THE TUSK VOLUME 6: Bits of Compliance Advice from Elinphant

Introduction

As August comes to an end we are saying goodbye to our inaugural team of summer interns. These six young women and men inspired all of us at Elinphant with their enthusiasm, knowledge and willingness to learn. We are very grateful for the work they did, whether it was applying for trademarks, doing Blue Sky reviews or updating our website. I started the internship program because I wanted a way to help our employees’ children and others to continue to grow despite the disruptions caused by Covid-19. I speak for the entire Elinphant team when I say we very much enjoyed the experience and are looking forward to the next round in 2021. For more details on the program, see here: http://elinphant.com/interns/. If these young men and women are representative of our younger generation, the future is bright for Wall Street and America.

Reflections

It has been months since the pandemic has led most of us to leave our offices and work from home, and it is unclear when – or if – we all will return to our offices. While it’s been difficult for many of us who have had to learn to juggle our home and work lives, this stretch of time has been a real challenge for compliance staff who are charged with making sure remote workers comply with our industry’s rules and regulations. It would be good for everyone to review their compliance procedures and make sure everyone is on the same page. We all want everyone to stay healthy, but it’s equally important that we protect their jobs.
For more of my thoughts on this topic please see: https://bit.ly/2QRwOfr

Lawyers are saying whistleblower tips this year have increased because people working at home feel more comfortable reporting wrongdoing, the Wall Street Journal says. That may be in some cases, but I think in other cases it’s a negative consequence of working remotely. In the office, workers with concerns can simply step into a manager’s office and talk things out informally. An employee working from home doesn’t have that option and begins to think the worst. That leads to distrust and a call to regulators. Managers, the lesson here is to make an extra effort to stay connected with your workers to address their concerns.
Tips to SEC Surge as Working From Home Emboldens Whistleblowers:
https://on.wsj.com/2Y4E7DX

Is the “cancel culture” coming to banking? Deutsche Bank is being investigated for doing business with accused sex-trafficker Jeffrey Epstein even after compliance officers raised concerns, The New York Times reports. Executives decided Epstein was too lucrative to drop, the paper said. Banks need to reconsider the changing landscape of reputational risk in current environment.
Regulators May Punish Deutsche Bank for Its Jeffrey Epstein Ties:
https://nyti.ms/2YfpXQ8

Are you fully aware of your duty to disclose financial conflicts regarding compensation when dealing with clients? Some conflicts are obvious, others not so much. This SEC FAQ provides some areas that you may not think about regularly, but you should keep in mind.
Frequently Asked Questions Regarding Disclosure of Certain Financial Conflicts Related to Investment Adviser:
https://bit.ly/37Kf8dj

This Financial Times article explains how firms are making money through payments for order flow, a practice the SEC requires to be disclosed. For more:
Zero-Fee Trading Helps Citadel Securities Cash in on Retail Boom:
https://bit.ly/3ezONBm

Almost half of CFA Institute members surveyed said the coronavirus-caused financial hardships likely will result in unethical actions by financial industry professionals. The fear is highest in North America, lowest in Latin America. For details, see:
In Financial Services, We Don’t Trust: https://bit.ly/3egaDZT

Have you thought about whether your technology requires your firm to be registered with regulators? You should check to see. This developer of an unregistered app that handles security-based swaps was fined $150,000 by the SEC.
For details: https://bit.ly/3gYUKZI