Thomas J. Curry Joins Starling Advisory Board

Starling Team
WStarling, an applied behavioral sciences technology company, has announced the appointment of Thomas J. Curry to its Senior Regulatory Advisory Board. Curry joins current advisory board members Rick Ketchum, former CEO of the Financial Industry Regulatory Authority (FINRA), who also headed regulation for the NYSE and served as President of NASDAQ; and Martin Wheatley, inaugural CEO of the UK Financial Conduct Authority and, earlier, CEO of the Hong Kong Securities & Futures Commission.

Curry was nominated by President Obama to serve as head of the Office of the Comptroller of the Currency (OCC). As Comptroller of the Currency (2012-17), Curry led the US federal agency that charters, regulates, and supervises national banks and federal savings banks. 

Now a partner at Nutter McClennen & Fish LLP, Curry advises clients on financial services regulation, governance, and policy issues as a member of the firm’s Corporate and Transactions Department and co-leader of its Banking and Financial Services group. Curry also chairs the Milken Institute’s Fintech Advisory Committee and is a founding board member of the Alliance for Innovative Regulation, which aims to help regulators to adopt innovative technologies. 

“I am excited to join Starling and its advisory board as the company brings new tools for non-financial risk management to market. Managing the operational risk associated with conduct is an ongoing area of concern to bank management and their supervisors,” said Curry. “Starling offers an innovative platform that helps business leaders to manage such risks, and to promote the efficiency and productivity of their organizations. I look forward to providing guidance as they expand.” 

“Long before it was fashionable, Tom argued that company culture was a key driver of risk and thus demanded board-level attention,” said Starling CEO, Stephen Scott. “When such attention is inadequate, it can deeply damage firms, their leadership – and also the regulators charged with safeguarding stakeholders,” he added. “Given his uniquely wellinformed perspective, Tom appreciates this more than most,” Scott said. “He will be a great asset to us as we craft technology tools that permit firms to manage non-financial risks from a position of foresight.” 

 About Thomas J. Curry

Curry is a Boston-based partner in the Corporate and Transactions Department at Nutter McClennen & Fish LLP. As co-leader of the firm’s Banking and Financial Services group, he advises clients on a range of policy, financial services regulation, governance, and other issues. 

Curry chairs the Milken Institute’s Fintech Advisory Committee and is a foundation board member of the Alliance for Innovative Regulation, which aims to help regulators to integrate technology into every stratum. 

He was nominated by President Obama to serve as Comptroller of the Currency – head of the Office of the Comptroller of the Currency (OCC). Curry served in that role from 2012 until May 2017, leading the US federal agency that charters, regulates, and supervises national banks and federal savings banks. As Comptroller, he also served as ex-officio member of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) and the Financial Stability Oversight Council. 

Before becoming Comptroller, Curry served as a member of the Board of Directors of the FDIC, nominated to that role by President George W. Bush and confirmed by the U.S. Senate in 2003. He has served five Massachusetts Governors as the Commonwealth’s Commissioner of Banks: from 1995-03, appointed by Governor William F. Weld (Republican) and from 1990-91, appointed by Governor Michael S. Dukakis (Democrat). 

Curry has served as a member of the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision. He served as Chairman of the Federal Financial Institutions Examination Council (FFIEC) for a two-year term, from 2013-15. More recently, he served as an expert consultant for the International Monetary Fund. 

Curry was the Chairman of the Conference of State Bank Supervisors (2000-01) and served two terms on the State Liaison Committee of the FFIEC, including a term as Committee chairman. He was Acting Commissioner of Banks (1994-95) and First Deputy Commissioner and Assistant GC within the Massachusetts Division of Banks. He entered state government in 1982 as an attorney with the Massachusetts’ Secretary of State’s Office. Curry is a 1978 graduate of Manhattan College, summa cum laude, and received his law degree from New England School of Law.


 About Starling

A globally recognized RegTech pioneer, Starling is an applied behavioral sciences company that helps customers to create, preserve, and restore value. Combining machine learning and network science, Starling’s Predictive Behavioral Analytics platform allows managers to anticipate, and to shape, the behavior of employees and teams. Starling reveals how relational trust dynamics within an organization impact business performance — predictably. Its proprietary algorithms generate actionable insights that allow leaders to optimize performance and to identify and mitigate culture and conduct risks before they cascade into crises. 

