More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
To help the companies it serves tackle their ongoing compliance challenges, Charles Schwab on Monday launched Compliance Solutions, which combines the capabilities of Schwab Designated Brokerage Services (DBS) and Compliance 11, Inc.
Schwab says its Compliance Solutions program fulfills an initiative it launched last November after acquiring Compliance 11 and pairing it with Schwab Designated Brokerage Services. Compliance 11 provides regulatory compliance software and DBS provides trade monitoring services. Since the acquisition, Schwab says it has focused on creating a unique suite of tools and resources for clients.
“Companies understand that they need to meet regulatory requirements, but at Schwab we believe compliance can and should mean more than a check-the-box approach,” said Trish Cox, senior vice president for Corporate Brokerage Services at Schwab, in a statement. “Consumers value open and transparent business practices, and positive perception in this area may benefit a company’s bottom line. When managed effectively, a compliance program can be an opportunity to position a company favorably in the marketplace, build trust with clients, and enhance value and market share for a firm.”
Scott Rister, vice president of Compliance Solutions, said Schwab is also seeing growing concern among its own client base of employers regarding compliance issues. “Our clients are coming to us for help as they face an increasingly complex regulatory environment that often outpaces their ability to manage compliance processes,” Rister said in the same statement. “The business risk for our clients is real, and our solutions are designed to tackle it head on.”
Rister added that one of the chief concerns faced by regulated firms is improper securities trading, and the number and types of firms that are required to monitor employee securities trading is growing rapidly. Employees, he said, may be prohibited from trading a specific security for a variety of reasons, such as the firm possessing material non-public information.
To address this challenge, Schwab introduced proactive trade blocking. Proactive trade blocking “is unique in the industry and prevents employees from executing a prohibited trade in error, notifying them that the prohibited trade was blocked according to their company’s rules,” Rister said. “With other systems available today, even if a prohibited trade is detected, it is after the fact, which creates a poor experience for the employee and the employer alike, often requiring the trade to be canceled and unwound.”
Proactive trade blocking, Rister went on to say, “offers a much more streamlined approach and a much better experience, saving time and minimizing hassles. These trading errors are typically honest mistakes made by honest people. Now we offer a unique solution that helps them avoid these mistakes in the first place.”
Compliance Solutions also offers additional tools and technology resources “to help transform a company’s overall compliance process from complex and time-consuming to simple and efficient,” Schwab said.
The comprehensive offerings include:
- Proactive enforcement of company trading policies
- Distribution and tracking of employee affirmations and disclosures
- Logging and reporting of gifts and entertainment
- A sophisticated, cloud-based software application
- A scalable, flexible platform
- Easier maintenance of compliance policies and procedures
- Dedicated service and support teams
- Bundled pricing for cost savings
- Employee access to a full suite of brokerage products and services from Charles Schwab & Co.
- Employee access to a range of banking products and services from Charles Schwab Bank.
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