Securities Regulatory Reviews and Assessments

The Securities Practice Group specializes in evaluating, designing, and assisting in the implementation of regulatory, surveillance, and compliance policies, procedures, and systems and making recommendations for clients to achieve best-practice standards. 

Representative Assignments

• Promontory reviewed the compliance systems and written compliance policies and procedures of an investment adviser to multiple hedge funds.  We also assessed the operational effectiveness of key compliance policies, procedures, and systems, and then made recommendations on how to improve and enhance them to fulfill regulatory requirements and meet industry best practices.  Throughout the review, our professionals provided real-time advice to the client on compliance and regulatory issues.  In addition, Promontory provided guidance to the client and its attorneys on effectively working with the SEC staff during ongoing investigations and examinations.

• Promontory served as the independent compliance consultant for one of the world’s largest financial institutions as part of 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 SEC that outlined our findings and detailed our recommendations to strengthen the company’s supervisory, compliance, and other policies and procedures.

• In connection with an inquiry by a federal regulator into a broker-dealer’s alleged manipulative activity in the U.S. Treasury markets, Promontory assisted in an independent review of the broker-dealer’s relevant supervisory, compliance, and other policies and procedures.  Our review included assessing relevant management and compliance reports, monitoring systems, and other controls.  Promontory also made recommendations on how to enhance the relevant controls and policies and procedures to achieve industry best practices.

• For a national securities exchange with an affiliated designated contract market, Promontory assisted in drafting and updating trading rules and related member materials to govern trading on a new futures trading system.  Promontory assisted and advised the client throughout the rule development and approval process with the CFTC.

• Promontory advised a national securities exchange on the effectiveness and comprehensiveness of its regulatory program.  Among other things, Promontory reviewed the surveillances and examination approaches and methodologies of the regulatory program in light of current regulatory requirements and expectations and industry best practices.  We drafted materials describing the regulatory program for submission to the SEC.

• A Promontory professional provided regulatory, compliance, and technology advice to a national securities exchange for its equity and derivatives trading, after conducting a comprehensive review of the relevant regulatory programs, processes, and market surveillance.

• A Promontory professional assisted a national securities exchange in analyzing the implications of proposed Regulation NMS, drafting the exchange’s comment letter, and preparing the written testimony of exchange officers for hearings before the SEC and the U.S. Senate Committee on Banking, Housing, and Urban Affairs.  

• Promontory was retained by a consortium of potential investors to conduct regulatory and compliance due diligence of an acquisition target in the commodities and futures industry. Promontory reviewed the target entity's regulatory, compliance, supervisory, and regulatory reporting systems. Additionally, Promontory assessed the target entity's policies and procedures and analyzed areas of potential regulatory risk. Based on the foregoing, Promontory reported its due diligence findings to the investor consortium. Our team worked collaboratively with the various participants in the potential deal including other consultants, lawyers, and investment bankers.

• For a national securities exchange, Promontory drafted policies and procedures for compliance with Regulation NMS Rule 610(d), related to the locking and crossing of protected quotations, and Regulation NMS Rule 611, which prohibits market centers from trading through better prices at away markets except when relying on a specified exception to the rule.

• Promontory was retained by a financial services company to analyze the securities compliance and regulatory implications of various restructuring alternatives. Promontory also provided the client with an assessment of the approximate expected costs of designing and implementing a securities compliance program consistent with regulatory requirements and securities regulators' expectations. Finally, Promontory developed a process for the client to ensure that all employees conducting securities-related activities were properly licensed and supervised.

• A large financial services company engaged Promontory to conduct a review of the firm's policies, procedures, and practices related to the use and protection of personal and/or financial information of customers. Promontory assessed the effectiveness of the design and implementation of these policies, procedures, and related practices to determine whether, among other things, they were consistent with state and federal law, including the Gramm-Leach-Bliley Act and the Commission's Regulation S-P. Promontory prepared a report for the client as well as the client's regulator outlining Promontory's findings and detailing recommendations to strengthen the company's policies and procedures.

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For more information regarding the Promontory Securities Practice Group, please contact Kathleen Hamm, Managing Director, at (202) 384-1022 or khamm@promontory.com