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Employee Conflicts of Interest

Compliance & Coronavirus: Star Virtual Forum Roundups

How are some of the top operators in compliance coping with and solving challenges presented by COVID-19? We round up the best thinking from the recent Star US and EMEA Virtual Forums

“There’s been a sharp spike in personal account deals that have been put through the system by employees. We’ve seen a 400% increase in PAD in the UK, and maybe 300% in the US. Conversely, entertainment and hospitality spending has collapsed totally. In terms of controls, what we’re not doing is giving anybody special dispensation because requests have failed some of our checks, i.e., we’re not granting any special favors right now because of market volatility.”

Does this story have a familiar ring to it? It was related by a StarCompliance client and panel member at our recent Star US Virtual Forum. And it’s as good an encapsulation as any of what compliance officers worldwide are currently seeing in this moment of global lockdown and how they’re reacting. Read on for further highlights, insights, and tips from veteran compliance officers around the world as represented at our US and EMEA virtual forums.

What’s it like for compliance officers in the new normal? How have day-to-day operations been impacted? How are compliance officers absorbing all the excess trading activity the pandemic-induced market volatility has generated? And how are firms making sure they stay in touch and retain that feeling of workplace connectedness though there’s no more workplace to speak of? Read what these veteran compliance officers had to say.

“Day-to-day operations have been pretty smooth overall, though we didn’t have plans in place for something like COVID-19. The team’s been able to remain in contact via telephone and video, but mostly our email has been keeping us in touch. IT has managed to keep everyone online, and we haven’t had any network outages or with any of our systems, including STAR.”

So far we’ve been able to comfortably absorb the excess trading activity, and that’s down to my team stepping up to meet the challenge. We’ve also taken steps over the years to pre-approve certain securities, so a lot of the things being traded of late are on the auto-approve list.”

“We have offices in Asia, which went into lockdown much earlier than London. When it looked like the coronavirus was headed for the UK, we started speaking to clients there. One thing we identified was that, while everyone had disaster recovery plans in place, due to the scale of this event the idea that we could move everyone to a separate office location went out the window. We quickly mobilized, and made sure all of the applications could be accessed remotely.”

“Outside of the human impact, of people at home not interacting, on a practical basis we’re a globally spread compliance team, working remotely from each other and our employee base. So in that sense, COVID-19 has had perhaps less of an impact on us than it may have had on a firm that has one office in London that everyone commutes in for. People are used to reaching out to us remotely. Businesses are operating, though more slowly. Processes are slightly less efficient.”

“We’ve wanted to make sure our team is interacting, and not feeling lonely at home, so we do have daily calls where the agenda is to talk about your day. What you’re finding good about the moment. And sometimes it’s as simple as the sun is shining. Just to keep us all connected.”

What are regulators up to in this time of market strangeness? Are they relaxing expectations? Tightening the screws? Lowering their guard? Or maybe waiting until this is all over to conduct retrospective audits and find instances of firms lowering their guard? Our panelists offered some firm, uncompromising advice.

“The regulators may be working remotely, but they are working. And we all know, after the markets settle, the regulators will be back on their horses, investigating anything they can find. Any abnormalities or anomalies that took place. Anything even slightly suspicious.”

“We made the decision that we wouldn’t be making changes to the code of ethics and that we wouldn’t be making any exceptions. We feel that’s a slippery slope. This isn’t the time to relax standards. We know that people have a lot going on personally and professionally, but relaxing our code is just not the thing to do right now.”

“The regulators will be going back in time, and while they’ll have some consideration for the challenges thrown up by the current crisis that won’t save you from breaches and violations of various regulations and laws, so you have to be diligent. At a very senior level on our side within the firm—on the business, legal, and compliance sides—it’s been stressed that this is not the time to lower your guard or cut any corners. You have to assume the firm has a target on its back.”

Compliance officers are getting creative with how they use STAR during COVID-19. Increased use of notification and communications functionality was high on the solutions-list for our virtual forum panelists. Dashboards were also at the forefront of conversation; use cases included SMCR reporting, attestations, gamification and competition between user groups, and reducing the manual slicing and dicing of data. Here are several use cases panelists shared.

“We’ve always used STAR for general communications from compliance, but now we’re also using it for COVID-specific communications surrounding the increased trading and accompanying restrictions per the code of ethics. We sent out a custom alert and then had it posted on the STAR Platform homepage. We’re finding people respond to these custom alerts in a way they’ve never responded to emails from upper management. It’s a great use of STAR, particularly in times like this, when you have to push out communications quickly and record that they’ve been sent.”

“We’re thinking dashboards could be a game-changer. Right now, we have to spend a lot of time extracting data from systems into spreadsheets, and slicing and dicing it manually. If we could get all that automatically, from the dashboard, that would be fantastic. We also see help from dashboards on attestations, where you can see the percentage of employees that have completed their attestations and see how that team compares to other teams. Then we can go to senior staff and say: ‘Your team is lagging and we have the data to back it up.'”

It’s safe to say that responding to the sudden day-to-day operational challenges posed by the pandemic was the first priority for financial firms and compliance teams worldwide. But once the dust settled, compliance departments did find they had some time on their hands. General housekeeping, SMCR implementations, and improving systems and processes have been the order of the day. Here’s more on what some of our Star panelists have been up to.

“We’re building out a more interactive manual. Where people can get to policies and FAQs. Where they can get to other links that we have. So that everything is in one place and is easier to find. I would say easily 60% of all of the questions we get from employees could be answered by reading the policy. And it’s the same people asking the same questions. So providing it to them in a way that will take some of this repeat questioning off our plate would be a big help.”

“We had been trying to apply for a new regulatory license, and were being pushed to try and do it in four weeks. We were jumping and running and chasing our tails. But had we actually made the deadline and gone live with it as hoped we would have breached immediately, by virtue of the fact that our employees couldn’t be as responsive as we needed them to be due to the pandemic. So COVID means we’ve put that license application on the back burner. But it has allowed us as a compliance group to get a bit of sleep, to take a breath, and say, okay, over the years we’ve stuck lots of Band-Aids on things. Now we can do some needed housekeeping.”

“While the initial focus for many of our clients was all about managing day-to-day operations, in the last week and a half we’re finding that projects suddenly put on hold are starting to come back alive. Firms are recognizing that the COVID-19 situation is not going to turn around quickly and we’re probably all going to be working remotely for a long period of time. So we’re seeing a return to focus for many of these sidelined projects, like SMCR implementation and evidencing.”

Some days, it feels as though COVID-19 has stopped the world from spinning. We’re living in an environment no one was prepared for, but out of chaos can comes learning and reflection. Here’s Star’s own Tim Ward, who moderated both panel discussions, with his final takeaway and some parting advice:

“Even though these are challenging times, we’re at least learning a lot about our processes, our workflows, our systems, and the collective resiliency of so many aspects of compliance. This is stress testing—as real and rigorous as it gets. And when we get back to business as usual, I think there will be valuable lessons learned. In the meantime, keep calm and carry on!”