Tuesday, July 31, 2012

How best to handle orphan income

A common challenge with asset managers is how to deal with what might be termed "orphan income": income that arrives after the asset that produced it has departed the portfolio. This often happens when we sell a stock position after it has gone ex (i.e., any purchasers of the stock after this date will not be entitled to the dividend, but the sellers will be, even though they sold their shares) but before the dividend has been received. It is not typical with fixed income securities, because when a bond is sold, the purchaser typically pays the seller any accrued income.

Case in point: you own stock that goes ex dividend on the 5th of the month. You sell it on the 6th, and the pay date is the 15th. When the money arrives, there is no asset to tie it to. If you measure performance on that stock, you find yourself going from a zero market value to the value of the dividend, which can be a bit messy.

Option #1: shift the date you received the money (the 15th) back to the date you sold it (the 6th). That makes everything work out fine, right? This would not be appropriate, since you shouldn't adjust the pay date, as this is altering the true accounting that occurred. This can be especially problematic at year-end, as you would receive  income in the year prior to its actual receipt.

Option #2: carry an accrual until pay date. THIS makes sense, does it not? Ideally you're carrying an accrual, anyway, once the stock went "ex." But if you didn't, create an accrual in cases like this. This way, you will derive the correct return and not mess with the accounting.

Have different thoughts? Chime in!

Monday, July 30, 2012

Why it is good to look at outliers

In the past two weeks I've conducted two software certifications for Spaulding Group clients, and in both cases they had controls to test portfolio returns against specified benchmark tolerances. And, as you might expect, the fact that a portfolio blows past a tolerance level doesn't mean it's wrong; merely that it's worthy of review. After all, we expect to see outliers appear.

The London Olympic games already have a case of someone going past a benchmark, but really not a benchmark we'd typically expect to see. The London Mail had an article about 16-year old Chinese female swimmer Ye Shiwen's performance that not only beat the female record, but also surpassed American swimmer Ryan Lochte's time in the last 50 meters. "Ye Shiwen posted such a good time that her final 50m was in fact faster than Lochte's performance in the men's event, at just 28.93 seconds...Her achievement was so unprecedented that it even led some broadcasters to question whether Ye had benefited from underhand practices."

Perhaps Ye did not benefit from any banned substance. But such an extraordinary performance is worthy of review, and this is what will occur. Controls such as this in performance measurement should almost be routine, as a way to catch errors.

Thursday, July 26, 2012

Results not typical (too bad there isn't a GIPS-type standard for all advertising)

While exercising this morning, I caught an advertisement on the television for a supplement to help men guard against prostate cancer. I had the sound off, so don't know what was said, but at one point noticed the following:

Results not typical.

Difficult to read? It says "Results not typical." Imagine trying to read it from across the room! It was in rather small white print, against a light blue background.

Yes, it was there; but clearly (no pun intended) not meant to be read by everyone, save for those who were sitting quite close to the screen. And yet their advertisement had testimonials which were apparently "not typical."

To present performance of outliers would, of course, be an example of non-typical results. And while a distribution has outliers on both the positive and negative ends, I doubt that we will see an advertisement touting the results of those outliers that are on the left side of the curve.

GIPS(R) (Global Investment Performance Standards), of course, guards against this by requiring the inclusion of all accounts that meet the criteria the strategy being marketed; not individually, but collectively, with a dispersion method (if there are six or more accounts present for the full period) to provide even greater insights.

Many men over 50 will no doubt pay close attention to advertisements offering aids to guard against prostate cancer, and many (most?) will overlook the fine print, but will willingly pay for a supplement whose results may, in reality, not do much at all. Likewise, a manager who sells their money management services by highlighting the performance on the far right of the distribution will also be bringing on clients who will not normally achieve such results.

What this of course also means is that any time information is shared with a prospect that comes from a subset of the entire composite (e.g., a representative account's attribution results), sufficient details must be shown so that what it truly represents is understood.

Wednesday, July 25, 2012

What do you need to do when you change your return methodology?

Last week I began to conduct a software certification for a Spaulding Group software vendor client. My primary contact mentioned that they changed their policy for timing of cash flows, so that inflows default to start-of-day events, while outflows default to end-of-day (though these can be overridden, if necessary). She asked if anything needs to be disclosed, and also, what happens if they recalculate history because of an as-of trade?

