Public, Private or ‘Private Private’: Do you have the right information barriers?

August 25, 2020 by ACA Compliance Group


As the months stretch out ahead, and the ‘new normal’ working environments evolve, the financial industry continues to navigate the COVID-19 blighted landscape.

Throughout the lockdown the Financial Conduct Authority (FCA) and the Securities and Exchange Commission (SEC) have reiterated both their expectation that private information be handled appropriately and their requirement for firms to maintain adequate and appropriate information barriers. Handling of Material Non-Public Information (MNPI) has been a topic that the FCA has returned to repeatedly over the years with Market Abuse, a staple of the annual business plan. Most recently the FCA (re)raised this topic in their Market Watch 63 and the SEC as part of an Office of Compliance Inspections and Examinations (OCIE) Private Fund Risk Alert and the SEC's Division of Enforcement Co-Director's statement regarding market integrity and increased risk during COVID-19.

As we move into, and through, the second half of 2020, it is anticipated that deal flow in the private markets space will pick up. With the various state-aid programs coming to an end, or at a minimum winding down, firms may look to fill that potential funding gap with new loan facilities via the direct lending option. Even during the early part of the lockdown, there were signs of bargain hunting in the corporate space, with certain sovereign wealth funds seeing value in companies being affected by COVID-19 and taking substantial stakes.

Consensus at the Alternative Investment Association's (AIMA) Alternative Credit Council Global Virtual Summit in June was that economic recovery is expected to be most likely either a “Nike Swoosh” or a “W” in shape. Both these recoveries indicate potential for Private Equity/M&A deals to come to market late in 2020 and early 2021. Of course, these predictions were all based upon a lack of a second wave of COVID-19 and (re)lockdown of states/cities. We also see in the market firms re-positioning existing funds, and in some cases targeted fund raising to take advantage of market dislocations and to invest in different parts of the capital structure.

Be it new facilities, refinancing or brand-new deals, each of these have the potential, if not the certainty, of introducing “private” information into the work environment. Ahead of what could be a busy second half of 2020 for the credit space, there is possibly no time better to revisit what should be considered as “private” information and how that can get a little grey and nuanced in the private markets sector.

Download our white paper, which examines:

  • The potential vulnerabilities that work from home orders can place on the handling of MNPI and the importance of compliance officers reviewing their information barriers
  • The Regulatory bit: EU Market Abuse Regulations (MAR) – “inside information”
  • The Public vs Private Debate: Inside Information vs Confidential Information vs Price Sensitive Information
  • How to operate with differing levels of Private Information and coming into contact with “Confidential” or “Price-Sensitive” information
  • Recommendations for achieving compliance in COVID-19 economic malaise

Download

How we help

ACA works with hundreds of credit and private market clients globally. We can help you assess your information flow and risks and design your information barrier framework and controls around provision of such information, creating a structure that works for your business model.

We also provide policies and procedures for employee compliance as well as personal account dealing surveillance technology for identifying potential conflicts of interest, insider trading, market abuse, and other misconduct. We also conduct mock regulatory examinations, policy and procedure reviews, and various surveillance reviews and analysis to help our clients identify potential issues and areas for improvement.

In addition, we provide a range of market abuse compliance solutions to help you meet your regulatory responsibilities.

Contact Us

For European queries, please contact Andrew Poole at +44 (0)20 7042 0500.

For U.S. queries, contact Jami Jack at +1 214 930 9220.