Automatic Stay

Finance allah shmoop what is a compliance department You know

that karate or tai chee move where the guy has

your wrist bent all the way back and he's looking

at you like your dinner Yeah uncle Well in this

case he's the compliance department and you're you know complying

well the same holds true in corporate ranks There are

myriad laws not just in the securities business that executives

everywhere have to follow Or this happens Well compliance department's

comprise lawyers who have like a thousand eight hundred ninety

seven things they check to be sure that your complying

with regulations so like you're a sales exact you sell

routers mostly the banks So that's super expensive dinner on

your expense account What was that for And what exactly

could you have been doing Business related at magic marty's

exotic dance club That company rules what happened That was

on the cover of the wall street journal How do

you feel then Yeah comply Don't go there next All

right You're a mutual fund manager You're visiting up big

telecom company and you're slowly getting rid of the coffee

pete's house Blend the three cups of it that you

had two hours earlier Well from the next stall you

over here The ceo of the telecom company on his

cellphone among other noises Talking to his banker about the

twelve dollars a share premium he hopes to get when

a t and t buys his company Can you quickly

put in an order and buy shares No And in

fact you have call your compliance department as soon as

you're you know done and halt any trading your fund

was doing in the stock as you now have very

inside information Alright well complaints applies also to the way

forms get filled out the way travel is paid for

Any quote favor unquote over and above About ten bucks

worth all that's Something that has to be run through

the compliance department lawyers to be sure that your behavior

is you know complying And the same happens for complex

stock trades as well like you work in a hedge

fund with a risk manager of the compliance department A

little bit different Kind of complying there you're down eighteen

percent on a trade you made just two weeks ago

What do you d'oh Well guess what By charter of

your hedge fund or the indenture on it or the

contractual agreement you set up with your investors you have

to sell Now even though you think it's a screaming

by here down eighteen percent you clearly didn't know what

you were doing when you bought the stock at one

hundred bucks a share And now it's you know eighty

two And so now you must comply with your bylaws

and sell and take your losses Because complying is not

an optional thing that you just picked the follow or

not When you feel like it You know kind of

like romantic relationships used to be before tinder was invented