The ethics of Christopher Cox


Sometimes events catch up with executives who commit too much to print. Here’s a cautionary tale of a senior leader who was hoist by his own petard.

The Madoff Ponzi scheme has led commentators to issue damning indictments of the S.E.C.’s failure to respond to repeated requests they investigate the fraud. Sunday’s New York Times has an excellent article by Michael Lewis and David Eindhorn where they detail the wilful manner in which the S.E.C. chose to ignore repeated red flags about the situation:

“Harry Markopolos sent his report to the S.E.C. on Nov. 7, 2005 — more than three years before Mr. Madoff was finally exposed — but he had been trying to explain the fraud to them since 1999. He had no direct financial interest in exposing Mr. Madoff — he wasn’t an unhappy investor or a disgruntled employee. There was no way to short shares in Madoff Securities, and so Mr. Markopolos could not have made money directly from Mr. Madoff’s failure. To judge from his letter, Harry Markopolos anticipated mainly downsides for himself: he declined to put his name on it for fear of what might happen to him and his family if anyone found out he had written it. And yet the S.E.C.’s cursory investigation of Mr. Madoff pronounced him free of fraud.”

In light of these revelations, it’s fascinating to read an interview with S.E.C. chairman Christopher Cox in the September 2007 SPEAKER magazine published by the National Speakers Association. The Q&A session “Doing the Right Thing” is subtitled “The chairman of the SEC explains his philosophy about ethics and setting the right tone from the top.”

Speaker Magazine, September 2007

Cox observes that the best practices in any company are set by the senior executives. “Over and over again, commissioners and staff at the SEC observe that the tone at the top is a major factor in determining the effectiveness of internal controls to prevent fraud…”

When asked if ethics violations in financial companies occur on a regular basis, Chairman Cox answers:

“Sadly, yes. The full, five-member commission meets for many hours every week to take an in-depth look at individual cases in which securities laws violations are being investigated or charged.”

While Madoff kept his $50 billion scheme afloat, the S.E.C. was taking action. Cox details that:

“We have (a chief ethics officer) at the SEC, responsible for publishing ethics NewsGrams every two weeks on our internal web site, and e-mailing those to all employees as well.”

Sadly, these NewsGrams must have been absent any notification about Madoff or the other multi-billion dollar disasters brewing in Wall St on Cox’s watch. As he observes at the end of the interview when asked if he’ll transition out of government service at some point:

“I don’t know what the future holds. And despite the time I’ve spent in government, the challenges of the SEC are fresh and exciting.”

Perhaps a little too exciting?

Blogging Basics

Blogging Basics is a September 2008 article I wrote for the National Speakers Association SPEAKER magazine that’s now online. Lots of links to blogging resources.

Financial crisis explained

Two great articles in the Sunday New York Times explaining the origins of the current financial crisis in clear terms.

The End of the Financial World As We Know It

Michael (Liar’s Poker) Lewis and David Eindhorn lay bare the regulatory failings at the S.E.C. and Treasury Secretary Paulson’s secretive maneuvering with the $700B TARP fund which included guaranteeing $306B to Citigroup:

“Three hundred billion dollars is still a lot of money. It’s almost 2 percent of gross domestic product, and about what we spend annually on the departments of Agriculture, Education, Energy, Homeland Security, Housing and Urban Development and Transportation combined. Had Mr. Paulson executed his initial plan, and bought Citigroup’s pile of troubled assets at market prices, there would have been a limit to our exposure, as the money would have counted against the $700 billion Mr. Paulson had been given to dispense. Instead, he in effect granted himself the power to dispense unlimited sums of money without Congressional oversight.”

Lewis and Eindhorn recommend a short list of practical steps that can be taken to prevent a re-occurrence of these series of unfortunate events – most telling is to close the revolving door between Wall St and the S.E.C. which puts future fox’s in charge of the chicken coop.

