For several years, the financial press has accounted news items of considerable and repetitive interest concerning securities fraud, ethical lapses, money laundering, conflicts of interest, and insider trading.  More often than not, these cases result in loss of business, reputation, revenue, and importantly, trust.  Further, as regulatory authorities globally turn their attention to higher expectations in the control environment, the compliance function is quickly becoming an important driver in risk management strategies. From MiFID to Dodd Frank, financial services firms globally are strengthening their Compliance functions with stronger training, supervisory, advisory, reporting and surveillance, and control room resources to meet the intense regulatory scrutiny now expected.

Participants will obtain a deep understanding of and appreciation for the necessity of a strong and well equipped compliance function within any financial services institution. Through lecture, class exercises, interactive participation, simulation, and case studies, participants will review the need for financial services regulation, the markets/participants/institutions/instruments over which regulation proceeds, the use of the compliance function as a risk mitigator, the various methods and approaches to compliance with regulatory requirements, establishment of a well-functioning compliance department, and the skills required to succeed as a compliance officer.

Through intense analysis of specific cases concerning insider trading, compliance and ethical lapses, money laundering, rule violations (both inadvertent and purposeful), delegates will obtain keen insights to reduce the risk of regulatory and compliance problems and to foster a culture of compliance within their own firms. 

Attend this topical 3-day course and learn:

• How to successfully structure and manage an effective compliance function
• The immediate impact of an ineffective compliance program
• The comprehensive loss of revenue, trust, and reputation resulting from a weak compliance environment
• How regulatory changes can quickly impact your organization and bottom line
• How to prepare for intense regulatory scrutiny and examinations
• From multiple case studies that globally illustrate cultures of compliance and strong compliance departments

This course has been specifically designed for the benefit of:

• New Compliance Officers
• Risk Managers
• Control Function Managers
• Legal Department Managers
• Management Consultants
• Equities Sales and Trading Desk Operations Managers
• Fixed Income Sales and Trading Desk Operations Managers
• Investment Banking Administrative Officers
• Treasurers
• Financial decision makers in corporations
• Strategists
  

 

DAY 1

Registration commences at 8:30 AM
Programme runs from 9:00 - 5:00 daily

Setting the Stage:  The Need for Compliance

News Reviews:  Compliance and Regulatory Cases

• Ethical lapses in the financial services industry (Ignorance, Accidents, or Purposeful?)
• Insider trading schemes
• Money laundering webs
• Supervisory lapses
• Reputational risk cases
• Failures in fiduciary responsibilities
• Cross border bookings
• Problem of cost cutting and compliance
• Regulatory scrutiny over outsourcing and smart sourcing

Regulatory, Business and Market Expectations: the Bar is High

Regulatory

• Intense regulatory scrutiny
• More comprehensive examinations
• Defined, verifiable and effective training programmes
• New legislation (MiFid, Dodd Frank)
• Attention to metrics
• Structural corporate entity changes
• Placing the customer first
• Policies, procedures, supervision, and governance

Market and Business

• Loss of business
• Loss of reputation
• Loss of market share
• Loss of trust
• Loss in profit

Approaches to Financial Services Regulation

• Define regulation
• Define compliance
• Historical, social, economic, political foundations for regulating  financial services

Case Study: Tear Down and Build up Exercise
Delegates will dissect two case studies of Allied Irish Bank and Credit Suisse’s Delta One Desk to determine the essential elements of an effective compliance department 

Creating the Rubric: Structure and Functions of an Effective Compliance Department
Delegates will reference this Compliance Rubric throughout the course.  Daily, delegates will have the opportunity to apply the Rubric to each course topic, emphasizing the integrative nature of compliance into the business line.

Introduction to the Rubric: Structure and Functions of an Effective Compliance Department

• Advisors and advisory services:  providing regulatory advice
• Surveillance, reporting, and defined metrics
• Conflicts clearing: personal account dealing, political contributions, registrations and designations, outside business affiliations, gifts and entertainment
• Examinations and desk reviews
• Branch audits
• Supervision: setting the tone at the top
• Policy and procedures: development, distribution, enforcement
• Regulatory relations
• Training
• Position monitoring
• Control room: Chinese wall, chaperoning, watch list, restricted list
• Communications with the public and electronic communications review
• Affiliate transactions
• Anti-money laundering and embargoes
• Regulatory inquiries, complaints
• Relationship of compliance to regulators, audit, corporate governance, legal, risk management and controlling
• Testing, control and follow up
  
  

DAY 2

Continuation of the Rubric:  Structure and Functions of an Effective Compliance Department

