Financial Regulatory Forum

Internal Audit & the Four Cs: Culture, Conduct, Corporate Governance and Customer Outcomes

By Michael Cowan, Regulatory Intelligence Analyst, Thomson Reuters

NEW YORK, July 30, 2014 - Corporate governance and culture have moved into the mainstream as a result of the financial crisis, and as the global recovery takes hold, governments and regulators are keen to ensure lessons are learned. It is clear, however, that despite the increasing profile of corporate governance with regulators, shareholders and customers, and the effect it has on the health and reputation of firms, it is still an area in which many internal auditors lack a high level of involvement. (more…)

SEC bars, fines advisory owner for misrepresenting GIPS compliance

By Stuart Gittleman, Compliance Complete

NEW YORK, June 3, 2014 (Thomson Reuters Accelus) - The Securities and Exchange Commission has barred an investment adviser’s president and owner from the advisory and brokerage industries for misrepresenting his firm’s performance and its compliance with GIPS, the global investment performance standards.

Tuesday’s ruling, by SEC administrative law judge Cameron Elliot, may be the first formal SEC sanction against an adviser or an associated person for misrepresenting its compliance with GIPS, which is voluntary, although the SEC has sanctioned a firm that also invented a client with large investments with the firm. The SEC has warned that its examiners will focus on disclosures over fees, expenses and performance. (more…)

Big banks fall short on data requirements, but regulators may share in the blame

By Bora Yagiz, Compliance Complete

NEW YORK, FEB. 11 (Thomson Reuters Accelus) – An international study for a bank regulators’ group has found deficiencies in the way banks measured and reported counterparty exposures. But the regulators themselves may share responsibility for the shortcomings, as they have provided little specific guidance for the banks.

The report by the Senior Supervisors Group (SSG) –a forum of senior officials from banking regulatory agencies of several countries– found that 19 participating large banks fall short in some areas of data aggregation and quality. The report was based on the banks’ own self-assessments. (more…)

U.S. SEC releases 2014 exam priorities; exchanges, retirement in focus

By Nick Paraskeva, for Compliance Complete

NEW YORK, Jan. 15 (Thomson Reuters Accelus) – The U.S. Securities and Exchange Commission on Thursday published the 2014 priorities for its national examination program (NEP). Prominent among the priorities were scrutiny of “perceived control weakness” at financial exchanges and oversight of retirement investments.

The NEP’s examination priorities address issues that span the entire market, such as fraud, retirement rollovers and older investors, corporate governance, enterprise risk-management and technology. In addition, each of the NEP’s four program areas: investment advisers and investment companies, broker-dealers, exchanges and self-regulatory
organizations, and clearing and transfer agents, have individual focus areas. (more…)

FINRA exam priorities for 2014 incorporate enterprise wide, risk-based approach

By Nick Paraskeva, for Compliance Complete

NEW YORK, Jan.7 (Thomson Reuters Accelus) - Broker dealers have been put on notice of regulatory priority areas where they will be examined in 2014. The topics seen as posing greatest risk to investors and markets were issued in a letter by the Financial Industry Regulatory Authority (FINRA) on the first day of the year. They include new areas such as seeing patterns of suspicious activity by representatives, including questioning firms why they hired the persons.

“We encourage firms to use this guidance along with their own analysis to enhance their programs as we will be examining for strong controls and robust compliance efforts in these areas” stated Susan Axelrod, FINRA Executive Vice President, Regulatory Operations, on release of the letter to member firms. (more…)

New regulations require cleaner data

By Mark Davies, contributing author for Compliance Complete

LONDON, Apr. 18 (Thomson Reuters Accelus) – Continuing efforts by financial regulators and by firms themselves to monitor and offset risk have affected almost all areas of firms’ operations, including the management and maintenance of data. The overhaul of global systems following the financial crisis has led to an audit of data, and specifically of the information which firms hold about themselves and their counterparties or clients, known as business entity reference data.

More regulation

This “data exploration” is being driven by the cumulative effect of several individual pieces of regulation, including the European Market Infrastructure Regulation (EMIR) and Solvency II in Europe and the Dodd-Frank Act and the Foreign Account Tax Compliance Act (FATCA) in the U.S., all of which are likely to have an impact globally. The primary goal of these proposals, with the exception of FATCA, is to improve risk management in the financial system.  (more…)

Dos and don’ts on handling a regulatory investigation

By Stuart Gittleman, Compliance Complete

NEW YORK, Dec. 21 (Thomson Reuters Accelus) - A “highly polarized (and) politicized environment” had made the job of defending against a regulatory investigation particularly challenging, Lawrence Zweifach, a Gibson Dunn law partner, told attendees at a New York City Bar Association program last week. But there are steps a firm can to take to face the challenges.

The high-pressured atmosphere is affecting judges, regulators and legislators, and leading to cases “that will not stand up in the long run” to be brought, said Andrew Levander, a Dechert law partner. (more…)

CFTC adopts final rule requiring firms to save their oral communications

By Emmanuel Olaoye, Compliance Complete

WASHINGTON/NEW YORK, Dec. 19 (Thomson Reuters Accelus) – The Commodity Futures Trading Commission on Monday approved a final rule that would require firms registered with the agency to record the oral communications of their brokers for up to a year.

Firms would have to start recording conversations on telephones, voicemail, cell-phones and other media if they trade in a “commodity interest”.  (more…)

U.S. bank regulator promises better enforcement following scathing congressional report into HSBC AML failures

By Brett Wolf

WASHINGTON, July 18 (Thomson Reuters Accelus) - After widespread anti-money laundering (AML) failures at HSBC that continued for years due to lax regulatory oversight, a U.S. bank regulator has vowed to take a broader view of institutions’ compliance programs during examinations.

“The agency was much too slow in responding and addressing what are significant weaknesses or violations at this institution. Going forward, I would hope that we would be much more nimble and take into account the entire picture,” Thomas Curry, who took over as Comptroller of the Currency less than four months ago, said on Tuesday during a hearing by the Senate Permanent Subcommittee on Investigations. (more…)

Dewey & LeBoeuf collapse highlights importance to clients of safeguarding records

By Martin Coyle and Julie DiMauro

NEW YORK/LONDON, June 1 (Thomson Reuters Accelus) – The collapse of U.S. law firm Dewey & LeBoeuf underscores the importance to financial companies of gaining access to their legal records, ensuring continuity of advice, and safeguarding privileged information, according to regulatory lawyers and experts. Dewey, once one of the largest U.S. law firms with deep ties to Wall Street, filed for Chapter 11 bankruptcy protection earlier this week after failing to find a willing merger partner, and its UK unit was placed under administration. The former legal giant was saddled with $100 million debts, a criminal investigation and the departure of senior staff. It is likely to be liquidated. The failure is the biggest in the history of U.S. law firms. (more…)

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