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Former Chief at Upper Big Branch Mine Sentenced

The former security chief at the West Virginia mine where 29 workers were killed in April 2010 was sentenced to three years in prison on charges that he lied to federal agents during the investigation.

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Hughie Elbert Stower had originally faced a maximum possible sentence of 25 years by U.S. District Judge Irene Berger.

Last October he was convicted of giving false statements to the FBI and investigators with the Mine Safety and Health Administration (MSHA).

He was also convicted of obstructing the federal investigation into the cause of the explosion at Upper Big Branch mine.

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U.S. Attorney Booth Goodwin had sought a 25-year sentence, but he said he wasn’t disappointed with the judge’s decision.

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“This represents perhaps one of the longest sentences ever handed down in a mine safety case,” Goodwin said. “We wanted to send a clear message and will continue to send that anyone who obstructs our investigation, they’re going to be met with the harshest prosecution.”

According to witnesses who testified, Stover instructed mine guards to send out radio alerts when inspectors would enter the property, which is illegal. A second count alleged he sought to destroy documents by “ordering a subordinate to bag them and throw them into an on-site trash compactor,” which is illegal as well.

The MSHA released its final report on the incident in December 2011, concluding that flagrant safety violations contributed to a coal dust explosion. It issued 369 citations at that time, assessing $10.8 million in penalties. The Upper Big Branch mine disaster remains the worst coal mine disaster since 1970 when 38 miners were killed at Finley Coal Company’s mines in Hyden, Kentucky.

25 Members of Anonymous Arrested

The hacking collective known as anonymous has suffered a setback. It was announced this morning that Interpol arrested 25 people with ties to the activist group.

On Tuesday, Interpol said that it begun looking for the hackers as part of “Operation Unmask,” an initiative that launched in mid-February. The investigation was launched after Anonymous members claimed credit for denial of service attacks on the Colombian Ministry of Defense, presidential Web sites and an electric company in Chile, as well as an attack on the Web site of Chile’s National Library, the Associated Press reported.

As is customary with Anonymous, the group immediately sought revenge for the arrests, bringing down Interpol’s website briefly after the news broke.

The group made headlines earlier this week when it leaked information gathered from the Startfor Intelligence firm through Wikileaks. The website published an email obtained from Stratfor, an international affairs think tank, that alleges Pakistani intelligence and military officials were aware of Al Qaeda leader Osama bin Laden’s presence in Pakistan.

Of course, Anonymous is not the only hacking group to turn their beliefs and frustrations into breached data. There have been several high profile incidents, whether initiated by an individual or a group, within the past few months that have wreaked havoc at major companies. Here are just a few:

  • Sony — the company’s security policies have been questioned by several lawmakers after the electronics giant fell victim to more than a dozen cyber attacks since a major breach of its PlayStation Network and Qriocity services in May of last year.
  • Google — In June, the web powerhouse announced that several U.S. government officials using its Gmail service were the target of a phishing scam. China was blamed but no proof was ever produced.
  • RSA Security — Lockheed Martin suffered a “significant and tenacious” cyber attack in May that was believed to be the result of an earlier attack on RSA Security. RSA admitted in June that its security systems had been breached.

The arrest of Anonymous members comes on the heels of President Obama’s State of the Union address in which he called on Congress to pass “legislation that will secure our country from the growing dnagers of cyber threats.” Never has this been more necessary than now. In fact, Wired recently ran a piece calling cyberwar “the new yellowcake.” It quotes Senate Commerce Committee Chairman Jack Rockefeller (D-W.Va.) as saying:

“Today’s cyber criminals have the ability to interrupt life-sustaining services, cause catastrophic economic damage, or severely degrade the networks our defense and intelligence agencies rely on. Congress needs to act on comprehensive cybersecurity legislation immediately.”

Strong words. And true.

The fact is, no matter how many members of Anonymous are arrested, there will always be another group or individual ready to inflict damage of organizations and governments via the internet. The only we can do is prepare to manage that risk.

 

 

 

D&O Insurance: The Cooperation Clause and Privileged Communications

Directors and officers and the insurance companies that insure them often have a complicated relationship that can be both cooperative and adversarial. And as Richard Giller of Alston & Bird LLP explains in an online exclusive article, this relationship becomes even more complicated in the face of a lawsuit that strains the parties’ ability to communicate. He discusses how this effects the cooperation clause of the policy and the ramifications of sharing confidential or privileged information with a D&O insurer.

Because sharing information with a D&O carrier may be critical to assist in the evaluation of liability risks, the cooperation clause had been described as a material provision of the policy and a condition precedent for the insured’s rights under the policy. A breach of the cooperation clause that causes actual and substantial prejudice to the carrier may operate to relieve the insurer of liability under the policy. Thus, the risks associated with the failure of a policyholder to cooperate could be catastrophic.

Giller also offers useful strategies that policyholders and carriers could employ in order to maintain the confidential nature of their communications, including joint defense and confidentiality agreements. So be sure to check out his interesting and informative article, only on RMmagazine.com.

Q&A With David Hollander, Ernst & Young’s Global Insurance Advisory Leader

On the heels of Ernst & Young’s recently released 2012 Global Consumer Insurance Survey, I spoke with David Hollander, Ernst & Young’s global insurance advisory leader, to ask a few questions the report brought up.

The report states that, in regards to younger P/C consumers, the brand can command a higher premium. Do you find this surprising and why?

DH: Initially, yes. We thought many of the millennials would be active in price competitive shopping and that price would be dominant. However, when considering the findings, we realized that this segment is accustomed to massive ad campaigns focusing on the importance of brand across all industries and the finding became less of a surprise.

What do you see for the future of online P/C business? Will it eventually be completely online or will customers always demand face time?

DH: There are many products within the P/C spectrum. Many of those products will fit and move more quickly to a web-based sales mechanism. For some products, we do see a continued shift to more “direct to company” or “aggregator” usage over the next five to 10 years. However, in no way will consumer interaction be completely web based. Companies will counteract by bundling products prompting consumers to seek more info from a live person. Also, in our study, consumers resoundingly stated that when it comes to servicing, especially when making a claim or purchase they want personal interaction.

The report states that a mere 31% of P/C consumers in Brazil are satisfied with their claims experience, as compared to 71% in the U.S. and 68% in Mexico. Why do you think there is such a vast difference?

DH: The difference in Brazil can be attributed to several factors. While in the Americas the top three measures insurers can take to improve the claims experience were: Dealt with my claim more quickly (33%), provided a better level of communication with me during the claims process (32%) and provided a more personal service (23%).

In Brazil, the same top three measures were noted, but all were mentioned by more than 40% of the customers. For instance, more than 50% of the customers expect quicker service.

Additionally, as a response to the low interest rate environment in Brazil, some insurers directed their focus on efficiency gains. One of the steps some Brazilian insurers took was to tighten their negotiations with claims services providers resulting in a reduced quality of claims servicing to customers.

In your opinion, what was the most surprising finding of the Global Consumer Consumer Insurance Survey 2012?

DH: Actually, we found three. The first being the favorable position of the insurance industry overall as a trusted provider of insurance and other investment products. The second being the degree to which consumers desire to purchase multiple products from the same product provider. And the third is the degree to which the insurance industry is behind others in rewarding loyal customers and conducting customer retention programs.