FRAUD: Books & Records

Books and Records or lack thereof have become a focal point for regulators. Whether FINRA, SEC or MiFID II the requirements have become prescriptive. Audit trails are detailed; regulators utilize the audit trails to identify market patterns and fraud; these audit trails are required to be maintained as Books and Records. In the US, the Consolidated Audit Trail (“CAT”) requires order, trade and customer information. In the EU, MiFID II requires phone conversations to be recorded and maintained.

Books and Records are scrutinized as part of cybersecurity reviews. The recent Equifax data breach is an example of the importance of Books and Records to both regulators and Equifax. In identifying records compromised or stolen, storage of Books and Records would need to be stored in a backup database. Equifax’s Chief Legal Officer and Head of Security; knew of the data breach and approved sell transactions in Equifax securities by senior officials of Equifax. These trades may be deemed illegal insider trades. Equifax’s Books and Records no doubt are central in pursuing action against the Chief Legal Officer, other Senior Officers and Equifax.

Elin is the CEO of Elinphant a financial compliance services firm. Elin ensures compliance officers who serve clients are skilled and knowledgeable in relation to the clients business and needs. Elin is known for looking at compliance challenges as well as marketing and sales in an innovative and direct manner.