Risk Mis-Management

Joe Nocera explains the complexities of the statistical ‘Value at Risk’ or VaR model managed by the beautiful minds of PhD statistician ‘quants’ whose complex algorithms justified the trading excesses of the bubble era. By using only tame historical data in their models they were unable to anticipate the ‘black swan’ event of the 1% chance of catastrophic risk:

“One reason nobody seems to know how to deal with this kind of crisis is because nobody envisioned it.”

Both articles shed light on the dynamics of executive communications when group-think rules. Thinking outside the box before the box imploded was not encouraged or rewarded. Pity.

Guest Posting: We Won’t Be Fueled Again! Or, An Inconvenient Arrogance

An open letter to GM, Ford and Chrysler (Mostly GM!)

By Betsy Rosenberg
Creator, Host – EcoTalk Radio
Founder – Don’t Be Fueled! Mothers For Clean and Safe Vehicles

Betsy Rosenberg
Dear Big Three Automakers;

So there you are in Washington DC with your hands outstretched and your hats out, speaking truth to power. “We’re in trouble Mr. Treasury.” “Please bail us out Uncle Sam.” “Please don’t let us die, don’chya know we’re too big to fail?”

Those are the plaintive cries echoing in the nation’s capitol chambers from the mouths of once powerful and almighty Titans of the SUV Age. And just like their gas-guzzling former darlings on wheels, these men – and they ARE mostly men – suddenly seem old, tired and of a bygone era. Good riddance gentlemen, your vehicles were just too big to succeed!

Somewhere in the depths of your gas-filled gut, you must have known judgment day was coming. All those years you made 10 to15 thousand dollars profit on each giant guzzler you sold, such a large mark-up that your sales teams were trained to push the biggest and the baddest models onto unsuspecting consumers. Car buyers looking for a 2 or 4 door sedan would drive off the lots feeling high and mighty about the great deal they got, until they filled up at a gas station. That’s when the gloating went into idle.

While there is some smug satisfaction to be felt by environmental activists and gasroots groups like the one I co-founded in 2002 called Don’t Be Fueled! Mothers for Clean and Safe Vehicles, the “we told you so’s” wont last long. They cannot because there’s so much work to be done to get our economy and environment out of the ditch, and darkness is fast approaching. That’s why there will be little reveling and no joy in Motown’s demise. If if the Big 3 go down, the negative ripples will be felt all the way to both coasts. That’s why we can no longer tolerate the dragging of wheels.

Reading about GM chief Rick Wagoner’s impassioned pleas for government intervention, I had to do a double take – almost gave me whiplash! Is this the same executive and company that has fought, with tens of millions in advertising dollars, to stave off government regulations that would tighten fuel economy standards and restrict tailpipe emissions in California and beyond? Is this the same Robert Lutz who proclaimed the dip in SUV sales a year ago was just a blip, and predicted gas would fall below two dollars per gallon again? (Well he was right about that one but surely cheaper gas is just a blip). Please excuse me Mr. Lutz, but with each passing day, you are looking more and more, like a putz!

I wonder what you’ve all been drinking – leaded gasoline perhaps? The u-turn in your change of tune, and fortunes, is staggering and surreal. And yet…this is precisely the scenario that a small group of Bay Area mothers predicted six years ago, and took that warning to GM!

I recall the meeting held with two of us from Don’t Be Fueled! and Dave Barthmuss, Group Manager for General Motors’ Western Region, Environment & Energy Communications team, who was in San Francisco in 2004 to meet with “stakeholders” to discuss GM’s green future. After thanking Bill Shireman (Global Futures) for arranging the intimate gathering, we proceeded to tell Mr. Barthmuss – in very plain Mom’s English – that the company was wasting its time and money talking to school kids about the hydrogen future. Presumably they were trying to get a jump on brand loyalty from the next generation of American drivers, but they were also carefully crafting a greener image than the Hummer was providing in those high-on-gas-fumes salad days.