In addition to Curry, Senior Regulatory Advisors to the company include Rick Ketchum, former CEO of the Financial Industry Regulatory Authority (FINRA), who also headed regulation for the NYSE and served as President of NASDAQ; and Martin Wheatley, inaugural CEO of the UK Financial Conduct Authority and, earlier, CEO of the Hong Kong Securities & Futures Commission. 

Siew Kai Choy is inaugural member of a new Risk & Governance Advisory Board, (a former MD at GIC, Singapore’s sovereign wealth fund, he was Director of the Data & Analytics Department, Head of Governance and IT in the Public Markets Group, and founded GIC Innovation Labs). 

And Starling is also guided by a Scientific & Academic Advisory Board that includes John Seely Brown (“JSB,” former director of the Xerox PARC Research Lab), and professors Nicholas Christakis (director, Yale Human Nature Lab), Karen Cook (director, Stanford Institute for Research in the Social Sciences), and Thomas Malone (director, MIT Center for Collective Intelligence).
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What Can Global Markets Learn From New Zealand’s Approach to Conduct? | Insurance Business New Zealand

Starling Team

While New Zealand’s financial services sector goes through a period of change, industry leaders in the Asia-Pacific region say they see similar shifts happening across the globe. Now, this region may learn from New Zealand’s approach. That ‘principles-based’ approach to conduct has resonated in several countries. 

“Every regulator in every market wants to improve the professionalism and conduct of their financial advisers – they’re just starting at different points,” said Sam Tremethick, chief partnership insurance officer at AIA. He expressed that that regulatory change requires bringing a level of professionalism and good conduct to its players because the industry is nothing without that trust.

Now, regulators are taking a close look at how  Australia and New Zealand are managing culture and conduct reviews

Keep reading

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Now More than Ever: The Need for Reliable Conduct Risk Metrics | Regulation Asia

Starling Team

In a recent Regulation Asia post, Starling CEO Stephen Scott discussed how the demands being imposed on the global banking system highlight the Achilles Heel of nonfinancial risk management and misconduct risk.

On 19 February, the S&P 500 reported it’s quickest ever retreat into a bear market. In a related story, the Financial Times produced a chart depicting this fall against other historical events. It is telling: this retreat was faster even than that during the Great Depression. The present contraction reflects the speed by which economic events can spread, contagion-like, in our inextricably linked global economy.

Banks are of course deeply caught up in current events. As the Wall Street Journal put it aptly, “banks can’t do social distancing.” Central banks seeking to forestall economic crisis will look to the banking sector to help pump much-needed liquidity into markets, and to help assure that those monies reach small businesses and perhaps even households.

The intermediary role of banks has long been their key social function, and we will rely on them playing this role especially well in the coming months. Banks have thus launched a coordinated global effort to win a relaxation of regulatory burdens, to include those targeting compliance related risks such as misconduct.

Read more

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Do Closures Slow the Spread of Coronavirus? Past Outbreaks Provide Clues About Health and Conduct Risk

Starling Team
We’re all paying more attention these days to contagion dynamics.  Starling advisor, Nicholas Christakis, is a physician and esteemed social scientist at Yale.  In our 2019 Compendium, he discussed how conduct within firms follows rules of contagion.

Mathematical models allow us to anticipate how a contagion will likely spread. This is true also for behavioral contagion, as Nicholas argues and still more fully in his Ted Talk on the topic.

Nicholas has recently offered his well informed views on a question that many are struggling with currently:  will shutting down public schools help the broader community during a time of growing concerns with COVID-19?  

Nicholas studies social networks. He’s also developing software and statistical methods to forecast an epidemic’s spread before it happens. He believes that these closures are beneficial.

For example, he cites several studies that look at reactive closures. They typically find that reactive school closures (for a moderately transmissible pathogen) reduces the cumulative infection rate by about 25%. They also delay the peak of the epidemic by about 2 weeks.

This provides an enormously valuable buffer to help alleviate the strain on already overstretched medical care staff and facilities.  But, Nicholas observes, proactive school closures can have an even bigger impact.  

In fact, it’s one of the most powerful non-pharmaceutical interventions for a virus like this. These measures have been shown to save thousands of lives.

