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SEC Enforcement Action 2008 thru 2016

Independent Compliance Consultants as a Remedy in Regulatory Cases

SEC Enforcement Action 2008 thru 2016Independent Consultants are frequently mandated as part of the remedy in securities enforcement actions. The SEC and SRO’s like FINRA and MSRB recognize the value of having an independent compliance consultant monitor or perform specific tasks related to a case and ensure corrective action is being applied appropriately. The tasks are generally outlined in the settlement agreement and can include a number of months or years a Broker-dealer or RIA may be required to retain services. In such cases, regulators describe the independent consultant as a; compliance consultant, disbursement consultant, or monitor depending on their prescribed use.

 For the most part regulators are relying more and more on the resources of consultants for obvious reasons.  Leveraging consultants reduces reliance on limited regulatory resources and frees up staff for new cases. Consultants are also able to handle tasks more efficiently where regulators are not designed to, such as cash disbursements or re-writing policies and procedures. Regulators may even request a detailed analysis of a firms’ compliance program by an outside consultant as requisite to completing remediation.

Respondents (defendants) in a regulatory case are naturally concerned about the cost of consultants, as the expense is out of pocket, but many firms agree independent consultants are generally less expensive and easier to work with than regulatory examiners. For this reason, often a BD or RIA will request review of their records prior to being fully investigated by Regulators. This allows the firm an opportunity to discover and remedy risks outside of the public eye, and may hopefully improve a firms’ chance of satisfying a regulator earlier and for less of an expense.

If a Regulator requires an independent consultant as part of a settlement, respondents should take care to have the terms and work to be performed by the consultant clearly defined. An overly broad mandate by a Regulator can have a serious consequence on an unsuspecting firm. Given the consultant is independent, they are barred from exhibiting a conflict of interest between the firm and regulator, and are often given leverage to pursue whatever remedy deemed appropriate in absence of clear instructions. With that in mind, the use of a third party consultant can be a very positive remedy to improving the relationship between firms and regulators. Often regulators value the expertise of consultants and their ability to monitor a firm after a regulatory issue has been discovered.

 Firms which are proactive about a regulatory inquiry leading to enforcement may be able to bypass the request for an independent consultant by taking steps on their own to remedy risks before a formal resolution is handed over. Early efforts by respondents demonstrate to a Regulator that the firm understands the depth of the problem and takes remediation seriously. Some steps a firm may take include; investigating and reporting problems whether they’ve been identified by the Regulator or not, and demonstrating remediation by making a voluntary restitution or adopting new policies to prevent future occurrences.   These steps can also provide a basis for reduced fines, sanctions, or suspensions.

Firms faced with a regulatory inquiry should understand that Regulators can impose “any equitable relief deemed appropriate or necessary”. This may include; providing restitution to persons harmed, revising procedures, ceasing certain business activities, and more. Requiring the resources of an independent consultant is frequently considered an appropriate course of action to ensure a complete remedy. Thus, while independent consultants are not explicitly authorized by regulators at this time under specific licensing, they are a frequent sought for their expertise and ability to develop sensible solutions in remedy enforcement cases.


 

Is there a regulatory inquiry or issue you are concerned about?  Our staff has helped numerous firms subject to inquiry and examination.  We’ve assisted law offices across the US working with Broker-dealer, RIA clients, and other financial service businesses. Our services include providing expert testimony, analysis of records and remediation; as well as outsourced compliance and principal support on an interim or month-to-month basis. We’re happy to work directly with financial service firms, their attorneys, CPAs, investors, shareholders, and liaison with Regulators. Visit our services menu for more information.

Reach out to us for a confidential discussion of your business and we’ll see what we can do to help. If we’re unable to assist, we’ll try to find a suitable resource for you.

Broker Dealer Support Services

SEC Examines Efficiency of Outsourced CCO’s

SEC releases results of examinations on 20 investment advisers that outsource compliance activities to consultants. The study, conducted by the Office of Compliance Inspections and Examinations ( OCIE ), offers insight to effective practices when outsourcing compliance activities.