First, we would not expect anyone to recalculate history, just because a change is made to the formula, with only one exception: if the method was flawed (we've found flawed formulas used at a few firms, who developed their own system, using their own in-house designed formula). Okay, maybe a second example: if an asset manager wants to comply with GIPS(R) (Global Investment Performance Standards), and the one(s) they had been using historically don't comply with GIPS, so in order to comply, they have to recalculate past performance).

As for disclosures, I'd say that they need to indicate the timing of changes and what formula(s) is(are) used at which time.

This disclosure can also include a statement that in the event of as-of trading history is recalculated, the newest employed formula at that point in time will be used.

Make sense? Have a different view? Chime in!

Tuesday, July 24, 2012

Wrestling with what IS and IS NOT supplemental information for a GIPS presentation

True Confession Time: years ago, when the concept of "supplemental information" was being introduced, I opposed the idea of actually "labeling" this information. While understanding the notion of supplemental is important, I didn't see much value in having to label it. Today, my view hasn't changed. But that doesn't matter: the rule is that one must label if you're a GIPS(R) (Global Investment Performance Standards) compliant firm. [But, I want to make it clear that this comment doess not constitute a criticism of either the Standards or those who crafted them. It's merely an opinion.]

Now, the tricky part: what to label?

Let's begin with a definition of  what supplemental information is; from the Standards' glossary we have:
Bottom line, it's performance-related information that's neither required nor recommended. And so, when you want to include performance or risk information along with your compliant statement, you need to decide if it's supplemental or not, because if it is, you have to label it.

As GIPS verifiers, we often encounter clients who have elected to include additional information, and must consider whether it's supplemental or not. Let's consider the following two examples, from recent verifications we conducted:
  • benchmark risk statistics, other than the required 36-month annualized standard deviation: while the standards recommend that firms "present additional relevant COMPOSITE-level EX-POST risk measures" (see ¶ I.5.B.6), it doesn't suggest the same for benchmarks. Was this an oversight? Is there a sense that this may be implied? Think about it: to show, for example, the Sharpe ratio for the composite but not the benchmark has limited value, right? But, strictly speaking one might conclude that it has to be labeled. I'm of the opinion that this is a "gray area," and am fine either way: want to label it? Fine! Don't want to? I'm okay with that.
  • growth of a dollar (or Euro, Pound Sterling, etc.): while charts are recommended, I believe only of information that's recommended or required. And so, since such a chart (or the underlying data) isn't recommended nor required, I'd say this falls into the "supplemental camp," and requires a label.
What if you fail to label something, is your claim invalid? I would say "no." I think that this would be a minor infraction, and one that simply needs correction.

What if you label something that really isn't supplemental? I'd call this an oversight, and say that it does not invalidate the claim. Once made aware of the error, simply remove the label.

Have a different view, thoughts, insights, or other examples? Please chime in!

Friday, July 20, 2012

The Spaulding Group to host Risk Week: an online conference event

The Spaulding Group will host Risk Week this coming fall. It will be a week of daily webinars, covering a variety of risk topics.

Risk measurement's importance to the investment industry has never been greater; thus our belief that a week of daily sessions, conducted by leading authorities, will benefit many.

Last year, we held Attribution Week, which was very well received. This format seems to be quite attractive, as it involves no travel, has a minimal time commitment, and yet provides an organization with great content. Its flexible format allows you to sign up for one or more of the sessions (i.e., pick and choose the ones that most appeal to you). Or, sign up for the full week!

To learn more, please visit our conference website, or call (732-873-5700) or email either Patrick Fowler or Christopher Spaulding.

Thursday, July 19, 2012

More on representative accounts and GIPS compliance

A Spaulding Group verification client recently sent me the following note:

Hi Dave, I’m hoping you can answer a questions for us very quickly.  Our CCO and I are having a disagreement over whether representative account performance from a composite can be shown alongside the composite performance being presented to a prospect.  The guidance statement indicates that supplemental information like carve-outs, country weightings and hypothetical performance can be shown as supplemental information but does not specifically reference a representative account from the composite.

You may recall that I blogged about this subject last month. I stand by my earlier statement that GIPS(R) (Global Investment Performance Standards) compliant firms may, in fact, include details from a representative account to a prospect. However, it's important that appropriate disclosures be included.

