With the Securities and Exchange Commission’s (SEC) adoption of amendments to Rule 10b5-1 and the SEC’s recent enforcement actions against a broker-dealer for an insider trading violation, your brokerage firm has reason to be on high alert about its compliance with the SEC’s insider trading regulations.
At ComplySci, we understand that a reliable regulatory compliance solution can be paramount to the success of your compliance program. We are always at work ensuring that our solutions meet the needs of our customers and the ever-changing financial regulatory landscape, and we want to make sure that your brokerage firm gets the most out of our solutions.
Here are five best practices that compliance teams like yours can implement to maximize the value of the ComplySci® Platform solution for insider trading compliance.
Enhancing your brokerage firm’s compliance program management with the ComplySci Platform to avoid insider trading violations
In this blog post, we will explore best practices that compliance teams can implement to maximize the value of the ComplySci Platform solution.
1. Tailor the ComplySci Platform to mitigate risk of insider trading violations
Leverage the flexibility of the ComplySci Platform to create tailored watchlists that capture individuals or entities with access to material nonpublic information (MNPI). This is not a set-it-and-forget-it kind of initiative, be sure to regularly update and refine these watchlists. Change is always happening at your firm, so you want to be sure that your watchlists align with changing roles, responsibilities and business relationships within the firm. That way, you will be sure that the alerts you receive capture accurate and actual risks for your firm.
2. Leverage data analytics for enhanced insights
Using the ComplySci Platform, your compliance team can configure dashboards and generate reports in various formats. Take full advantage of this flexibility and configure your team’s dashboards to display the features that are most important to your firm and generate reports in the formats (whether that be numerical or visual) that are most meaningful for your firm.
3. Conduct trend analysis
But don’t just stop at reporting! Be sure to use the ComplySci Platform’s data analytics tools to identify trends and patterns in trading activities, communications or access to sensitive information. Taking note of past data can help your compliance team uncover anomalies or abnormal behavior that may indicate potential insider trading activities. This analysis can help your team identify potential information leaks or unauthorized sharing of MNPI so your team can speedily address them.
4. Take full advantage of direct broker feeds
Direct broker feeds are the most accurate and reliable method of employee transaction data ingestion for your compliance platform. In you initial onboarding, the ComplySci team will support the set-up of all necessary feeds, however, be sure to continue to assess what brokers you may need to monitor, adding new feeds should it be necessary.
Why broker feeds?
Electronic feeds eliminate the need for employees to produce – and for compliance departments to retain – paper account statements or manually-created transaction reports. Such manual methods require an additional level of security to ensure only authorized personnel can access the physical or electronic files. With direct brokerage feeds, user security can be defined and changed with just a few mouse clicks, which provides added peace of mind to compliance and risk offers and to employees.
5. Foster a culture of compliance and reporting
Finally, it’s important to remember, your firm’s compliance program management is only as good as its people. Ensure that your employees can use the ComplySci Platform well and understand how to do their part in avoiding an insider trading violation. Additionally, establish a culture where employees feel comfortable reporting suspicious activities and potential insider trading.
By implementing these best practices, brokerage firms’ compliance teams can effectively leverage the ComplySci Platform to maximize its value for preventing insider trading. With these practices in place, compliance teams can enhance their ability to detect and prevent insider trading, safeguarding the integrity and reputation of the brokerage firm.
Is your firm ready to leverage the ComplySci Platform to prevent insider trading at your firm? Schedule a demo today!