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The securities industry has a huge amount of laws, rules, and regulations that govern almost every aspect of the business. Sure, there are always those who decide to skirt the laws for their own benefit. In almost every instance, attentive security measures can catch the wrongdoing. Most securities firms place a very high priority on compliance with these regulations, both to catch unscrupulous employees and clients and to provide good level of security to all account holders. All securities firms have a chief compliance officer who provides regulatory compliance services to ensure that everyone is following all rules and regulations set forth by the SEC and FINRA. Two of the key areas to monitor are communications and account activity.
Monitoring communications with clients is one of the biggest jobs of a compliance officer. All communications with the public are subject to archiving and review rules set forth by the regulatory agencies. All email between a firm and its’ clients must be maintained for a period of 6 years. This can be a huge task, and is very difficult without compliance management solutions in place. There are companies who make software specifically for this job. The software records all incoming and outgoing emails in real time. This software also has the ability to scan and uncover certain keywords for scrutiny, such as employees using words such as “guarantee” or “guaranteed” in emails. This allows the compliance officer to actively monitor all communications and easily review archived emails on a monthly basis. Upon uncovering a problem communication, the compliance officer is able to fix the issue.
The second key area for regulatory compliance services monitoring is the activity done in client accounts. After all, a brokerage is in business to facilitate the buying and selling of securities products. Due to the rapid growth in internet speeds and real time trading software, trading volumes continue to rise each year. This makes monitoring of account activity even more challenging. Management needs to know when a pattern of activity in an account changes, and be able to monitor changes from historical patterns in real time. Additionally, accounts are on watch for large losses or a pattern of trading activity that may be causing losses to happen. Most of the time a simple phone call inquiry to the client to makes sure they are aware of losses and activity levels in their accounts.
Using compliance management solutions can really help any firm to stay on top of regulatory requirements that seem to grow with each passing year. They allow supervisory personnel to accurately review activity and keep an electronic record of all reviews done.