Why Private Investments and Outside Activities Matter More Than Ever
As we begin 2026 and prepare for a busy year ahead, it is a great time for compliance teams to take stock of their employees’ private investments and outside activities. Whether capturing new hires or existing employees pursuing new opportunities, the obligation to disclose and obtain permission to conduct such activities is critical for protecting market integrity, identifying and managing conflicts of interest, and sustaining regulator confidence in firms’ supervisory frameworks.
In an environment shaped by rapid innovation, shifting market conditions, and expanding personal investment options (including digital assets, private placements, start-up advisory roles, independent consulting, and board memberships) firms are grappling with more nuanced risk profiles than ever before. This complexity is making robust, reliable disclosure programs a vital part of compliance operating models.
Why Disclosure Obligations Are Expanding
The traditional categories of outside activities and private investments (e.g., ownership in LLCs, real-estate partnerships, advisory roles, and outside employment) have not gone away. But regulators globally are paying closer attention to a broader set of activities, including:
- Angel investing and seed-stage participation
- Private equity and venture fund commitments
- Co-investment opportunities
- Digital-asset investments, blockchain project involvement, and token advisory roles
- Side businesses, consulting engagements, and entrepreneurial ventures
- Non-profit and board positions with potential fiduciary influence
Employees often enter a firm with pre-existing holdings or obligations. Others encounter new opportunities throughout the year. Both scenarios require timely, accurate reporting to the firm so compliance can assess conflicts, suitability, and restrictions before issues arise.
New Opportunities, Closed Opportunities and Ongoing Responsibilities
This year saw an increase in both new outside engagements and closed or exiting positions, driven by higher deal flow, increased access to private markets, and more professionals participating in alternative investment vehicles. Yet, many firms report that employees are not fully aware of what requires disclosure or when updates must occur.
Key challenges include:
- Existing investments that become higher risk as financial circumstances change
- New ventures that start informally but evolve into commercial activities
- Passive ownership interests that create unexpected fiduciary or competitive conflicts
- Departures or wind-downs of outside roles that still require documentation and off-boarding
A start of the year review is an ideal point for employees to revisit their activities, reflect on the past year, and ensure all disclosures accurately reflect their present obligations.
Regulatory Expectations Are Clear and Increasing
Regulators worldwide, from the SEC and FINRA to the FCA, ESMA, MAS, and others, expect firms to maintain clear, structured, and actively supervised outside activities and private-investment programs. Enforcement actions throughout the year continue to emphasize:
- The need for complete, proactive employee disclosure
- The firm’s responsibility to evaluate, approve, restrict, or deny certain activities
- Maintenance of up-to-date records, monitoring logs, and review workflows
- Rapid identification of conflicts of interest, including competitive or fiduciary conflicts
- The obligation to reassess activities as roles or risk profiles evolve
A static outside activities framework is no longer acceptable, regulators want proof of continuous oversight.
How Firms Can Strengthen Their Year-End Compliance Posture
As compliance teams conduct their annual reviews, several steps can help set the foundation for a strong start to the new year:
1. Reinforce Employee Education
Remind employees of what counts as an outside activities or private investment, especially the less intuitive activities such as advisory roles, digital-asset involvement, informal consulting, or ownership in a family business.
2. Streamline Disclosure Workflows
Simplify how employees submit or update disclosures. A digital, centralized system alleviates manual burdens and ensures consistency.
3. Reassess Risk Ratings
Private investments that were low-risk a year ago may now carry more exposure due to changing market conditions, strategy shifts, or new fiduciary obligations.
4. Strengthen Monitoring and Attestations
Regular certifications ensure employees reaffirm their commitments and give firms opportunities to identify unreported activity.
5. Ensure Fully Documented Exits
Closing an outside activity still requires documentation. Firms should maintain accurate records of termination dates, unwinding of ownership interests, or dissolution of responsibilities.
Looking Ahead: Building a Culture of Transparency
Private investments and outside activities have become foundational to modern professional life, particularly in financial services, where employees often bring entrepreneurial ambition, investment sophistication, and wide-ranging networks. But these same qualities can introduce conflicts if not properly disclosed and supervised.
A strong compliance program does more than reduce risk, it creates a culture of transparency and reinforces trust across the organization.
As we enter the new year, firms that invest in smarter workflows, clearer communication, and proactive oversight will be best positioned to navigate the growing complexity of personal investment and outside business activity.
To learn more about StarCompliance’s Outside Business Activities Compliance Software and to book a demo, click [Here].
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