We mothers, backed by thousands of other outraged moms – or so we said – were demanding U.S. carmakers give us more fuel efficient family-friendly vehicles, like hybrid minivans and SUVs. We were soccer moms, not anarchists, and we spoke in calm but firm tones. To his credit, Mr. Barthmuss listened intently when we told him they would be seen as greenwashers if GM, and other automakers (absent Honda which took the high road on this), continued to litigate, rather than innovate. We also scolded him, in our firm but gentle motherly manner, for ignoring hybrid technology available today, in favor of a hydrogen future that may or may not ever materialize. We told them if they didn’t get on the hybrid bandwagon they’d become dinosaurs and die an untimely death.

Several years later, at a future green car expo, Dave Barthmuss conceded to me, in hushed tones, that our conversation in that downtown SF conference room, had indeed, made an impact on him, but clearly he doesn’t run the company. The next time we spoke was on my national radio program, EcoTalk, a few years later when GM was rounding up the last of its EV-1 electric cars – to the great upset of many of its lessees who loved the groundbreaking vehicle.

At that time, General Motors was forcibly removing cars and trucking the new age wheels to the desert in Mesa, Arizona where they were crushed to death in the darkness of night. This was fall of 2005, during the same week Hurricane Rita was bearing down on Galveston, Texas stranding hundreds of SUV drivers who had run out of fuel along the shoulder of freeways as they fled for higher ground. Adding to the absurdity, GM announced that they would not be crushing all the EV-1’s. Instead they would donate a few to car museums so future generations (if there are any) could marvel at the late great electric car that supposedly nobody wanted. In fact, there were about 5,000 people on a waiting list for EV-1’s at the time, according to Chelsea Sexton, who, along with actress and activist Alexandra Paul, organized a week long protest outside the GM facility in Southern California, and who starred in the seminal documentary, “Who Killed The Electric Car?”.

So now you say we should bail you out; the government you fought, and the public you duped into thinking we “needed” these behemoths of the road? What do you take us for, fossil fools? No, you lived off those axles of evil, laughing all the way to the bank. Now we should save you from bankruptcy and self destruction?

Some of us would like to see you go away. At the very least go into a corner and have a “time out”. Think about all the bad car-ma you have wrought, all in the name of greed. Take ten minutes…or ten years…to feel appropriate remorse for letting down your children, your country and your sacred shareholders in the quest for short term profits, putting your special interests over public interest.

This obstinacy was especially heinous in the wake of 9/11, when you lobbied hard against strengthening CAFÉ standards, when it was not supposed to be “business as usual”. The NY Times was still running daily obituaries for those who perished when the Senate believed Trent-Lies-A-Lot as he held up a picture of a SMART car and said “if this legislation passes, it will be the death of SUVs and we’ll all be forced to drive purple-people eaters”.

You had the backing of President Bush who threatened that imposing stronger CAFÉ standards on American-made vehicles would “hurt the economy and cost jobs”. So nothing changed and look what happened; tens of thousands of jobs have been lost, the economy is in the tank, SUVs are sitting on car lots gathering dust and there are waiting lists for SMART cars more than a year long! And now that we are in the driver’s seat, and you are a deer caught in the headlights, let us, the American people, ponder your future.

I, for one, have already made up my mind. You sealed your fate several years ago when you put the brakes on progress. Otherwise we’d all be getting 35 miles per gallon, or higher, today. As we moms see it, the only way you can exorcise the Detroit Devil, and come out of your corner, is to have a total car-ma conversion, become a true leader and corporate steward of the environment. That’s right, if you want to survive, then we want change we can believe in. Begin with sweeping change at the very top of management – give walking papers to those executives arrogant enough to inconveniently come begging in personal corporate jets.