I was reminded of the risks with rep accounts while listening to a weight loss program advertisement. The examples they provided seemed extreme, and in fact they disclosed this, saying that these examples were "not typical." At least they provided some degree of clarity, though this may be overlooked by many who are seeking  a quick cure to their overweight problem. In the case of performance, the degree that a rep account can be deemed "typical" may be difficult to discern, so again, make sure you sufficiently explain what's being shown. Ideally, what it represents, how it was chosen, how other account experiences may differ, etc.

Wednesday, July 18, 2012

Performance attribution with derivatives

One area that often results in a lot of confusion (and probably some controversy) is how one should calculate performance attribution of a portfolio that includes derivatives. I have been of the opinion that if the portfolio holds anything that isn't represented in the benchmark (I'm not speaking of specific securities, but from a broader, asset class or sector perspective), it deserves special attention.

I am currently designing an attribution model for a client that invests in options, alongside their equities. I must confess that putting this together with their data is taking a bit longer than I had planned, but I am hopeful we will present them with a valuable tool they can use with their clients and prospects.

The general approach is to segregate the options from the equities. And since these are covered writes, the covering securities or cash will be with the options.

The result will be a clean portrayal of where the return comes from.

More details will follow, most likely in The Spaulding Group's monthly newsletter. So stay tuned!

Monday, July 16, 2012

Occasions when the cure is worse than the disease

In their classic, A Monetary History of the United States, 1967- 1960, Milton Friedman and Anna Jacobson Schwartz observed that FDR's bank holiday, shortly after he took office in 1933, which was supposed to have been a cure was, in reality, "worse than the disease."

A recent WSJ OpEd piece titled "The Dodd-Frank Downgrade" suggested that it, too, created a worse situation: "by issuing a series of downgrades of giant banks this week, Moody's Investors Service may have performed a taxpayer service. Two years ago President Obama and Congressional Democrats told Americans they have strengthened the banking system and revoked too-big-to-fail privileges from the financial giants. Now Moody's can help Americans understand  that the Dodd-Frank law has fulfilled neither promise. The law's signature achievements are higher costs, reduced opportunities and weaker banks."

This post isn't intended as a criticism of our president or the Democrats in Congress, but rather how unintended consequences can lead to results not necessarily foreseen, which can put us in worse shape. This appears to have been the case with this law.

Any rule making body runs the risk of causing such difficulties. When rules are considered their intent is usually for the good, but on occasion create unintended difficulties for those the rules are  designed to serve. Unfortunately, it is often difficult to project ahead what the impact may be. This is one of the benefits of soliciting public comment in advance of making rules official. And while this isn't a fail-safe measure, it at least provides additional opinions to surface which may, in fact, reveal problems that would result.

Saturday, July 14, 2012

First Madoff, now Wasendorf: Knowing who you can trust is getting increasingly difficult

I sometimes jokingly say that since I was once a politician, lying comes naturally to me. And we know how politicians typically rank on the scale of trustworthiness. Lawyers and used car salesmen are also among those who seem to garner little respect in the trust department. But I believe that historically, those investors who have met with great success and who have contributed to important causes have been held in the highest levels of our respect, esteem and confidence. But that has changed.

First, it was Bernie Madoff, whose multi-billion dollar Ponzi scheme was detected after 20 years of organized fraud, that apparently involved several of those who worked for him.

And this past week we learned of Russell Wasendorf, Sr.'s nearly 20 years of fraud, which resulted in the stealing of $100 million. In his case, he both admitted to the crime (in his suicide note) and claims sole responsibility for this action.

And while Wasendorf's stature and success may not have been as widely known as Madoff's, he was still one who garnered great respect from many in the industry, as well as those in his local community.

Fraud is nothing new, of course, and perhaps really isn't that uncommon. Our local paper today speaks about a New Brunswick (NJ) accountant who was found guilty of check kiting and defrauding two banks of $1.5 million. But this guilty party (Amro Badran) is not a public figure, as Madoff and Wasendorf were.

Those individuals who stole, but then gained public attention through their apparent good deeds, are ones who may have, by these same acts of generosity, been able to increase the degree of their illicit behavior.

I'm sure many are now wondering, who next? Or, what can we do to catch these folks sooner? I don't think there are any easy answers. Sadly, the risk of fraud by highly regarded investment professionals seems to be on the increase, though.

