Securities and Other Financial Products

Promontory served as the independent compliance consultant for one of the world’s largest financial institutions in its settlement of SEC enforcement actions alleging late trading and market timing through mutual fund complexes. We conducted a comprehensive review of the fund complexes’ supervisory, compliance, and other policies and procedures designed to prevent and detect (1) conflicts of interest, (2) breaches of fiduciary duty, (3) breaches of codes of ethics, and (4) violations of the federal securities laws. As required by the SEC settlement, Promontory submitted reports to the client and the SEC that outlined our findings and detailed recommendations to strengthen the company’s supervisory, compliance, and other policies and procedures. As required by the settlement agreement, Promontory also reviewed the effectiveness of the implementation of our recommendations. 

In connection with an SEC investigation and a related bank inspection of a large multistate diversified financial holding company, Promontory conducted a comprehensive review of the company’s enterprise-wide control and risk management policies and procedures. The SEC’s investigation focused on whether the company prepared its financial statements using accounting principles that were not in conformity with GAAP. As a condition of settling various regulatory inquiries, Promontory’s team reviewed and analyzed the company’s (1) governance and management structure; (2) internal audit and control functions; (3) regulatory reporting; and (4) risk-management structure, including compliance and financial reporting and accounting systems. Promontory prepared four reports - submitted to the client and the government - outlining findings and detailing recommendations to strengthen the company’s controls. 

In connection with a deferred prosecution agreement, Promontory reviewed the effectiveness of the compliance, ethics, and internal audit functions of a large global financial institution providing insurance, broker-dealer and asset management products to institutional and consumer clients. We later reviewed the company’s implementation of our recommendations and provided a report to the company’s Audit Committee on the effectiveness of the compliance department compared to the compliance departments of peer financial institutions, using the U.S. sentencing guidelines as the benchmark. 

Promontory was separately engaged by two major banking organizations to conduct a gap analysis comparing the organizations’ policies and procedures, monitoring, testing, training, and other controls against the proposed and final rules issued by the CFTC, the SEC and the Prudential Regulators under, and the self-executing provisions of, Title VII (Derivatives) of the Dodd-Frank Act. Promontory also identified deficiencies or required remediation resulting from this gap analysis.  As part of this process, we assessed the adequacy of each firm’s human and technological resources and their sufficiency for compliance with Title VII.  Promontory’s report outlined findings and recommendations related to the organization, structure, staffing and responsibilities of the firm’s compliance function and derivatives business model, and assisted the firms in implementing these recommendations.