Ongoing virus developments, decisions by states, cities, or counties regarding timelines and school closures, shelter-in-place requirements, and other measures aimed at curbing the spread of coronavirus (COVID-19) have forced firms to move to a completely remote business model. With reduced face-to-face interactions, employees are increasingly turning to electronic devices and platforms such as email, text messaging, instant messaging platforms like Microsoft Teams or Slack, and social media to communicate with their co-workers and clients.
Increased electronic communication traffic can result in additional risks. Regulators, although providing relief in certain areas, still expect the compliance role to function effectively to mitigate these risks.
Here are a few tips that can boost the strength of your electronic communications surveillance program and help your firm to stay vigilant during these unprecedented times.
Identify and Document Which Communication Platforms are Being Used
Find out what methods are being used for business communications and how. If the methods and platforms being used are not approved, consider whether they need to be added to the approved list – either permanently or temporarily during this time of social distancing. Additionally, ensure appropriate communication archives are set up on new platforms in accordance with your firm’s books and recordkeeping requirements. If any exceptions are made to your firm’s communications policies, document these exceptions and the reasons why they were made.
Now more than ever, it is important to remind employees of your communication policies and the risks present when using unapproved and unarchived communication channels. Consider firm-wide reminders and/or training to help prevent data loss, including potential leverage of personal machines, printers, and email accounts.
Increase Your Surveillance Cadence
It is better to identify and deal with potentially new and/or significant compliance issues at the earliest stage. With the recent influx of electronic communications, an increase in the frequency of reviews may be necessary to stay on top of these issues. Without in-person interactions, more frequent monitoring can be an effective measure for compliance to stay attuned to daily developments. Firms who normally conduct quarterly or monthly reviews may need to increase to a bi-weekly or weekly schedule, depending on the volume of communication. Review schedules should reflect not only the volume of communications sent/received but the new risks arising during this global pandemic.
Re-assess Key Terms and Lexicon
The new work-from-home environment, coupled with current market volatility, may have shifted both the language and topics used in conversations. Take time to refresh words or phrases previously used to monitor for compliance issues. In this new environment, they may create a number of false positives or may not capture the complete picture. Firms should also consider adding in new or alternate words to address heightened risks during this time.
Consider the following risks that may be prevalent in the current environment when re-assessing your lexicon:
- Cybersecurity/Information security - communications highlighting potential breaches of networks, hacking and phishing attempts, privacy concerns related to sensitive or confidential information
- Valuation – monitoring of communications (formal or informal) to investors related to investment performance, discussions among investment professionals that appear to contradict communications to investors or other third parties
- Portfolio management and trading compliance - conversations between investment team members and/or third parties that may appear to indicate more aggressive investments to make up for losses or take advantage of the market conditions
- Investor complaints – communications indicating issues related to the responsiveness of the adviser or other concerns
- Marketing/Investor relations – messages being sent with false undertones, painting a rosy picture in order to prevent redemptions
- Books and records issues – employee inability to access networks/files or properly maintain records, use of personal email or other unapproved communication channels
- Supervision – responsiveness of staff and vendors
- Interactions with public companies – monitor for potential material non-public information (MNPI) as traders try to recover losses sustained in the volatile market and search for non-calendared or reported calls
We Are Here For You
If your firm is finding it difficult to maintain the proper level of monitoring in this new environment, ACA can be of assistance. We specialize in conducting thorough reviews of electronic communications tailored to your firm’s needs. We can work in a temporary or ongoing capacity with any archival platform and are able to perform reviews in seven different languages. Contact us to find out more about our surveillance services.
ACA COVID-19 Resources
ACA is working to produce resources to help your firm navigate through the COVID-19 pandemic. Visit our COVID-19 resources page for regulatory updates, resources, and best practices to help your firm stay up to date and manage business disruptions caused by COVID-19.