Matching the Rubric to Firm Culture

• Firm mission statement
• Risk area mission statement
• Compliance mission statement
• Code of conduct
• Policies and procedures

The Makings of an Effective Compliance Department

• Centralized vs decentralized structure
• Risks inherent in each type of structure
• What content knowledge should a compliance officer have?
• What are the competencies of a successful compliance officer?
• Integration of the various areas of compliance?
• Collaboration with other control areas of the firm
• Objective nature of the compliance department
• Compliance department: reducing regulatory risk or business stoppage department?
• A penny saved is a penny earned? The impact of regulatory fines

Understanding the Business to Understand How to Comply

• Markets, instruments, participants, and institutions
• Primary vs secondary markets
• Sales vs trading vs corporate finance vs asset management vs banking vs operations vs private wealth vs research vs prime brokerage
• Market behaviour
• Technical vs fundamental analysis

Risk Management and Compliance: a Partnership throughout the Firm
For each risk, the instructor will:

• Define each risk
• Expand by example or case study
• Illustrate Impact of each risk to a financial services firm
• Provide insight into mitigating risk methodology strategies
• Show the connection between risks throughout the firm and the application to compliance

Sample Risks Faced by Financial Services Firms:  Business, environmental, compliance, regulatory, reputational, credit, market, investment, interest rate, maturity, counterparty, denominational, political, economic, social and financial risk

Addressing Risk through Compliance Management

• Identify risk
• Determine impact
• Coordinate stakeholder needs
• Plan, control and manage
• Mitigate or eliminate
• Policies and procedures
• Training
• Supervision
• Metrics
• Testing
• Regulatory relations
• Implementation

Case Studies: Sample Cases of Insider Trading – Galleon Group
Case studies distributed to groups of 4-5 participants

DAY 3

Regulatory Framework - US and UK Financial Regulatory Regimes as Examples

UK framework: Parliamentary Law vs Common Law/Case Law

• European Union Directives
• EU Financial Services Action Plan
• Lamfalussy process
• FSA and relationship to treasury
• Extraterritorial issues

US framework: Congress and laws

• Regulatory bodies: Fed, SEC, FINRA, CFTC, State Commissions
• 33 ACT, 34 ACT and 40 ACT
• Self Regulatory Framework: FINRA

Supplemental regulatory framework

• Corporate governance and oversight
• Internal supervision
• Internal risk functions (e.g. compliance, audit, ethics, controlling and legal)

Capital Adequacy and Risk Limits

• Trigger points for risk and overloading on risk
• Basel III
• Value-At-Risk models
• Monte Carlo Simulation models

Current Events/is it Working?

Review of Dodd Frank Act (USA); EU Directives; MiFID/Market Conduct

Global Round Robin on regulatory news

Brazil:  Banco Central Do Brasil, Comissao de Valores Mobiliarios, Superintendencia de Seguros Privados

China:  Chinese Securities Regulatory Commission, Chinese Banking Regulatory Commission

Russia:  Federal Financial Markets Service

India:  Reserve Bank of India, Securities and Exchange Board of India

Course summary and close

• Mario J. DiFiore

  Assistant Dean, Senior Advisor and Adjunct Professor, Gabelli School of Business, Fordham University, New York
  (Former Co-Global Head and Director of Compliance Training, Deutsche Bank AG, Commercial and Investment Bank)
  
  Dean DiFiore joined Fordham’s GSB Administration, July 2010 after a 25 year career on Wall Street and the Federal Reserve Bank of New York.  Prior to joining Fordham, he was Director and Co-Global Head of Deutsche Bank AG’s Compliance Training Group for the Commercial and Investment Bank (CIB), as well as the Head of Americas Compliance Training. He was responsible for one of the largest financial regulation and Compliance training programs on Wall Street. 
  
  In addition to his career at Deutsche Bank AG, Dean DiFiore was an Assistant Director at Ten Squared LLP, a medium-sized hedge fund, as well as the Continuing Education Manager for Prudential Securities.  Dean DiFiore began his career with the Federal Reserve Bank of New York where he spent over 12 years in the Research and Statistics, International Affairs, and Public Information areas. 
  
  In addition to his current university post teaching at Fordham, Dean DiFiore has taught Finance, Economics, and Business courses at New York University, Baruch College of the City University of New York, Pace University, SUNY Empire State College, and the Mountbatten Institute (St. Mary’s College of the University of Surrey, UK).  He is a former member of the Securities Industry and Financial Markets Association (Continuing Education Committee) and serves as a consultant to Deutsche Bank AG. Dean DiFiore received his MBA and BA (summa cum laude) from Fordham University. 

  
   

Compliance Risk Management

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