But also what is sad is that Madoff and Wasendorf tarnish our industry. A priest who is a family friend mentioned a few years ago how he was in a men's room, and a man and his young son were standing by the sink. Our friend was in his priestly garb (e.g., Roman collar) and the father told the boy to stay by him when he saw our priest. I.e., the scandal that has rocked the Catholic church had caused some to stereotype about priests, even though a very small percentage are guilty of child abuse.

Likewise, I am confident that a very small percentage of folks in our industry are guilty of fraud. But stories like these don't help in the "PR" department.

Thursday, July 12, 2012

Benchmarks & the GIPS standards

We have gotten a series of questions lately regarding the inclusion of benchmarks in a GIPS(R) (Global Investment Performance Standards) presentation. I'll summarize some of it here.

Secondary benchmarks: can a firm show additional benchmarks along with their primary? Yes! But you must make it clear which is the primary.

Absolute benchmarks: can these be included in a presentation? Absolutely! In some cases an absolute benchmark would be the ideal one. If it is actually a secondary one (which is the case with one of The Spaulding Group's verification clients), the primary has to be identified. In addition, details regarding the absolute need to be included, as appropriate, so the reader understands what it represents and how it's constructed.

Reference benchmarks: in some cases firms show benchmarks which don't align with the actual composite's strategy, but rather for reference purposes. Can these be shown and must they be flagged as being "supplemental"? First, yes, they can be shown. Second, no, they aren't supplemental.

The GIPS glossary defines a benchmark as:

And so, a reference benchmark clearly matches the definition, and neither warrants nor requires the "supplemental information" disclosure, since it's not supplemental. Again, clarity is needed to ensure the benchmark's role is clear.

Have additional thoughts, insights, ideas, or questions? Please chime in!

Tuesday, July 10, 2012

The Spaulding Group now offers Opeational Reviews

The Spaulding Group announced yesterday that we now offer operational reviews. While we've actually been performing this service for 20 years, we never told anyone about it...seems odd, right? When a client would come to us and ask, "can you review our operation, to identify opportunities, problems, issues, etc.?" we would reply "yes, we can!" Well, we decided we should "go public" with this service, and make it formal. The text of the release:

The Spaulding Group, Inc. (TSG) announced today that it is formalizing a performance and risk operational review. The service is a thorough, comprehensive and detailed analysis of a firm's performance and risk measurement operations.   TSG's Operational Review Service provides the firm with a validation of what they're doing right, as well as ideas to enhance their organization and the services they provide to both their internal and external clients.

"Over the past 20 years we have conducted operations reviews for several asset managers and plan sponsors. We are excited to announce the formalization of this service," said TSG's president, David Spaulding, CIPM. The review covers the organization's structure, calculations, functionality, reporting, systems, workflow, completeness, and controls. Upon completion, clients will be provided with a comprehensive assessment of how they are doing, as well as how and where they can improve.

The service is available to any firm or institution with a performance measurement function, whether it's a separate department or an "extra duty" for one or more members of the team. This includes asset managers, pension funds, endowments, foundations, government agencies, and custodians. There is no defined way for an organization to be structured or staffed; there are many variables which can influence the choices firms make.This service will provide firms with an assessment of how they can improve their operations and ultimately benefit the overall investment process.

To learn more, please email or call (732-873-5700)  
Chris Spaulding.

Monday, July 9, 2012

UAPS Moving Forward

The Universal Advisor Performance Standards' Advisory Board held its first meeting at the end of June. And while much of the session was devoted to becoming acquainted and discussing the group's role, preliminary comments were made regarding the draft white paper, which can be found at the official UAPS website.

Two weekends ago saw yet more commentary in the press, this time in the Jason Zweig's "Intelligent Investor" column in The Wall Street Journal. Several other publications have also referenced these new standards, including USA Today and Forbes.

If you haven't yet read the white paper, please do. And if you'd like to share your thoughts, please feel free to drop me an email.

We are excited by the attention UAPS has received. Our advisory board consists of an impressive group of individuals, from a cross section of industry segments, who all agree that these standards are needed. We will strive to keep the public informed of our progress.

Sunday, July 8, 2012

What we might learn from the Higgs boson?

I must confess a fair amount of interest in the recent discovery of the Higgs boson, aka "The God Particle." It is an amazing story, though its true meaning seems beyond the grasp of most of us mortals. I won't bother to attempt to explain what it is, since there are many resources available on the web, but briefly, as I understand it, it is the thing which causes the protons, neutrons, etc. to, in a word, coagulate into matter; otherwise they would be merely energy. I am confident my friend Jose Menchero, whose doctorate is in theoretical physics, could do a great job explaining it. Hopefully, he won't critique this post.

