As enterprise communications technologies have evolved, the related challenge of managing business rules for groups permitted to use them and communicate with one another have become more complex. In financial services, business information barriers prohibit communications between specific groups to mitigate the risk of misuse of material non-public information (“MNPI”) to prevent market abuse and insider dealing. Information barriers requirements are spelled out in FINRA Rules 2241 and 2242, Section 204A of the Investment Advisers Act, in FCA’s SYSC 10.2 Rule as well as the SEC’s Exchange Act Section 15(g), which requires broker-dealers to:
establish, maintain, and enforce written policies and procedures reasonably designed . . . to prevent the misuse . . . of material, nonpublic information.
As a result, compliance frameworks for monitoring information barriers between groups like investment banking and research teams are essential. Over the last few years, the SEC and other regulators have levied several fines for instances where failed compliance controls resulted in the misuse of MNPI within an organization. New ways of working and communicating have also highlighted the need for effective controls. As the FCA noted “Working from home – which many insiders will still be doing even as some trading floor staff have returned to the office, also changes the controls landscape.”
The ascendance of collaboration tools like Zoom, Slack, and Microsoft Teams has prompted a reassessment of information barriers compliance and related technical controls for consolidating and simplifying employee oversight. Reinforced by regulators' expectations of robust standards regardless of how firms work and communicate or in the words of the FCA “Our expectation is that going forward, office and working from home arrangements should be equivalent”.
As part of our August product release, Theta Lake introduced advanced capabilities for monitoring communications between groups subject to information barriers requirements. It provides a first of its kind solution designed to provide a macro-view across all modern collaboration tools.
First, firms can assign users to specific organizational groups using our Spaces feature. Users and groups can be created by automatically syncing with enterprise directories using LDAP, uploading existing details via a spreadsheet, or manual configuration within the platform. Once groups have been established, our information barriers detection will identify any interactions between restricted individuals, elevate the risk score of a conversation between restricted participants, and visually indicate the violation in our AI-assisted review screen. Moreover, group assignments in Spaces can be applied across every supervised platform—Theta Lake flags information barriers violations across Zoom, Microsoft Teams, Slack, Cisco Webex, RingCentral, Cloud9, and any other communication tools used by your firm.
Theta Lake’s streamlined approach to information barriers compliance makes it easy to maintain consistent settings across platforms and facilitate the expansion of collaboration platform deployments to meet the demands of a work from anywhere world.
To learn more about Theta Lake’s information barrier capabilities, contact us for a demo.