 

“The Compliance Rules”: Rule 206(4)-7 and Rule 38a-1 under the Investment act of 1940 | Adopt > Designate > Review

  • Adopt and implement written policies and procedures reasonably designed to prevent violations by advisers

  • Designate an individual, a CCO, to be responsible for administering the policies and procedures

  • Review policies and procedures regularly for adequacy and effectiveness, and  prepare a written report for the fund’s board  

Read more

Sentry Software for Compliance Management

All Compliance Consulting and Regulatory Support Firms are Not the Same

 

RND Resources, Inc. works hard to prove that compliance can run more efficiently by automating and integrating processes. Doing so, allows firms to grow without being held back by compliance capability restrictions.

      Part of the work we do at RND includes supporting small independent firms or providing compliance partners expertise on a specific matter. We’re able to do this because we have a team of veteran FINRA specialists and FINRA experienced examiners who work closely to identify customized solutions. We find outside of the box solutions that allow firms to prosper and grow without being held back by regulatory demands.

 

Sentry Software for Compliance Management      Some clients have in-house compliance departments that are over-whelmed with too many reviews and procedure or policy changes. They have a difficult time keeping up the workload. Unable to respond and quickly handle the needs of the firm, they hold the firm back from growth strategy.  In this case RND Resources is able to provide much needed support and guidance. So, the limitations of the compliance department are no longer a limiting factor to the firm’s success. Our services are scalable. We grow with each firm, keeping them in focus and up to date at all times. At the same time, our experts provide the guidance needed to successfully introduce and manage new program offers.

 

      To further improve our commitment to efficiency and transparency we’ve added Sentry, a software-as-a-service, for our clients. Sentry provides clients with access to our proprietary checklists and processes in a seamless, integrated, software solution.  By combining Sentry with our support team, firms are given greater flexibility to track regulatory data and run up-to-the-minute audits.  Improved response rate and accuracy are just a few of the benefits of the Sentry solution.

Read more about Sentry: www.finracompliance.com/sentry  

Sentry Compliance Software

Sentry Compliance Software – Scalable, Secure, 24-7 Access

Sentry Compliance Software Solution  Sentry Compliance Software

Phone: (818) 657-0288

 Request a Demo !


Sentry Compliance Software

Power up RND with Sentry: The Smart New Team Member

 

Sentry gives securities brokerage firms an integrated web-hosted solution to help manage compliance and risk. All in one place.

Maximize efficiency with Work-flow Automation for

  • Branch Audits

  • Outside Accounts

  • Risk Management

  • Conflicts of Interest

  • Suitability Assessment

RND Resources, Inc outsourced compliance team uses Sentry to help firms improve efficiency and reduce overhead by providing an easy way for managers to follow regulations and communicate securely with members of their firm and ours.

 

WorkFlow Communication | Designate tasks and communicate new policies quickly. Print workflow reports to manage timelines and due dates.

Work as a Team with your Software Partner

View dashboards for a birds-eye view of the compliance landscape or review charting trends and analysis to discover actionable insights. Advisors can look up status on new accounts, compliance, and suitability through the program as they follow up with investors. Download data to Excel and PDF for use in internal reports. Trade monitoring, insider information management, conflicts of interest, suitability tests, exception reports, and more make the compliance function transparent and reduce reliance on individual follow up.

 

Preset Dashboards

Control Access with Preset Menus & Dashboards

We build security in to the system by establishing preset menus with access only to  features applicable to job function. Dashboards show assigned and in-process compliance tasks and policy requirements. Share compliance calendars across the organization as well as a library of compliance rules, policies, and procedures.   

 

24-7 Access

Software-as-a-Service Secure Login Access, 24-7

Access the database wherever you go. Always be prepared with the information you need. Research data while in meetings. Conduct audits on staff and reporting while out of town at conference. Where ever you are, your compliance database is with you adding an extra layer of confidence and convenience.

 

Connectivity

Connect with Departments, Tasks, and Outsourced Compliance Teams

Keep an accurate and constant audit trail. Integrate compliance management between  advisors and investors. Stay on top of training and attestation.  Access pattern analysis, risk reports, and suitability reviews. Bring transparency to regulatory compliance and be ready for audits anytime. 

