The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) released Thursday a report to help broker-dealers safeguard confidential information from misuse, such as insider trading.
The report describes strengths and weaknesses identified in examinations into how broker-dealers keep material nonpublic information from being misused. It also highlights effective practices that examiners observed at some broker-dealers.
OCIE Director Carlo di Florio said in a statement that the report “illustrates the types of conflicts of interest that may arise between a broker-dealer’s obligations to clients that provide confidential information for business purposes and the potential misuse of such information for insider trading or other improper ends.” He said it also describes “various methods that broker-dealers use to identify and effectively manage such conflicts, including information barriers that limit the flow of sensitive information.”