We mothers demand that green strings – no – make that green ropes, be firmly attached to any bailout package and that General Motors fully recycle itself into Green Motors – and not just in name, though you won’t even have to change your logo. After replacing the obscenely overpaid executives who drove you deep into the sea of red ink plow full steam ahead into a more sustainable future and retool those assembly plants to churn out hybrid vehicles in every model, and not just hybrid light; nothing that gets less than 30 mph will pass inspection. And while you’re at it, dust off that dormant electric car assembly line, crank those factories up to full gear, and accelerate America into a brighter, greener tomorrow. Give a jolt to the plug-in Chevy Volt you plan to debut in a year and make that prototype electric car your bread and butter. And last, but not least, you must agree to not spend one red cent on lobbying to defeat green legislation!

Then, after you’ve had your “come-to-what-would-Jesus-drive” eco-epiphanies, and your inconvenient arrogance is extracted in rehab, go on Larry King, Oprah and Ellen to beg forgiveness for your sins and to assure America that your overhaul will have traction. Then, and only then, can you get back to work and remember that we will be watching you. Nothing short of a total green makeover will satisfy us. If that sounds too radical and technologically challenging, consider that the Toyota Prius I’m driving gets over 45 miles per gallon and so did the first and second Prius’ I’ve leased since 2002. And consider the choice before you…either use those green ropes to pull yourselves through to the other side, or use them to hang yourselves.

Now, we ask you; doesn’t a big, bold commitment toward a greener future, through “re-in-car-nation”, sound a bit brighter? What’s that? Sorry, we couldn’t hear you due to the sound of another ice shelf crashing into the sea.

Betsy Rosenberg: Green Radio Host, Public Speaker

YouTube profile

Betsy “The Queen of Green” Rosenberg and National Speakers Association 2007 Pro-Track graduate has created a nice promo piece on YouTube.

While not all speakers can access a media library that includes getting the last word in on Fox News (no mean achievement!) many of us can make much better use of video and post the results to YouTube. Don’t have professional footage? Get a Flip

How to: Twitter

Twitter

Twitter is the 140-character messaging service which takes some getting used to. It’s confusing for new users and hard to understand much of the usefulness and appeal until you have been using it for awhile. It’s growing into a useful social networking, community building and marketing tool.

To find out about Twitter check out this newbie’s guide and also read this more complete guide.

If you’d like to connect me on Twitter with I’m @cheshirelad.

How to: Distribute a Press Release

PRWeb makes it easy. We’ve just written the Obama Victory Speech Vision Statement Movie Press Release and got it out on the wire. PRWeb has all the tutorial help you’ll need.

Long Distance Marketing

A new venture by NSA Northern California past-president Scott Q. Marcus looks interesting. Scott lives up in the redwoods in Eureka and is turning his geographical isolation to an advantage with a blog on Long Distance Marketing.

Long Distance Marketing

Scott writes of the challenge of finding and developing a customer base that is not located near your base of operations:

The question is “How?” That is one foundation on which this site is built. How do you reach potential clients and customers who live far away from you? What works? What doesn’t? In this “new” age of marketing, what are the most effective tools to find your clients? Of even more import is how do they find you?

His blog will document creative approaches to that challenge. One approach is to publish a quarterly magazine called ‘Two Words’.

For a ringside seat at the birth of a new business venture, bookmark Scott’s blog and join in the conversation as he launches himself into cyberspace – WOOOOSH!

How to: expand your mind

Just discovered iTunesU – a vast collection of FREE, down-loadable lectures from great academic institutions around the world. I’ve got 18 episodes on creative writing from Britain’s Open University lined up, with lectures on politics from the LSE to follow.

The Medieval Speechwriter

Canterbury Tales

Think for a moment of corporate America in terms of Medieval England.

This is of course quite ridiculous. We’ve come a such a long way since the 14th Century. Back in the Dark Ages literacy was at all-time low. A minority of the population held a passport and had traveled overseas. The rabble was distracted by jousting, feasting and Mystery Plays. And the King gave speeches no-one listened to.

I can’t possibly imagine what this era of history has in common with our own.

But what if? What if we did imagine?

What roles would we all play? What do the characters in the Canterbury Tales, or Monty Python and the Holy Grail tell us about life today?