In this weekend's WSJ, Michio Kaku, a CUNY theoretical physics professor, wrote (in "The Spark That Caused the Big Bang") about the facility in Europe where the discovery was made (Kaku described it as a donut shaped structure with a circumference of 27 miles, which borders Switzerland and France).

He tells of how two proton beams are shot through the structure, in opposite directions, and accelerated to near light speeds. They are forced to collide, and "for a fraction of a trillionth of a second, the Higgs boson appears."

We often speak of precision in performance measurement. I would think a trillionth of a second would be quite a fraction; the amount of time spoken of here perhaps doesn't have a word associated with it, it's so small, or if there is a word, we aren't familiar with it, so it was left out of the article.

Apparently the expression "God particle" hasn't always been embraced by physicists, and I recall reading this past week that some refer to it as the "goddamn particle," because of its refusal to be found. But found it has been; at least the confidence level of those who claim it is at the "99.9999%" level, which seems pretty darn confident.

In performance and risk measurement we deal with numbers all the time. And we strive to be as confident as possible with the accuracy of what we produce. Fortunately, our returns are typically shown to only two decimal places (i.e., to basis points), though some like to show fractions of these (and I admit that I do, too, when the numbers are so tiny that they'd be 0.00% otherwise), while others prefer to just show the return to a single decimal place.

And so, what might we learn from the Higgs boson? That some things can be illusive; if we want to discover them, we must be patient and persevere. That perhaps we need to think of some of our industry's own "Higgs bosons." That is, are there things we merely take for granted, without any empirical evidence? I believe there are; in fact, I'm attempting to address two of them right now. We are blessed with some true researchers, such as Jose, who, perhaps because of their educational pursuits, are quite adept at the rigors of research. We can probably stand a few more. Our industry, unlike physics, is still very much at its infancy. New discoveries and ideas arise on a regular basis; perhaps this is one reason so many of us enjoy it.

Friday, July 6, 2012

A twist on handling the interaction effect

One of the topics which often results in debate is the interaction effect. Recall that in performance attribution, specifically with the "Brinson models," we have two effects: allocation and selection. Depending on how we calculate these effects we may have a third: interaction. The formula for interaction is:

I.e., the difference in returns (portfolio minus benchmark), which reflecdts the selection decision, and the difference in weights (portfolio minus benchmark), which reflects allocation.

There are some who argue that the interaction effect should never be shown individually; that since no one is making an "interaction decision," it has no value and is unworthy of any attention. That the interaction effect properly belongs with selection: end of story!

On the other hand, there are folks like me who see value in the interaction effect and believe that the allocation effect should not be influenced by the selection decision (by using the portfolio's returns rather than the benchmark's in the formula), and likewise the selection effect shouldn't be influenced by allocation decision (by using the portfolio's weight rather than the benchmark's). As a result we're left with the interaction effect.

I, and one of my esteemed and well regarded colleagues, recently got a note from someone from a software vendor on this topic:

We have customer who wants to split a reporting period into two sub-periods. In the first sub-period they want the Interaction Effect added to the Stock Selection Effect, but in the second they want the Interaction Effect added to the Asset Allocation Effect.

Is there any reason why this may not be valid?

My colleague responded that interaction should only be included with selection, and that this approach is invalid. I strongly disagreed. If the selection decision is a good (i.e., the portfolio return is higher than the benchmark's) but the allocation decision was a poor one (where the portfolio weight is less than the benchmark weight), the interaction effect will be negative: why should the selection effect get this baggage? Why should it be lowered because of a poor allocation decision?

While I prefer to see the interaction effect analyzed to determine where it is to be placed (if it isn't going to appear separately), the approach this fellow's client wants is apparently an attempt to spread the effect across the other two, rather than arbitrarily always placing it with one or the other. Granted this method is one that employs an arbitrary assignment of the effect, but is done so in a manner that is consistent, just as always putting it with interaction is consistent. One cannot "game" this approach, so as to always optimize one effect rather than another.

To me, this is equivalent to always placing it with one or the other effects; it's just that it's alternating back-and-forth. I see nothing wrong with this approach.

Do you? Have some thoughts? Please share them below!