 

Improve Response

Improve Response Rates with Real-Time Feedback

Visually follow responses and task completion by support staff and employees. Use calendar features, alerts, and build customized reports to manage what you track, rather than track what you manage.  Our platform acts like a perfect assistant, keeping compliance teams informed of progress and outstanding items on the to-do list. 

 

Maximize Resources

Maximize Resources and Build Growth

By making compliance management flow faster and easier, managers are available for meetings and strategy planning. As you grow with our software service, you’ll be able to work on other tasks that require thought and planning while compliance runs smoothly.  Move ahead of the competition with a strategic competitive advantage in compliance support. 

 

Regulatory Updates

Regulatory Updates Customized to Fit your Firm

Complex and ever-changing regulations are time consuming to firms. More and more resources are required to keep up with new policies while less time is spent building the practice. Our Software-as-a-Service platform automatically builds in compliance changes and adds alerts, timelines, and calendars to keep you up-to-date.  This frees up managers to work on developing new policies and procedures that  improve efficiency.

 

Scalable Growth

A Scalable Solution

How will you benefit from our Scalable Solution? We’ll customize the software to fit your needs. As you grow, our software is fully capable of handling new services, programs, and policy changes. Add departments and divisions to meet your overall growth building strategies with out concern that compliance can handle the volume and changes. 

 

Certified Compliant

SSAE Type II Certified  and CSAE-3416 Compliance

SSAE-16 Type 2 standards are built in to the software. The SSAE standards assure controls of the system are suitably designed to achieve control objectives. CSAE-3416 applies to International standards of suitable audit controls and reporting requirements. As a compliance support firm we know the value and importance of building a compliance software as a service platform that is based on industry standards.

 

  • Your firm will benefit from a solution that connects outsourced compliance with your administration so managers will always know what is being handled.
  • Reduce cost of labor and management spent on compliance tasks by allowing the software to follow-up on tasks and provide reminders
  • Improve response rate and accuracy through automation. Free up time spent managing compliance tasks by creating workflows with automated reminders and alerts.
  • Always be ready for regulatory exams. Anytime. Get up-to-the-minute tracking of policy changes provides an on-demand audit trail whenever its needed.
  • Our outsourced compliance support will keep the program updated with relevant regulatory changes providing better work-flow automation while we work to identify and adjust for the regulatory landscape.

Trade Compliance: Track trade analytics, risks, and market data, all in one place.
Branch Management: Add and follow Calendar to-do items to keep on-going oversight.
Compliance Dashboard: Sort, add, and manage compliance tasks by priority.
Regulatory Reviews: Transparent audit trail tracks regulatory changes to compliance.

Trade Compliance Branch Management
Compliance Dashboard Regulatory Reviews

Watch the Video and See how easy it is to use Sentry

Get more information and request a customized demo. Complete this form or call (818) 657-0288

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Regulatory Rules imposed since Dodd-Frank 2010

Think Financial Firm Compliance Regulations and Rules are Too Complex? Take a Look

In March 2015 Commissioner Daniel M Gallagher’s office provided a diagram showing the myriad of regulations imposed on financial firms since the Dodd-Frank Act in 2010. As regulators pile on more regulations, overall cost-benefit analysis is not required and therefore, often not performed.  Other than accounting for incremental effects, regulators seem to have missed analysis of the overall regulatory burden on firms.  The end result is the potential for high barriers to entry for new firms and increased compliance overhead for existing ones. A concern about increased overhead costs and higher barriers to entry is that large institutions become increasingly larger, while smaller firms cannot compete.

Read the Statement from Commissioner Gallagher March 2, 2015.

Regulatory Rules imposed since Dodd-Frank 2010

 

 

RND Resources, Inc. understands the hardships faced by start up broker dealer firms and firms with over-burdened compliance departments. We employ veteran CPA’s, MBA’s, and experienced regulatory examiners to navigate the complex rules on your behalf. We’ve been able to save overhead costs for smaller firms, where employing a fully staffed compliance department is not affordable. Our professionals are on top of the latest compliance requirements to help reduce and eliminate issues that trigger fines, further inspection, and sanctions. Whether you’re looking for a firm to step in and help resolve pressing compliance issues, or need to support an over-burdened compliance department, we are able to assist. Call us to find out how we can help (818) 657-0288. Or, feel free to send us a request for quote.