Obviously the CEO is the King (or, in rare cases, the Queen). An enlightened monarch or raging despot ruling over the organization. The EVPs and SVPs are the Barons at Court, consumed by intrigue and power plays. Sales managers are the Knights, conquering new territory. The staff are serfs and peasants, laboring in cubicle farms.

What about the speechwriter? What roles best suit the speechwriter in this Medieval analogy?

Actually, there’s quite a number which fit the job description.

For starters, how about the speechwriter as the Motley Fool?

The Motley Fool

The fool on the hill
Sees the sun going down,
And the eyes in his head,
See the world spinning ’round.
– The Beatles: Fool on the Hill

The Fool in the Medieval Court stands behind King’s throne. While Barons and Knights give measured advice the Fool whispers in the King’s ear “That’s boring. Rubbish! Claptrap! The people won’t buy it. You’ll have to spice it up to keep their attention at the Guild Hall Luncheon tomorrow. Make ’em laugh my liege. Tell ’em a story.”

The Fool adds Laughter! Humor! Interest! He has King’s ear, for the moment. The King tolerates him (just) and values his fresh point of view.

The role of the Motley Fool is politically cool. You get to hang out with the powerful and mighty in the land. You might even spend time with the King on the Corporate Jet. But never forget that you’re the only person in the room without 5,000 serfs reporting to you and a quarterly number to make.

Screw up and it’s “Off with his head!”

As Robert Schlesinger said about his role in JFK’s White House, speechwriters counter the “diplomatic blandness” the State Department bureaucracy produced.

Lessons for Speechwriters as Fools

  • Step outside the corporate bureaucracy.
  • Look at issues and topics with fresh eyes.
  • Inject humor, levity, tell stories – audiences love it.
  • Have the courage to speak frankly to the powerful.
  • Don’t show fear when the King growls.

Enough with the Jester. What other role characterizes the job of an Executive Communications Manager (aka Speechwriter) in today’s corporation? How about …

The Ploughman

Businessmen they drink my wine
Ploughmen dig my earth
– Dylan: All Along The Watchtower

A world away from the gilded Court, Ploughmen till the fields. Tedious but necessary work plays a large part in speechwriting. Doing research. Fact-checking. Ploughing through the background papers which spew from Subject Matter Experts like weeds sprouting on a April morning after a few sweet showers.

Lessons for Speechwriters as Ploughmen

  • It’s boring work, but learn to live with it. With any luck you’ll have the fields tilled by nightfall and the King will invite you to the feast that evening.
  • Have systems in place to take care of the boring stuff. Tracking forms; checklists; everything to speed the plough.
  • Divide up tasks. It’s less overwhelming to focus on today’s furrow than worry about the rest of the forty-acre field.
  • Take breaks, quaff ale, be strong behind the plough.

The Fisherman

Fish supplemented the Medieval diet. Carp was delicacy plucked from the castle moat by Fishermen. It’s always fun to throw a few lines in the water and see what slippery items of information you can catch. Today’s fisherman uses email and voice mail to leave requests for information with subject experts across the kingdom. Bait your hook with the name of the CEO. (“I’m doing some research for a speech Mark is giving next month and wanted your views…”). Always use the King’s first name. When the fish bite, reel them in.

Lessons for Speechwriters as Fisherman

  • Plan ahead. The fish might not be biting today. You need to get your lines in the water early on in the process.
  • Have patience. But if you don’t get an answer after a few days, fish in another part of the corporate millpond.
  • Don’t forget to bait your email requests with the first name of the executive you are writing for.

The Miller

The Miller is an important member of every Medieval community. Without him, there would be no flour and no loaves of bread. Bread and circus’s are what keep the serfs fed and happy. Every Miller is dusty from grinding wheat into flour; separating wheat from chaff.