Thursday, July 5, 2012

First Principles in Performance & Risk

A first principle is refers to "any axiom, law, or abstraction assumed and regarded as representing the highest possible degree of generalization."

Fields such as philosophy, mathematics, and physics have them.

Does performance and/or risk measurement? I think there are candidates. For example, that time-weighted returns eliminate or reduce the impact of cash flows. Also, that money-weighted returns include the impact of cash flows.

What else? Should we, as an industry, have agreed upon first principles? I think we should. What do you think?

Wednesday, July 4, 2012

A mid-week holiday

It has become fashionable here in the United States to move holidays to a Monday or Friday, so as to have a three-day weekend. This has happened with Memorial Day and Veterans' Day, for example.

I was born on Veterans' Day (what used to be Armistice Day), and I always liked getting my birthday off. But several years ago they (whoever "they" are) decided to make it forever a Friday, and so it's rarely where it's supposed to be (my birthday).

A few holidays have escaped this trend. January 1 would be difficult to do this to. And fortunately Christmas remains December 25, but there's still the potential for those "inside the beltway" to decide it should always be the fourth Friday in December (after all, Martin Luther King's, Abe Lincoln's, and George Washington's have all been moved, why not Jesus Christ's? But let's hope not.).

July 4th is yet another that most likely won't move. I suppose it would be difficult to celebrate July 4th on July 6th, though by simply calling it "Independence Day" it could happen.

But to have a holiday smack in the middle of the week is a bit awkward. Many have taken the past two days off, so as to have five consecutive days away from the office, and many no doubt are taking the next two off (for the same reason). And a few (like our firm's COO, Patrick Fowler) took the two before and two after, to make it a full week off and only use four vacation days.

Yesterday I commented about July 4th on Facebook; I'll share some of what I wrote:

Tomorrow is a day of celebration here in these United States. But like Memorial Day, many don't fully grasp its meaning: it's the day we declared our independence from England, and what led to the many years of battle for us to actually become an independent nation.

Those brave men who signed this document were, in essence, signing their death penalties, for if we had lost the war, they surely would have been put to death.

Today we cannot be involved in a war but a few years before we hear the chorus of those who want us to depart; where's the fortitude? But during the long battle for independence, we persevered.

Let us give thanks to those who took those bold steps so that we could have the freedoms we so cherish today. Happy July 4th! And God Bless America!

July 4th is a special day in our nation's history, and I wish my fellow Americans a "Happy July 4th!" It's a special day for me personally, because it's the day I met my wife of nearly 40 years. And so we have an extra reason to celebrate!

Tuesday, July 3, 2012

Misleading information is legal?

While a great deal of attention was paid to the U.S. Supreme Court's decision on Obamacare this past week, another ruling should garner some interest, too: their conclusion that the 2006 Stolen Valor Act infringes on speech protected by the First Amendment. This means that individuals can falsely claim they won military decorations. As you might imagine, lots of folks are quite upset by this.

We encounter misrepresentations often, do we not? I recall getting a resume from someone once who claimed he was a Harvard graduate. After hiring him we learned (through a background check) that while he did manage to spend one semester at Harvard, he neither graduated from Harvard nor had a degree whatsoever; he was terminated as this was merely one of the fabrications in his resume.

Some folks use job titles which they actually do not have; they apparently like them better than their real ones. I knew a salesman who had "vice president" on his business card, even though he wasn't a VP; his justification was that it helped him sell. On the other hand, my Uncle Joe (everyone has one, right?) was a safe deposit vault attendant for First Pennsylvania Bank, and he would sometimes say he was "vice president of mops and brooms." Granted, it was clear that he was kidding; some folks aren't in their use of incorrect titles.

The greatest example of misrepresentation is clearly Bernie Madoff; at least in recent memory. Sadly, he managed to fool a lot of people for a very long time.

Rules such as the UAPS (Universal Advisor Performance Standards and GIPS(R) (Global Investment Performance Standards) exist so that individuals can provide performance information in a way that doesn't misrepresent. As Mike Alfred of Brightscope (who is working with The Spaulding Group on the UAPS) stated in an interview with WSJ's Jason Zweig, "Any industry that achieves high credibility across society has consistent standards for reporting outcomes so that a third party can judge whether you're doing a good job or not." Misrepresentation, regardless of whether it is protected by the free speech amendment, has long been found to be unwanted.