principles (GAAP). Covey and Skadra are enjoined
from further violations of federal securities laws. Covey is
also required to pay $216,205.38 in disgorgement and
prejudgment interest and $100,000 in civil penalties. See, SEC
release. |
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Privacy
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& Disclaimers
Copyright 1998 - 2002 David Carney, dba Tech Law Journal. All
rights reserved. |
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| Tuesday, October 8 |
The House will meet at 9:00 AM for morning hour and at 10:00
AM for legislative business.
The Supreme Court
will hear oral argument in FCC v. Nextwave, Case No. 01-653,
and Arctic Slope Corp. v. Nextwave, Case No. 01-657.
Day one of a three day public workshop hosted by the FTC
to "explore how certain state regulations and private
business practices may be having significantly anticompetitive
effects on e-commerce". See, FTC release.
Location: FTC, 600 Pennsylvania Ave., NW.
10:00 AM. The Senate
Judiciary Committee will hold a business meeting. See, notice.
Press contact: Blythe McCormick at 202 224-9437. Location:
Room 226, Dirksen Building.
10:00 AM. The Copyright
Office (CO) will hold a status conference regarding data
format and delivery for record keeping requirements to be
established by the CO for the Section 112
and 114
statutory licenses. See, notice
[PDF].
12:15 PM. The FCBA's
Professional Responsibility Committee will hold a brown bag
lunch to discuss the scheduling of committee events and
activities for the upcoming year. For More Information: Frank
Montero. No RSVP is required. Location: Arnold &
Porter, 555 12th Street, NW.
12:30 PM. Tom Donahue, P/CEO of the U.S. Chamber of Commerce,
will give a luncheon address. Location: National Press Club,
Ballroom, 529 14th St. NW, 13th Floor.
3:00 PM. Kozo Yabe will give an address titled "Protecting
Intellectual Property Rights in Cyberspace: A Japanese
Perspective". Yabe is a partner in the Tokyo based
law firm of Yuasa
& Hara, which focuses on intellectual property law.
The lecture is sponsored by the George Washington University (GWU)
Law School's Dean Dinwooodey Center for Intellectual
Property Studies. For more information, contact Prof. Robert
Brauneis at 202 994-6138 or by email. Location: GWU
Law School, Burns Building, 5th Floor, Faculty Conference
Center, 720 20th St., NW.
6:10 - 7:30 PM. The George Washington University (GWU) Cyberspace Security and
Policy Research Institute and the GWU Law School will host a
panel discussion titled "The Music Wars over Digital
Intellectual Property". The speakers will be James
Boyle (Duke Law School), Stanley Pierre-Louis (RIAA),
and Lance Hoffman (GWU Computer Science Department). Location:
GWU Law School, Room LL 102, 2000 H St., NW. |
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| Wednesday, October 9 |
The House will meet at 10:00 AM for legislative business.
The Supreme Court
will hear oral argument in Eldred v. Ashcroft, Case No.
01-618.
Day one of a two day symposium titled "The Rule of Law
in the Information Age: Reconciling Private Rights and Public
Interest" hosted by the Catholic
University of America School of Law. See, schedule.
Location: CUA, Walter Slowinski Court Room.
10:00 AM. The House
Commerce Committee's Subcommittee on Commerce, Trade, and
Consumer Protection will hold a hearing titled "Telecommunications
and Trade Promotion Authority: Meaningful Market Access Goals
for Telecommunications Services in International Trade
Agreements". Web cast. See, notice.
Location: Room 2322, Rayburn Building.
10:00 AM. The Senate
Commerce Committee's Subcommittee on Technology,
Terrorism, and Government Information will hold a hearing on
new laws implemented by the Administration in the fight
against terrorism. Location: Room 226, Dirksen Building.
10:00 AM. The U.S. Court of
Appeals (FedCir) will hear oral argument in Northrop
Grumman v. Intel, No. 02-1024. Location: Courtroom 402,
717 Madison Place, NW.
Day two of a three day public workshop hosted by the FTC
to "explore how certain state regulations and private
business practices may be having significantly anticompetitive
effects on e-commerce". See, FTC release.
Location: FTC, 600 Pennsylvania Ave., NW.
