example, globalization makes group management and risk aggregation more challenging, and the increasing power of information technology creates both new opportunities and new risks. furthermore, new products and new distribution channels are likely to affect your business and risk profile. the fiduciary and investment world has not been immune to problems caused by ineffective controls. well - publicized accounts of late trading and market timing at mutual fund firms, and the related investigations, have touched many businesses including banking, securities, and insurance firms. these types of compliance failures result in sanctions or financial loss and adversely affect the reputation and franchise value of a firm. as a result, we are seeing an increasing focus on enterprisewide compliance - risk management systems. the business lines and activities of financial services firms can cross many legal entities, making it more difficult for a supervisory agency acting alone to determine what went wrong and what processes may need to be improved. in some of the mutual fund cases, the federal reserve, as the consolidated supervisor of the relevant banking organization, worked closely with the primary bank regulator and the securities and exchange commission ( sec ) to investigate control breakdowns. the agencies exchanged information in order to compare their findings. findings from sec examinations of the broker - dealers, investment advisers, and mutual fund distributors were analyzed together with findings from targeted joint reviews of the bank holding companies and the banks conducted by the federal reserve and the primary bank regulators. the banking agency reviews were focused on corporatewide compliance practices and bank lending practices. my observation is that the significant deficiencies in mutual fund practices resulted from a combination of factors and a breakdown in controls. first, mutual fund activities were not being effectively overseen by their mutual fund boards. second, there were strong financial incentives at certain firms to increase the profitability of mutual fund activities, but the legal and reputational risks of these incentives were not appropriately addressed. third, a lack of adequate employee training resulted in employees deviating from standard procedures, in order to accommodate certain large customers. for example, in some cases, employees granted key customers a routine waiver of redemption fees, which allowed them to engage in market timing at the expense of other fund shareholders. a stronger corporate compliance program would have enabled a local compliance officer to identify these problems and bring them to the attention of higher - level managers within the corporation. based on our experience in investigating control breaches in these mutual fund cases, i would like to highlight a few lessons learned. one of the most obvious to me is the need to critically evaluate unusual

of overconfidence, caprice and greed. at least in not such a big way, i guess we will always have cycles and bubbles but hopefully the last one will have taught us something for a long time and be the biggest collapses we will have for at least two or three decades.