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Investment Advisor Services

Proposed SEC changes to Form ADV; Good or Bad?

RIA cover2May 20, 2015 the Securities and Exchange Commission unanimously approved amendments to Form ADV requesting more information about the composition of client portfolios and risk profiles, and advisers use of social media.  The 60-day comment window for Form ADV is now open. Thus far, the comments are mixed reviews.  

 

Small investment advisory firms appear to have the greatest concern citing that the changes will create more record-keeping, adding a new burden on already stretched to the limit compliance resources. The growing concern is that for smaller firms; every hour spent reviewing and completing compliance initiatives is an hour not spent with clients growing the practice. In addition, some firms state the proposed information is not really all that meaningful, and that Form ADV already contains too much information which prospective clients often don’t read.

SEC Chair, Mary Jo White indicated in her announcement of the proposal that the amendments are part of a series of rule-makings being put forth to enhance monitoring and regulation of the asset management industry. Further, she states the agency plans to use the additional data to improve its ability to conduct “more targeted” exams. And finally, the information will allow the public and the Commission to better understand the risk profile of individual advisers and the industry.

The proposed changes to investment adviser registration and reporting include:

Require aggregate information related to assets held and use of borrowings and derivatives in separately managed accounts. (Approximately 73 percent of SEC registered investment advisers manage a wide variety of client assets in separately managed accounts, which generally provide advisory clients with individualized investment advice and direct ownership of the securities and other assets in the account.)

Permit (by rule) certain “umbrella registration” filing arrangements that are currently outlined in staff guidance.

Provide additional information about an adviser’s advisory business and including branch office operations and the use of social media.

Proposed changes to Investment Advisers Act Rules

Proposed amendments to Investment Advisers Act Rule 2042 would require advisers to maintain records of the calculation of performance information that is distributed to any person. Currently, advisers are required to maintain performance information that is distributed to 10 or more persons.

The proposed amendments also would require advisers to maintain communications related to performance or rate of return of accounts and securities recommendations.

What are your thoughts regarding the proposed changes? Post a comment here or weigh in on SEC.gov

 


RND Resources Inc.RND Resources, Inc is committed to working with Investment Advisory firms. Our team’s familiarity with SEC and regulatory guidelines allow us to seamlessly guide our Investment Advisor clients through registration, audit, and compliance issues. Clients remark that the value they get from outsourcing compliance and registration tasks to us allows them to focus on running their business without the stress of managing a compliance department or worrying about changing regulatory laws.

Benefit from industry specific knowledge, experienced auditors, and assurance professionals. Call or email us today for a quote (818) 657-0288.

View our RIA Services Brochure

Join our June 29, 2015 – New York Compliance Roundtable discussion on this topic. See details on our website.

Are you protected from Cyber Threats

CyberSecurity – Governance and Risk Management

Are you protected from Cyber ThreatsRecent news stories indicate the corporate world has lost millions, if not billions, of dollars due to outdated or ineffective Cybersecurity infrastructure. At RND Resources, our trained team of Cybersecurity experts strategize closely with our clients to create a cost effective Cybersecurity governance framework.  Designs are created to address risk management policies, structures, while implementing controls to effectively identify and manage security risks.

We provide services to successfully protect Broker-Dealers, Registered Investment Advisors, Hedge Fund Managers, and Family Offices from today’s threats.

The RND Resources Cybersecurity Services include:

  • CyberSecurity Risk Assessment
  • Technical Controls
  • Incident Response Planning
  • Vendor and third-party Information Management
  • Staff Training
  • Cyber Intelligence and Information Sharing
  • Cyber Insurance

Let us help you learn about and navigate the latest industry standards. We’ll answer any questions surrounding Cybersecurity and/or Compliance. We’re here to help you. As a trusted Cybersecurity and Compliance advisor, we can assist you with every level of Cybersecurity and Compliance.

Find more information about our Cybersecurity Compliance services on our website, or contact Tarik Munisoglu (818) 835 7105 or by email to tarik@finracompliance.com.

Download our free Guide to CyberSecurity Planning

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