The enforcement division of the SEC recently reported record results for their latest fiscal year with more than 700 enforcement actions and more than $6 billion in penalties and disgorgement. Likely, 2023 will be another year of record enforcement. And as much as financial firms don’t anticipate running afoul of the SEC or other regulators or auditors, planning for disruptive events is important for all types of financial services operations, where an occasional mistake or event has a widespread financial impact on investors.
Remediation poses particular challenges and complexities for a firm. Firms likely lack the specialized expertise required for remediation, such as the legal and tax ramifications. Self-executed remediation also increases a firm’s likelihood of risk and customer dissatisfaction, since the firm needs to shift focus away from its customers and core business in order to manage and execute the remediation.
Additionally, self-administered remediation faces tougher scrutiny from regulators. Using outside experts adds a level of enhanced credibility and will create a smoother process overall. Bringing in expert external resources also ensures that the right questions are asked and answered, the methodology is compliant, customers receive timely and accurate communications, and deadlines are met.
Having a partnership already in place allows your firm to respond at a moment’s notice. By responding quickly to remediation, and by communicating swiftly and accurately with clients, a firm can make sure a remediation is simply a blip instead of a reputation-damaging event. Protecting client relationships while maintaining compliance and transparency ultimately improves retention.
The best remediation response is one that’s planned ahead of time with a partner who has:
By having a remediation plan and partner already in place, the execution phase can go smoothly and begin immediately—when it’s required.
To learn more about what asset managers should do to plan for remediation and what to look for in a partner, download our "Prepare for the Unexpected: A Guide to Remediation and Investor Distributions" whitepaper.