Bottom line: an ounce of prevention is worth a pound of cure.  As we’re reminded of this truism during the current public health crisis, with all its attendant economic consequences, we may also want to give some thought to how these same lessons apply in the context of managing conduct risk among scandal-beleaguered firms.

Nicholas A. Christakis, MD, PhD, MPH, is the Sterling Professor of Social and Natural Science at Yale University, where he directs the Human Nature Lab and is the Co-Director of the Yale Institute for Network Science. He was elected to the National Academy of Medicine in 2006, the American Association for the Advancement of Science in 2010, and the American Academy of Arts and Sciences in 2017. He is the author of the New York Times bestseller, Blueprint: The Evolutionary Origins of a Good Society, and known for his research in the areas of social networks, biosocial science, behavior genetics, and public health.

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KPMG Retakes Independence Exam Amid Cheating Scandal | Financial Review

Starling Team

The Australian Financial Review (AFR) has just reported on an emerging scandal at KPMG in Australia.  It recounts how senior executives and other employees were found to have cheated on a regulatory compliance test, as discovered through a whistleblower complaint, and subsequently verified during a comprehensive third-party investigation. 

The test in question was originally offered in December 2019 and January of this year.  A 20 question multiple-choice exam, the test is given at the end of an annual training course on KPMG’s policies and local regulatory requirements related to ensuring auditor independence.  KPMG Australia’s CEO announced that virtually all employees would retake the training and the test.

There are a number of items that are striking about both the cheating scandal and the response by KPMG. 

First, the training itself seems to have been fairly routine.  Training programs of this kind have become ubiquitous as firms scramble for solutions to their persistent conduct risk challenges.  These programs cover a variety of topics including #MeToo training, general ethics training, and training regarding specific compliance topics, such as insider trading. 

Our own experiences with such programs suggests that the programs, and their accompanying tests, are designed with a view to achieving 100% success rates, rather than selecting for failure, as might be expected in a licensing exam, for instance.  As such, a 20 question multiple-choice test on a topic that KPMG consultants review annually, and that consultants must navigate on a regular basis, should not have been a terrible challenge.  It certainly wouldn’t require cheating for any reasonably competent consultant.

Second, the cheating reflects a cultural element.  The training program reportedly takes 2 hours: a significant amount of time for consultants billing hundreds of dollar per hour.  These training programs are often boring, simplistic, and perceived either as lacking relevance to the test-taker’s “real world” experience of the workplace, or being so bloody obvious as to be meaningless in any practical sense.  It is not a stretch to imagine that the cheaters at KPMG may have been motivated to avoid ‘wasting time’ on the training and, thus, sought short-cuts.

Such a benign motivation — “let’s not waste time” — may explain the brazen openness of the cheating, which took place across archived and searchable corporate communications platforms. Cheaters could thus assume that they left an evidentiary trail.  But, if they perceived their behavior to reflect simply “the way things are done here,” it is likely that they were not troubled by leaving behind clear markers discoverable through subsequent internal investigation — notably, precisely the kind of internal investigation that KPMG and its peers regularly offer clients!

And thirdly, it is interesting to consider KPMG’s response: requiring that all key employees, including 600 partners and 5,900 client-facing staff, retake the 2-hour training and the exam.  Effectively, those that followed the rules will be treated the same as those who didn’t.  The implicit priority is thus not to ensure compliance: most employees presumably demonstrated mastery of the content the first time through.  Rather, it appears that for KPMG leadership the goal is to demonstrate uniform task completion.  

Behavioral science would suggest that this will lead to unintended consequences.  In a note sent to employees after the cheating was discovered, KPMG emphasized that they want all of their people to come forward whenever they see unethical or inappropriate behavior.  Yet the cost of coming forward in this instance (e.g., “whistleblowing”) has resulted in a penalty for everyone. One wonders whether fingers will be pointed at the small group of cheaters or if staff will instead blame an “over-zealous” whistleblower for having to sit through the tedium of the training and exam for a second time.

Our experience suggests that the response from KPMG’s leadership will have little impact on the cultural dynamics that led to the scandal in the first place.  ‘Tone from the top’ and rigid compliance controls may represent good practice, but it’s the ‘tone from the middle’ that shapes behavior.  KPMG would be well advised to focus its attention to that.  Demonstrating its success in this regard would likely go a long way towards winning opportunities to help their clients to do the same.

The full article is available here.

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