Firms may be concentrating on putting out the many fires resulting from the pandemic and economic shutdown, but SEC exams are still happening, and how managers respond to the crisis in the next few months will be heavily scrutinized down the road.
“Compliance is generally not at the front and center of everyone’s mind even when they’re in the office, so it’s even more back of mind now because the employees are working remotely,” said Amy Lynch, founder and president of FrontLine Compliance.
FrontLine Compliance has a few useful tips for how compliance officers can keep compliance at the front of everyone’s mind.
Firstly and most importantly, make sure your firm is sticking to its valuations process. “PE firms need to have a heightened sense of awareness regarding how they’re functioning right now, especially when it comes to valuation of their portfolios, because that will definitely be the focus area for the SEC when they resume their examinations on a regular schedule,” said Lynch.
Data security: Connect with IT weekly to ensure they’re deploying your firm’s Business Continuity Plan (BCP) and Written Information Security Plan (WISP)/cybersecurity plan effectively. The meeting is also a useful slot for management to be caught up to date on any incidents of breaches, remote trading processes and client-facing or client data systems.
Such a meeting can give compliance an early understanding of where any concerns might arise, since data security issues can affect the business continuity plan, and compliance is generally responsible for maintaining that, Lynch said.
Access to critical systems: Maintain a catalog of mission critical systems within the firm and engage often with the individuals within your firm that are well versed in these systems. Additional communication and collaboration within the firm will be increasingly essential to keep everyone on the same page. Operational issues can easily turn into compliance ones if not addressed, so it is important to find out what is working and what isn’t, according to FrontLine.
Communication: Additional reviews and monitors are necessary for monitoring internal communications. Social distancing measures have forced everyone to rely on email, text messaging and video chats as the primary mode of communications, and additional systems of review can help ensure everyone is engaged and focused on the firm’s goals during this difficult time. FrontLine notes that many firms have proprietary workflow systems via SharePoint or other similar programs. It is important to ensure everyone is using such tools actively.
A firm’s compliance chief should also be readily available to aid staff in this volatile time. “Individuals throughout the firm need to be able to reach compliance if they have a question,” said Lynch.
Implement regular training: A compliance program is only as good as its weakest link, and people are usually that link, according to FrontLine. Firm-wide compliance training will help to level the playing field and ensure everyone knows their compliance responsibility.