TIME? The Federal Accounting
Standards Advisory Board (FASAB) will meet to "obtain
information from interested individuals, organizations, and
groups about potential future projects". For more
information, contact Charles Jackson at 202 512-7352. See, notice
in Federal Register.
Deadline to submit comments to the FCC regarding SBC's Section 271 application
with the FCC to provide in region interLATA service in the
state of California. This is WC Docket No. 02-306. See, FCC
notice [PDF]. |
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| Thursday, October 10 |
The House will meet at 10:00 AM for legislative business.
9:00 AM. The House
Judiciary Committee's Subcommittee on the Constitution
will hold an oversight hearing titled "A Judiciary
Diminished is Justice Denied: the Constitution, the Senate,
and the Vacancy Crisis in the Federal Judiciary". Web
cast. Location: Room 2141, Rayburn Building.
9:30 AM. The FCC will hold a
meeting. The agenda
includes four items. First, the FCC will consider a NPRM
concerning the reform of the International Settlements Policy,
its international simple resale and benchmarks policy, and the
issue of foreign mobile termination rates. (IB Docket No.
96-261). Second, the FCC will consider a First Report and
Order regarding digital operation by terrestrial radio
broadcasters. (MM Docket No. 99-325). Third, the FCC will a
Forefeiture Order concerning compliance with the shared
transport condition of the SBC Ameritech merger order.
Finally, the FCC's Enforcement Bureau will report on recent
enforcement activities. Location: FCC, 445 12th Street, SW,
Room TW-C05 (Commission Meeting Room).
10:00 AM. The House
Science Committee will hold a hearing titled
"Conducting Research During the War on Terrorism:
Balancing Openness and Security." The scheduled witnesses
include John Marburger (Director of the White House Office of
Science and Technology Policy), Ronald Atlas (American Society
of Microbiologists), M.R.C. Greenwood (UC Santa Cruz), and
Sheila Widnall (MIT). See, notice.
Press contacts: Heidi
Tringe or Jeff
Donald at 202 225-4275. Location: Room 2318, Rayburn
Building.
12:00 PM. The Cato Institute
will host a book forum. Jagdish Bhagwati
(Columbia University) will discuss his book, Free
Trade Today, and a collection which he edited, Going
Alone: The Case for Relaxed Reciprocity in Freeing Trade.
Robert
Litan (Brookings) will comment. Webcast. Lunch will follow
the program. See, notice.
Location: Cato, 1000 Massachusetts Ave., NW.
3:00 PM. The House
Judiciary Committee's Subcommittee on Commercial and
Administrative Law will meet to mark up HR 5429,
the Satellite Services Act of 2002. Webcast. Location: Room
2141, Rayburn Building.
Day two of a two day symposium titled "The Rule of Law in
the Information Age: Reconciling Private Rights and Public
Interest" hosted by the Catholic University of America
School of Law. See, schedule.
Location: CUA, Walter Slowinski Court Room.
Day three of a three day public workshop hosted by the FTC
to "explore how certain state regulations and private
business practices may be having significantly anticompetitive
effects on e-commerce". See, FTC release.
Location: FTC, 600 Pennsylvania Ave., NW.
Day one of a two day Annual Update Conference on Export
Controls and Policy hosted by the Department of Commerce's
Bureau of Industry and
Security (BIS). See, agenda.
Location: to be announced.
Deadline to submit comments to the FCC regarding BellSouth's Section 271
application with the FCC to provide in region interLATA
service in the states of Florida and Tennessee. This is WC
Docket No. 02-307. See, FCC
notice [PDF]. |
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| Friday, October 11 |
The House will meet at 9:00 AM for legislative business.
Day two of a two day Annual Update Conference on Export
Controls and Policy hosted by the Department of Commerce's
Bureau of Industry and
Security (BIS). See, agenda.
Location: to be announced.
Deadline to submit comments to the FCC in response
to it Public
Notice [7 pages in PDF] regarding relief for the Auction
No. 35 winners. The FCC asks for public comments regarding two
possible scenarios for providing relief to the winning bidders
in the January 2001 re-auction of spectrum previously
auctioned to NextWave: full refund and option to dismiss all
pending applications, and selective opt out for pending
applications. See also, notice
in Federal Register. |
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| Monday, October 14 |
| Columbus Day. The FCC will be closed. |
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