When it comes to risk, most of us would rather be fire marshals than firefighters; that is, battling a raging inferno is far less preferable to taking smart, precautionary measures that would have prevented that inferno in the first place.
Modern tools like Ascent are all about marshaling – providing Risk and Compliance with targeted regulatory intelligence so that they never miss an important regulatory update. Shoring up your compliance program with great technology significantly reduces your need for costly outside counsel.
However.
If you’re in a situation where the house is already aflame (or you suspect it might be soon), then a consultant or attorney could prove necessary.
Risky Exams Require Rehearsals
If you were an actor or musician, you wouldn’t dare to go on stage without a rehearsal. In the same vein, you shouldn’t face a regulatory exam without a dry-run if you have any doubts whatsoever about how it might go.
You can conduct a competent practice exam yourself by studying the annual release from your regulator detailing its exam priorities, and then going through the exercise of a “self-audit.” However, just gearing up for that exercise can consume a lot of time and resources, and limits the number of eyes digging into your program.
Of the consultants who specialize in conducting mock exams, many are former regulators and are therefore experts at identifying gaps in your program with a regulator’s eye.
It may seem like extra work and added expense on the front-end, but it could save 5, 6 or even 7-digit fines, making you the hero when you have clean exam results.
Legal High-Wire Acts
When the DOJ, FBI, or a specialized investigation arm of a regulator like the SEC signals it wants to investigate your business, it’s time to call an experienced attorney with deep experience in dealing with regulatory and/or criminal enforcement actions.
An attorney can protect your business by being your front-line interface with the government, conducting a confidential internal review of your business to identify and address areas of concern.
Be aware of the distinction between hiring an attorney to represent your firm’s interests and hiring an attorney to represent someone individually. For example, if one of your employees is the target of an investigation where he/she knowingly violated firm policy for financial gain, you may need to advise that particular employee to retain separate counsel if your firm is not willing to tie its fate to that individual’s actions.
Your attorney can help guide you in making these decisions so you don’t get looped in with your employees’ intentional wrongdoings.
Anticipatory Damage Control
Let’s say you know your firm has had a compliance lapse since its last regulatory exam. Say, too, you’re aware the regulator has investigated or levied significant fines against peer firms for similar violations, and you have a hunch you’re next in line.
If you see a large fine barreling down the tracks toward your firm, then retaining a consultant or attorney ahead of time may help to soften the blow. Depending on the circumstances, you may be able to do damage control by taking remedial measures ahead of time by self-reporting the violation and engaging in open conversations with regulators to actively work with them on your firm’s and/or industry practices that caused said violation(s).
A consultant or attorney can help you choose and execute the appropriate strategy. The important thing is to not try and brush a known violation under the rug, in the hopes that examiners will miss it. As they say, the cover-up is always worse than the crime.
Shore up with Ascent
The three scenarios above are ones in which you might seek help dealing with what you anticipate could be serious issues at your firm. But what if you could summon help far earlier, before problems arise, so that you never again have to worry about the outcome of a regulatory exam in the first place?
Ascent eases the burden of keeping up with regulatory change by generating obligations and rule changes that matter to your firm. Ascent also automatically generates a detailed audit trail of every activity in the platform so that you can confidently prove compliance and transparency to examiners.
As the industry leader in developing AI-driven compliance automation software, Ascent makes uncertainty about regulatory applicability and obligations a thing of the past.
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Ascent helps financial services firms identify their regulatory obligations and keep them updated as rules change. Our targeted regulatory intelligence helps you avoid fines and reduce while, while lowering your overall cost to comply. Learn more.