Subject Matter Experts (SME’s – rhymes with please) will bring sacks and sacks and sacks and sacks of data to your mill. Each direct report likes to provide at least 45 minutes of content for a 15 executive minute speech. If the executive has 10 reports that means you’ll have to sieve through eight hours of content.

It’s the speechwriters job to grind it down, then bake fresh loaves to feed the audience.

Lessons for Speechwriters as Millers

  • This is your biggest single value-add. No-one else wants to stand there while the mill-wheels are a-turning.
  • Edit ruthlessly – throw out 90% of the data the engineers and SME’s send you.
  • Say ‘No’ to requests for more data and facts from Knight’s and Baron’s who pile on the grain as a CYA strategy.
  • Keep the mill-wheels turning. Don’t send un-milled sacks of data to the court. They are paying you to sift and select.

The Alchemist

The Alchemist turns base metal into Gold. Like Rumpelstiltskin’s daughter you’ll take their words and sit in your room all night spinning them into gold. And next morning no-one will know how you did it.

Lessons for Speechwriters as Alchemists

  • Study the book of spells – text-books on speechwriting such as those listed at the end of this parchment.
  • Safeguard the Mystery. Don’t reveal your secrets to the other members of the Court.
  • Practice makes perfect. Alchemy is an art, not a science. Cultivate your Craft.
  • Understand that what you do is magikal to ordinary mortals.

The Monk

Scriptorium: a place for writing – commonly used to refer to a room in medieval European monasteries devoted to the copying of manuscripts by monastic scribes.
– Wikipedia

Monks spent hours, days, weeks, months, years in the Scriptorium illustrating manuscripts like the Book of Kells. Everyone admires their artistry but wonders why they spent so much time coloring basic information and making it, actually, harder to comprehend.

That was then. This is now.

The speechwriter today spends hours, weeks, months, years in front of the computer illustrating presentations in PowerPoint. Future archeologists will gaze in wonder at the endless decks of slides. Beautiful, mindless illustrations of…what? Will anyone be able to comprehend these charts in the future? Can members of the audience comprehend them today?

Who cares. Monks may have had a diet of thin gruel, but illustrated manuscripts occupied them on winter evenings.

Lessons for Speechwriters as Monks

  • Learn cutting-edge PowerPoint skills. Take time to study and learn techniques.
  • Develop a good relationship with your graphics team who support you in this.
  • Read two of the Bibles of the modern era: Nancy Duarte’s slide:ology and Garr Reynold’s Presentation Zen

The Wandering Minstrel

Hey! Mr. Tambourine Man, play a song for me,
I’m not sleepy and there is no place I’m going to.
Hey! Mr. Tambourine Man, play a song for me,
In the jingle jangle morning I’ll come followin’ you.
– Dylan: Mr. Tambourine Man

OK. I saved the best for last. All of the previous roles are aspects of life at Court, inside the hierarchical corporate world, bound by proscribed roles and strict protocols.

The Wandering Minstrel travels the land a free man composing sonnets and madrigals for clients.

Today the speechwriter as consultant wanders freely, far from the twisted reach of crazy sorrow. If this sounds like the life for you, there’s important lessons you need to learn.

Lessons for Speechwriters as Minstrel

  • Aim for niche markets. Become an expert in a specific industry. You’ll make good money if your expertize is an inch wide and a mile deep.
  • Work fast, bill clients a flat fee, clean up and move on (just like Joe the Plumber).
  • Stay at the top of your game. You have to be good, darned good.
  • Work by referrals. People love to hire a Minstrel who has performed for the crowned heads of Europe.

That’s the end of my tour of the Middle Ages. If you’d like to hear how this sounded when I delivered it as a talk to a District 57 Toastmasters meeting in Oakland, California, on November 15th 2008, click on the podcast icon below. (Since this is 35 minute presentation, you might prefer to choose the Download option to save it to your computer.)

Book of Spells

Here’s some reference books I keep close by:

As useful as reading books is, you should also spend time listening to speeches. Here’s a list of 100 great ones.