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On February 10, 2016 the courts issued a decision addressing regulatory investigations that must be disclosed. This affects the SEC Rule 17h regarding required legal disclosure. – Read the full text report.
This significant decision will affect SEC Rule 17h with regards to reporting broker-dealers. This rule states that material legal disclosures must be reported to the SEC on a quarterly basis. A majority of companies refer to their accountants and/or auditors to figure out the materiality factor. A common practice approach has been to focus on the numerical information rather than a legal argument. However, this particular decision may encourage companies to look at their legal disclosure aspects from a different point of view. This report states that; “The question is not whether [a defendant's] silence can give rise to liability, but whether liability may flow from his or her decision to speak concerning material details without revealing certain additional known facts necessary to make his statements not misleading. This question is answered by the text of Rule 10b-5(b) itself: it is unlawful for any person to 'omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” Marina Baranovsky from Scitus Consulting an expert in this field noted that this argument of materiality of legal proceedings is very different than balance sheet materiality approach. The potential effect of the misstatement on trends, especially trends in profitability is an issue that compliance supervisors need to continually be on alert for. Ms. Baranovsky commented that it will be interesting to see how this significant decision will affect SEC Rule 17-H reporting Broker-Dealers in the future. Many companies in the past referred to its accountants and/or auditors to figure out the materiality factor. However, this particular decision may encourage companies look at their materiality of legal disclosures from a different point of view. This broadens the focus from primarily numerical reports which were more simplistic, to a combination of numerical, legal and ethical considerations. 6/1/2016
2016 FINRA ANNUAL CONFERENCE RE-CAPIt was a pleasure to attend and exhibit at the 2016 FINRA Annual Conference in Washington D.C. this year. Chairman Richard G. Ketchum delivered an excellent address at the opening of this conference. He reiterated that high ethical standards are critical to maintaining investors’ trust in the financial markets and in the professionals and firms with which they work.
He pointed out that FINRA’s reviews and focuses cover a number of factors, including how a firm communicates and reinforces values directly, implicitly and through its reward system. FINRA also is interested in how a firm measures compliance with its cultural values; what metrics, if any, it uses; and how it monitors for implementation and consistent application of those values throughout its organization. Chairman Richard G. Ketchum went on to say that “FINRA will assess whether control functions are valued within the organization; whether the organization proactively seeks to identify risk and compliance events.” Our Eagle Eye and SQWatcher applications will help your organization supervise and monitor your website(s) and your employees’ presence on the web. Our automated recordkeeping features will save you time and help ensure that you are consistently meeting the general supervision requirements. Demonstrate that your company values compliance. Our applications help you consistently stay compliant with NASD Rule 3012 and FINRA Rules 2201, 3110 and 3270. SiteQuest Technologies is the leading-edge compliance software provider specializing in solutions that help firms supervise the web as well as archiving and monitoring websites and blogs. We will help your organization become proactive in seeking to identify risks and compliance events on the websites that you are required to supervise. Contact us today and we will demonstrate for you the solutions our company has to offer. Read the full text of Chairman Richard G. Ketchum’s address. We are pleased to announce that James Cella, President of SiteQuest Technologies will be exhibiting at FINRA’s annual Conference. The conference is being held at the Marriott Marquis in Washington DC from May 27th through the 29th. Please stop by for a visit and be sure to enter our conference drawing for an Apple Watch. We will be located near the escalators at booth #27.
When doing web searches on Google™ or Bing™, how accurate are the results typically? Well of course if you’re looking for someone who has a large and prominent web presence, Google searches can be easy. A Google Search on Lebron James will give you plenty of accurate results, but let’s be real. When supervising an advisor, it can be like searching for a single needle in a vast array of haystacks.
Eagle Eye’s accuracy for a Broker Dealer client who has used the system for less than one year. Take my name as an example: James Cella. It’s not a common name, BUT there are over 50 James Cella’s in the United States and many of us have a decent web presence. One is a lawyer, another a hollywood film producer while another is a sports information director at a small university. So if one were to try to supervise me and were to Google my name, they would only find 4 results out of Google’s top 50 were actually me. That’s a whooping 8% accuracy. Now one could say that I don’t exist on the web and hence the low results, but the fact is that I do exist on the web with:
So 4 results in the top 50 returned by Google is flat out terrible. Just image how it would look if I were named John Smith. When we released Eagle Eye about a year ago, we set out to design an application that dramatically increased the odds of finding the James Cellas, Sally Jenkins, Timothy Freemans or whomever our clients needed to supervise. So how are we doing? Overall the numbers are pretty impressive. Our clients generally review anywhere from the top 20 to top 30 results found by the system and they are averaging around 55% to 67% accuracy. One client who has been on the system for nearly a year has an accuracy of 72% in their top 30 and an insane 82% in their top 15. That means that for every 10 results they are reviewing, 7 to 8 of them are the people they are looking for and this is after the company has blacklisted domains they don’t want to review like whitepages.com or classmates.com. How do we do it? We can’t reveal all the ingredients of the secret sauce, but we can tell you that we’ve built complex algorithms and intelligence into Eagle Eye so that it learns as your firm performs reviews. So what does all this accuracy give you?
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About James CellaJames Cella is the President of a growing and innovative compliance technology provider called SiteQuest Technologies. James is a customer-centric individual and focuses on building and sustaining positive and lasting relationship with his clients and partners. James and his family are "super fans" of Utah Football and have attended nearly every home game since 2002. Go Utes! Archives
July 2019
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7/7/2016