Compliance programs may involve email surveillance to review and monitor communications relating to trading activities, research events, and compliance with firm policies and procedures. Surveillance may be automated or come in the form of ad hoc email reviews by compliance professionals and/or regularly scheduled formal reviews. Outside counsel can be helpful in advising compliance professionals on appropriate search terms, tailored to the firm’s business.
Mock Audits. In addition to outside counsel, independent groups are able to conduct email reviews and also full-scale mock audits. Mock audits can help identify strengths and weaknesses in a firm’s compliance environment, and allow the firm to tailor its policies and procedures as needed. This can be powerful evidence of a sophisticated compliance environment, should the need to demonstrate this to investors or the government ever arise.
In the UK, if a regulated firm suspects that a client might have committed or attempted to commit insider dealing, the firm should comply with its obligations to report those suspicions via a suspicious transaction and order report (STOR). A firm must also submit a STOR where it identifies suspicious trading by an employee.1 For more on reporting obligations in the UK, see here.
A regulated firm that has identified activity it suspects may amount to insider dealing should also consider its general obligations in relation to countering the risk of financial crime should a client seek to transfer or use the proceeds of that suspicious activity. This includes, where necessary, seeking consent from the National Crime Agency. For more, see here.
1 Regulation 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) (MAR), as retained in the UK by the Market Abuse (Amendment) (EU Exit) Regulations 2019/310, art. 16.