A key element of the Securities and Exchange Commission’s (“SEC”) Rule 204A-1 or the “Code of Ethics Rule“, relates to personal securities trading by requiring all access persons of a registered investment adviser (“RIA”) firm to submit securities holdings and transaction reports to the firm’s Chief Compliance Officer (“CCO”) or other designated person(s). To simplify the submission and approval process of transaction reports, the MyRIACompliance® Employee Trade Monitoring software automatically records, monitors, and consolidates employee personal securities transactions. The cloud-based software eliminates the need to request and review paper brokerage statements by allowing the advisory firm’s Chief Compliance Officer to automatically monitor employee transactions and holdings for both remote and in-office work forces.
Recent personal securities trade monitoring enhancements include new features such as the ability to automatically “match” employee trade requests with executed employee securities transactions, the ability to automatically “flag” potential employee front running securities transactions, and the ability for employees to report private securities holdings such as investments in private companies.
Employee Trade Monitoring Software Overview
With the ability to establish an electronic data feed to over 15,000 financial institutions, the employee trade monitoring feature of MyRIACompliance® automates the submission and tracking of personal securities holdings and transactions for RIA firms of all sizes. The Chief Compliance Officer gains access to detailed reporting tools and the ability to manage a restricted securities list.
Transactions
The transactions section within the Employee Trade Monitoring software allows supervisory users to easily identify potential trading violations including transactions that are on the restricted list and transactions that are not matched to a prior employee trade request. In addition, users who subscribe to both the Employee Trade Monitoring add-on feature of MyRIACompliance® and Orion are able to benefit from the “autoflag” feature to identify potential front-running trade violations. When the “autoflag” setting is enabled, the system will automatically identify any employee and client transactions that have the same date, holding name, and type of action alerting the CCO to review and take potential action.
Holdings
The holdings section now allows supervisory users to review both public and private holdings. For public holdings, supervisory users are able to identify holdings on the restricted list. For private holdings, based on approved private transactions for a given private company, the software will automatically reconcile and display history in the private holding history. Filters now allow users to easily view restricted or not restricted holdings.
Trade Manager
The trade manager section allows supervisory users to manage post-trade reconciliation and trade requests for both private and public transactions.
For public securities transactions:
- By enabling the new “automatch” feature, the employee trade monitoring software will now match all a given employee’s trades that are within two days of that employee’s trade requests that have the same ticker, type of action, and share volume. This allows the CCO to quickly identify potential trade violations of restricted transactions, holdings, and unauthorized transactions.
For private securities transactions:
- With pending requests, a supervisory user can review the detail of the request and either approve or
prohibit the transaction. With “decisioned” requests, a supervisory user can review request and decisioning detail.
Restricted List
The restricted securities list is fully customizable for firms that implement an employee trade pre-clearance program. When implemented, each access person submits a trade request which is then automatically approved or held for approval based on the firm’s customized settings. In addition, any security purchased or sold by an access person that is listed on the firm’s restricted security list is flagged by the system for further review. All historical restricted securities are archived.
Accounts
The accounts tab shows supervisory users which employee accounts are connected, and or have errors that must be corrected.
One of our company’s longstanding commitments is investing time and resources to make the RIA in a Box MyRIACompliance® platform the industry leading compliance technology offering for registered investment adviser (“RIA”) firms. We put the client first by delivering innovative software and expert advice. Since 2005 we take pride in partnering with our clients to establish and support the highest quality registered investment adviser firms in the country. At RIA in a Box, we release new MyRIACompliance® software features and enhancements on a daily basis to meet the growing compliance challenges that investment advisers continue to confront.