WomenInCompliance.com – meet speaker Neshie Tiwari, CCO of Ellevest

Neshie Tiwari is the chief compliance officer for Ellevest, the investment management company for women by women, co-founded by Sallie Krawcheck in partnership with Charlie Kroll.

Ellevest was founded in 2016 as a digital financial advisory platform for women.

According to Neshie, “everyone is responsible for compliance…. and ethics.”

In the most recent “What the Elle?” Newsletter from August 21, 2018, she also described situations with potential conflicts of interest and how Ellevest published details on the possible conflicts and its mitigation in Ellevest’s Form ADV.

Other focal points for CCOs, in Neshie’s opinion, are “the benefits of diversity to build a strong business”, to “talk. A lot.” and “rules are good. A ‘true north’ is better.”

She will share her thoughts in panels and workshops at WomenInCompliance.com. While space is limited, we still have a few spots left for C-level female (and male) compliance, risk, data, tech and legal officers.

See you on September 18th.

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SEC hands out $90 million to whistleblowers in April 2018 alone

Since issuing its first award in 2012, the SEC has awarded more than $266 million to 55 individuals under the whistleblower program. In that time, almost $1.5 billion in monetary sanctions have been ordered against wrongdoers based on actionable information received from whistleblowers, including more than $740 million in disgorgement of ill-gotten gains and interest, the majority of which has been or is scheduled to be returned to harmed investors.

For more details on the program, please visit the SEC’s Whistleblower Program.

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SEC Standard of Conduct for Inv Pros

Dalia Blass, who last September was named the SEC’s head of investment management (David Blass, her husband, spoke at CSI NY last year about some of the industry developments), addressed the Standards of Conduct for Investment Professionals in NY this month.

The commission on April 18th published “regulation best interest” – proposing enhancements to the standards of conduct for B/Ds, and clarified views on fiduciary duties of financial advisors.

SEC Chair Clayton last week also testified that the best interest proposals are a priority for FY2019. Both said the commission’s efforts are the result of over two decades of thinking and experience, as part of his $1. 7b budget request. A modest increase is earmarked to fill 100 vacancies post hiring freeze.

Blass divided the three areas of the proposals as follows:

1. Clarity for retail investors about investment professionals (what kind of person is advising them, e. G. RIA, registered B/D, et al, and the use of “adviser” and “advisor”), including a “relationship summary”.

2. Enhanced standard of Conduct for B/Ds

3. Clarity around Standards of Conduct for I/As
The public comment period will remain open for 90 days following publication of the documents in the Federal Register.

For access to research, news, data and one of the largest global compliance, data, technology and information networks, please visit the Compliance Strategy Institute.

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SEC fines Yahoo (aka Altaba) $35 million for failing to disclose massive cybersecurity breach

Russian hackers in late 2014 stole Yahoo’s “crown jewels”, hundreds of millions of usernames, emails, phone numbers, birthdays, passwords, and security questions. Last week, the company in its entirety agreed to pay $35 million in SEC fines for failing to disclose the breach for over two years, filing quarterly and annual reports with the commission without mentioning the data breaches.

Verizon acquired Yahoo in June 2017 and since renamed the firm Altaba Inc.

For more information, including SEC statements and comments on the case, click here.

For access to research, data and one of the largest global compliance, risk, technology and data networks, visit the Compliance Strategy Institute.

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The regulatory case and example of Wells Fargo

Over $4 billion set aside for the fake account and MBS issues post-crisis, another billion today in fines for issues around mortgages, loans and risk compliance, and the Fed putting a limit on growth with a balance sheet cap.

Aside from the impact on the stock price, many in the industry now publicly wonder whether WF has been punished too harshly, and, by extension, the shareholders.

And results, while lower than competitors, have not been bad:

Preliminary net income of $5.9 billion, compared with $5.6 billion in first quarter 2017
Diluted earnings per share (EPS) of $1.12, compared with $1.03
Revenue of $21.9 billion, down from $22.3 billion
Net interest income of $12.2 billion, down $86 million, or 1%
Noninterest income of $9.7 billion, down $235 million, or 2%
Average deposits of $1.3 trillion, down $2.0 billion
Average loans of $951.0 billion, down $12.6 billion, or 1 percent
Return on assets (ROA) of 1.26 percent, return on equity (ROE) of 12.37 percent, and return on average tangible common equity (ROTCE) of 14.75 percent1

Wells Fargo last month hired C. Allen Parker as new general counsel.

Wells Fargo will hold its 2018 shareholder meeting on April 24, listen to it live here. The company presentation will be available as well following the event.

For ongoing analysis, news, research and networking, please visit: http://www.thecompliancestrategyinstitute.com

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Delay for AIFMD third-country passport extension

It looks like the EU will hold off on AIFMD third-country passport extensions until Brexit develops a clearer path.

Ugo Bassi, Director of Financial Markets, pointed towards the technical complexities and ongoing assessment period, also in light of Brexit, at a conference last week.

The Compliance Strategy Institute at its London and Paris roundtables had workshops around UCITS and AIFMD passporting post-Brexit.

An ongoing CSI task force of chief compliance, risk, operational and tech officers is creating strategies and initiatives for members to deal with their business challenges.

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Average annualized cost of cybersecurity for financial services firms $17M+

Below are a few interesting data points from the Ponemon Institute 2017 Cost of Cyber Crime Study, jointly developed with Accenture:

Notably, the average annualized cost for financial services companies is over $17M, and include evolving business models by criminals, including ransomware as a service. Information loss, such as with Equifax, represents the largest cost component with a rise from 35% to 43% year on year. PS, it is more than worth watching John Oliver’s story on Equifax, because there is so much more to it than the media reported. Also, for those of you that have frozen their credit, my favorite is Experian’s automated message telling callers that “in case you are calling regarding the Equifax debacle”, you should call them and not Experian, as “this is a different company”.

But I digress. Ponemon looked at nine security technologies (security intelligence systems, advanced identity and access governance, automation, cyber analytics, advanced perimeter controls, encryption technologies, data loss prevention, enterprise deployment of governance, risk, compliance, automated policy management) and found that most firms spend too much on the wrong ones. The Compliance Strategy Institute (CSI) in its global roundtable series NY/Boston/London/Paris had numerous CISOs and heads of IT and data participate in the workshops to better understand the data and technology needs for compliance, risk, legal and operations executives. The ongoing CSI task force around cybersecurity and technology is exploring these global themes further on an ongoing basis, alongside Compliance Solutions Strategies (CSS).

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