Bisys enhances regulatory consulting services for institutional managers

BISYS Regulatory Services delivers comprehensive programs and proven best practices that support current and anticipated compliance requirements for mutual funds, hedge funds, investment advisers, and broker-dealers. BISYS' staff of experienced compliance professionals and consultants, which includes former regulators, are fully informed about existing, proposed, and anticipated regulatory requirements, and the best practice recommendations provided by the regulatory and private sectors. These compliance experts are available to perform complete regulatory risk analyses, to support the development and implementation of comprehensive compliance and risk management programs, and to audit the effectiveness of financial services firms' regulatory-related initiatives. In order to develop and deliver practical, contemporary compliance solutions, BISYS continually monitors legislative, regulatory, and industry developments.

Recent events have demonstrated that regulators expect financial services firms to assess and address their regulatory and operational risks, and to demonstrate the effectiveness of their compliance-related programs and oversight. These evolving regulatory requirements are significantly changing the investment industry's approach to compliance, particularly when combined with existing and proposed officer certification requirements and the recent failures to detect certain infractions and address conflicts of interest. BISYS offers these independent and objective services to help mutual fund and investment management companies establish a culture of compliance within the context of these recent developments.

According to Lisa Hurley, executive vice president and general counsel of BISYS Regulatory Services, "Investment managers and broker-dealers engaged in advising or selling investment products are grappling with the regulatory issues and facing a new regulatory framework. Many firms do not have the compliance infrastructure to efficiently and effectively respond to the dynamic regulatory environment. BISYS Regulatory Services provides the expertise, resources, and programs to augment its clients' regulatory infrastructures and to guide firms in establishing an enterprise-wide culture of compliance. We work diligently in partnership with our clients to develop and maintain flexible, cost-effective compliance solutions for the long-term; and to ensure that they avoid potential compliance pitfalls by providing a broad range of solutions and regular guidance. We have made significant investmets in our legal, regulatory, and compliance resources based on the industry's growing demands for assistance and for outsourced compliance solutions. BISYS is consistently at the forefront of providing solutions that impact providers of financial services. We offer programs that meet the compliance standards and best practices embodied in the SEC's new risk-based approach to examinations and the proposed compliance program grading. We encourage each of our clients to address evolving regulations in a timely fashion and to proactively implement best practice recommendations, and we can provide the expertise and resources to help them with every aspect of this complex and dynamic process."

Regulatory areas currently generating industry-wide concern include:

- Trade Processing
Recent events have focused regulatory and industry attention on trade processing and related practices, including late order-taking arrangements, market timing policies and fair valuation enforcement, and portfolio information sharing practices. Most broker-dealers and fund organizations have reviewed and assessed relevant practices, procedures, controls and their contractual arrangements that have historically received little attention. BISYS is qualified to help these organizations assess their risks in these areas and implement and strengthen procedures based on legal requirements, contractual commitments, and best practices. BISYS also helps its clients establish the oversight mechanisms necessary to ensure ongoing compliance by the organizations they conduct business with, including service providers and outside dealer networks.

- Sarbanes-Oxley Requirements for Investment Companies
BISYS' model disclosure controls and procedures (DCPs) ensure that initiatives related to Sarbanes-Oxley compliance are adequate and efficient. BISYS' comprehensive audits assess the adequacy and effectiveness of DCPs against its model and each firm’s unique organizational structure. BISYS' periodic reviews support fund accountants, administrators, and certifying officers with the capabilities to verify the effectiveness of their controls over financial reporting. BISYS consultants provide related onsite compliance training and ensure that the requirements work efficiently with the firms' legal and compliance organization.

- NASD Rule 3010 Proposed Amendments
BISYS helps its clients ensure that their supervisory policies, controls, and procedures related to compliance with NASD Rule 3010 are adequately structured and enforced. The certification requirements of rule 3010 have been proposed to enhance investor protection by increasing senior management commitment to and accountability for compliance and the required internal controls. The proposed rule also is intended to generate increased interaction and information flows between operations and compliance officers.

- Anti-Money Laundering & USA PATRIOT Act
BISYS provides the expert guidance and staff resources necessary to develop compliance programs for the USA PATRIOT Act, and to perform regular program oversight through periodic, independent audits. BISYS' services, in conjunction with its clients' comprehensive, internal administrative structures, support Customer Identification Program (CIP) requirements, the monitoring and reporting of suspicious activity, reviews against U.S. government and other primary lists of known terrorists and money launderers, and recordkeeping requirements. For investment advisors and hedge fund managers planning to implement anti-money laundering programs in advance of expected rules, BISYS has designed best practice policies that meet the standards of the USA PATRIOT Act as well as those mandated within the other jurisdictions in which firms operate. BISYS' hedge fund anti-money laundering support includes the development and/or augmentation of identity verification procedures and enhanced due diligence to more effectively monitor suspicious activities and screen for high-risk investors listed on government watch lists. BISYS also has designed an annual review program and provides the services of an AML compliance officer.

- Breakpoints
BISYS provides procedural consulting and guidance for the appropriate application of breakpoint discounts to investors based on linked accounts, including the preparation or prospectus disclosure and the communication and coordination with broker-dealers to ensure that investor privileges are honored. BISYS also can assist with enhanced representative training and education and the implementation of applicable aspects of the Joint Task Force list of recommendations. BISYS' professionals also are available to analyze dealer arrangements, conduct due diligence of dealer networks and conduct reviews of mutual fund sales practices.

- Conflicts of Interest
Many of the recent regulatory issues resulted from the failure to control and detect conflicts of interest within an organization, and the fundamental structure of many financial services firms makes them especially vulnerable to these events. BISYS' consultants are available to provide comprehensive compliance oversight solutions, including assessments of the current investment management compliance and control arrangements, to implement supervisory and internal control systems, and to address the best practices and regulations established by the SEC.

Bill Tomko, group president of BISYS Investment Services, said, "Considering the liabilities and repercussions associated with compliance failures and the significant efforts required to implement and maintain adequate compliance solutions, it is important to seek a partner with the comprehensive knowledge necessary to assist and support ongoing regulatory requirements. BISYS has developed a unique approach to help our clients deal with the ever-changing compliance and regulatory landscape, and to assist them in meeting their related obligations. We believe our package of regulatory services is timely, a significant point of competitive differentiation, and extremely beneficial in today’s regulatory environment."