Written by Don Lee
SEC’s Chief of Staff Andrew Donahue recently spoke at the National Regulatory Services Fall conference and gave CCO’s color on how the SEC uses data in its examination processing, and identifies 9 things CCO should do in their practice.
Donahue stated that OCIE’s Risk Analysis Examination Group leverages technology in the examinations of clearing firms and broker dealers. Transaction data is is analyzed over a period of time to identify potential problematic behavior across firms including unsuitable recommendations, misrepresentations, inadequate supervision, churning and reverse churning. The SEC also mines large amounts of data to see how firms have implemented their compliance programs across branch offices.
Donahue said that the industry is constantly changing with the environment becoming more complex than ever. These rapid and complex changes in the industry and environment makes the job more difficult and it is important that CCO’s constantly challenge themselves and evolve to meet the demands of the profession.
Donahue’s comments regarding the SEC’s leveraging of technology to analyze data to identify potential problematic behavior highlights the need for firms to also use technology in their compliance programs. The likelihood that firms can effectively analyze large volumes of data on paper using manual processes to look for patters is near impossible given the complex environment we’re in today. CCO’s can evolve in their practice to meet the demands of the profession by incorporating technology in their compliance programs to meet these new challenges and make them more adaptable to complex situations.
Donahue went on to list the following 9 steps which he believes will help CCO’s in their profession:
1. Have firsthand knowledge of the regulations including relevant exemptive orders.
2. Have a deep understanding of the firm’s operations and structure.
3. Identify conflicts of interest and how they are reported and resolved.
4. Have an understanding of the firm’s clients and products including profitability.
5. Understand the firm’s compliance and technology platforms.
6. Have a detailed knowledge of the firm’s policies and procedures including application and monitoring.
7. Have an understanding of the markets where the firm operates.
8. Create an environment that puts the customer first ahead of the firm’s interests.
9. Identify what you don’t know and how to improve your competency gaps.
FinWebTech is a service as a software (SaaS) development company creating web applications to solve the growing needs of financial services firms. FinWebTech’s first product is Catalyst, an automated compliance solution for the securities industry. Catalyst provides firms with: Transaction Surveillance for AML and Suitability; Risk Assessments and Management; Supervisory Controls and Audit Logs, KYC, Document Repository and other tools to assist compliance departments manage their programs and reduce risk. Catalyst is priced to give small to medium sized firms access to compliance technology.
For more information on FinWebTech and Catalyst, please contact Don Lee at email@example.com or 305-409-1307