Recent regulatory actions focused on policies and procedures designed to safeguard material, non‐public information

Recent regulatory actions focused on policies and procedures designed to safeguard material,... Purpose – The purpose of this paper is to review recent regulatory enforcement actions sanctioning firms for failure to safeguard material, non‐public information (MNPI). Design/methodology/approach – The paper reviews recent enforcement actions and examines the implications for other firms who may face similar scrutiny from regulators for deficient policies and procedures and controls relating to their information barriers; makes recommendations on how firms can avoid similar mistakes through improving internal controls. Findings – Firms need to be especially vigilant in protecting their MNPI by reviewing their policies and procedures to reflect the firm's current business model. Firms must also take steps to ensure that supervisors fully understand their role in implementing and enforcing the firm's policies and procedures. Practical implications – Firms should conduct a comprehensive review of their business to understand which units come into possession of MNPI and how related entities interact with one another and could potentially share MNPI. Once these tasks are complete, firms will be better positioned to review their policies and procedures relating to safeguarding MNPI. Failure to do so may result in substantial monetary fines and being forced to retain an independent consultant. Originality/value – The paper serves as a reminder to firms about the implications of failing to have adequate controls to safeguard MNPI from both a monetary and public relations standpoint. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Investment Compliance Emerald Publishing

Recent regulatory actions focused on policies and procedures designed to safeguard material, non‐public information

Journal of Investment Compliance, Volume 12 (4): 4 – Nov 29, 2011

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1528-5812
DOI
10.1108/15285811111188180
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to review recent regulatory enforcement actions sanctioning firms for failure to safeguard material, non‐public information (MNPI). Design/methodology/approach – The paper reviews recent enforcement actions and examines the implications for other firms who may face similar scrutiny from regulators for deficient policies and procedures and controls relating to their information barriers; makes recommendations on how firms can avoid similar mistakes through improving internal controls. Findings – Firms need to be especially vigilant in protecting their MNPI by reviewing their policies and procedures to reflect the firm's current business model. Firms must also take steps to ensure that supervisors fully understand their role in implementing and enforcing the firm's policies and procedures. Practical implications – Firms should conduct a comprehensive review of their business to understand which units come into possession of MNPI and how related entities interact with one another and could potentially share MNPI. Once these tasks are complete, firms will be better positioned to review their policies and procedures relating to safeguarding MNPI. Failure to do so may result in substantial monetary fines and being forced to retain an independent consultant. Originality/value – The paper serves as a reminder to firms about the implications of failing to have adequate controls to safeguard MNPI from both a monetary and public relations standpoint.

Journal

Journal of Investment ComplianceEmerald Publishing

Published: Nov 29, 2011

Keywords: Securities regulation; Broker‐dealers; Investment advisers; Investments; Advisory services; Information disclosure; Regulation; United States of America

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