Category: CCO Forum, Client Forum, Compliance

Fall 2015 Compliance Highlights

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Compliance-HighlightsThese days, enhanced transparency and risk management seem to be joined at the hip when it comes to what’s driving regulators’ actions and shaping firms’ compliance programs. One only has to look at the SEC’s 2015 priorities, regulatory proposals, or industry commentary for proof.

So at last month’s Boston Financial Client Forum, when a panel of industry experts took to the stage to give their perspective on a number of compliance topics, it wasn’t a surprise that risk and transparency underscored their discussion. The panel, consisting of CCOs and a representative from the ICI, discussed the SEC’s recent proposals on fund reporting, liquidity risk management, state escheatment, blue sky, and intermediary oversight. Here are few highlights:

Management of Risk: In the past, firms have focused more of their time on measuring risk versus managing risk. Questions firms should be addressing these days include: How do you approach risk? What is your risk management structure? How do you mitigate risk and who should lead the group?

Panelists noted that the topic of data security captivates the attention of most boards, but liquidity risk management oversight can’t be overlooked. Firms need to make sure they’re educating their board on this issue and ensuring a balanced distribution of topics occurs at meetings.

Unclaimed Property/ State Escheatment: When it comes to unclaimed property, shareholder education is key and outreach is the best prevention against escheatment. Panelists advocated for the industry being more forthcoming with shareholders about the states’ actions around escheatment.

For instance, most shareholders aren’t aware of the states’ aggressive stance when it comes to enforcing inactivity regulations, their push for reduced dormancy periods, or what a state does with a shareholder’s assets once escheated. These revelations could have the potential to be a big wake up call for shareholders. More importantly, a more knowledgeable shareholder can protect themselves noted the panelists.

SEC Proposed Rules on Fund Reporting: One of the SEC’s objectives with these rules is to use the data provided by the funds to identify and address risk within the industry. The proposed rules, which came out in May, significantly expand the type of reporting mutual funds would need to provide to the SEC and investors. The rules also greatly increase the amount of data the SEC will be taking in and analyzing.

Implementing the rules will be complex and onerous for funds. Understandably, it’s a concern for them noted the panelists. Equally concerning for the industry is the SEC’s data security. Some of the questions the panel raised included: How will the SEC ensure the confidentiality and integrity of the data? What assurances can the SEC provide regarding their data security? If the SEC needs to augment their data security, will they have enough time before the rules go into effect?

Perhaps the biggest takeaway from the panel was how risk and transparency are now part of most, if not all, compliance related discussions.

At this year’s Boston Financial Chief Compliance Officer Forum, taking place tomorrow in Boston, transparency and risk management is the theme. If you’re a first-time attendee or a veteran of the conference, here is some of what you can expect: roundtable discussions with your peers and subject matter experts from Boston Financial on Blue Sky and the DOL Fiduciary Rule, discussions on the controls and key aspects of Boston Financial operating environment, regulatory updates, plus an industry perspective from the ICI.

The Forum kicks off Tuesday morning; we look forward to seeing you there.

Colleen Sebastian

Colleen Sebastian

Colleen has been with Boston Financial for 15 years, having held positions in client relations and operations. In her current position, she develops and executes marketing and communication strategies that accelerate business growth, build brand awareness, and strengthen employee engagement. Colleen holds a Masters of Business Administration from Northeastern University and is a graduate of the University of New Hampshire. A snow sport enthusiast, Colleen has been a volunteer for the Youth Enrichment Services’ (YES) winter program and still gets excited every winter for the first snowflakes of the season. Follow Colleen on Twitter @colleen_sebas.

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