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- Wells Fargo Has Shown Us Its Contemptible Values
- UBS to Counter Trading Troubles With M&A Work
- SEC Moves Quickly To Shut Down Fake Pre-IPO Share Scam
- SEC Testimony: Oversight of the SEC Division of Enforcement
- FINRA Modifies 'Agency Debt Security' in Rule 6710
- Is Jamie Dimon Doing a U-Turn on Bitcoin?
- After New Yorker's Racist Rant Goes Viral, His Law Firm Gets Pummeled with 1-Star Yelp Reviews
- Bill O’Donnell is New CFO at MetLife
- Trump Still Owes Deutsche Bank, Others as Much as $480Mn
- Wells Fargo Scandals Hurt Its Retirement Business
- Michigan State to Pay $500Mn to Victims of Larry Nassar's Abuse
- Top Lawyer at Novartis Leaving Over $1.2Mn Contract with Michael Cohen's Consulting Firm
- Cadwalader Adds Mark Chorazak to its Financial Regulation Practice
- Deutsche Bank: It's A Short According to Eisman of ‘The Big Short’ Fame
- Up In Smoke: Bank of Montreal Goes All-In on Pot Deals
- RBS to Pay $4.9Bn to Settle Toxic MBS Probe with U.S.
- Apple and Goldman Sachs Team Up to Release New Credit Card
- Robinhood, A Stock, Trading App Rejected by 75 Investors, Now Worth $5.6Bn
- Wells Fargo Reportedly Pocketed Fire And Police Department Pension Fund Fee Rebates
- Trading App Robinhood Surpasses E*Trade In User Numbers
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NEWSLETTERS & ALERTS
Mitigating the Problems When 'Sh_t Hits the Fan'
[Image: from toonpool.com]
by Howard Haykin
At some point in time, every firm will need to upgrade or replace its electronic records storage system. And at that moment, firms need to anticipate the many things that can go wrong – because, as we all know, ‘sh_t is bound to hit the fan’. Just ask Virtu Financial Capital Markets.
While I’m not familiar with all the specifics of Virtu’s disciplinary case or the details of its e-records storage system conversion, this much can be said from FINRA’s findings: while transitioning from a WORM-compliance electronic system, this market maker encountered numerous problems:
- the firm failed to retain 46 million transaction records;
- the firm didn’t notify FINRA in advance that it was retaining a new vendor;
- the firm didn’t implement an audit system to monitor the inputting of records to the new system;
- the firm didn’t obtain a required attestation from the vendor; and,
- violations continued to crop up 4 years after the transition. [See FINRA AWC #2016051831201.]
While it may be obvious to say, enormous planning and ongoing project management are necessary for any significant infrastructure make-overs or upgrades. And, when unplanned problems occur - like transaction records not uploading or being retained – firms must have the wherewithal to promptly detect them and act on them. A Plan B and even a Plan C must be in place.
Why so important? Beyond effective infrastructure logistics, when FINRA metes out disciplinary sanctions in response to any resulting violations, it will view in a more favorable light a firm that acted in good faith, sought guidance about its obligations, yet subsequently violated the rules. [See ‘FINRA’s Susan Schroeder on Enforcement Actions’.] Such intentions were not apparent with Virtu, where numerous violations and deficiencies continued to crop up for 4 years after the firm transitioned to its new storage system.
INTENTIONS. PLANNING. IMPLEMENTATION. RESPONSIVENESS.