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How to effectively implement operational separation in an integrated financial services enterprise
Journal of Financial Compliance,
2
(4),
371-379
(2019)
Abstract
The US federal securities laws require broker-dealers and investment advisers to protect the flow of material, non-public information (MNPI) to prevent violations of the securities laws. Barriers are an integral part of the compliance programme at large diversified financial organisations. In addition to addressing issues of insider trading or front-running, each a form of fraud prohibited by the anti-fraud provisions of the US federal securities laws, information barriers also perform operational functions to separate affiliates and business units as a demonstration of independent uncoordinated investment control or power. Separation demonstrates that each affiliate or business unit operates independently to permit disaggregating investment holdings or transactions that might otherwise be prohibited. This paper addresses certain of the operational benefits of information barriers outside of their customary uses for the protection of material, MNPI.
Keywords: information barriers; material; non-public information; Securities and Exchange Commission (SEC) regulation
The full article is available to subscribers to the journal.
Author's Biography
C Dirk Peterson is a partner in the Washington, DC office of K&L; Gates. Mr Peterson is a member of the Financial Services Practice Group. He represents investment banks, securities firms, dealers, market makers, institutional asset managers, private equity firms and real estate equity firms. In respect of information barriers, Mr Peterson has advised investment banks, asset manager affiliates of large insurance companies and private equity firms on structuring information barrier policies for the management of the flow of material, non-public and other sensitive information. Mr Peterson has assessed barrier policies and issued reports and opinions on their effectiveness for a variety of financial services organisations. Prior to joining K&L; Gates, Mr Peterson was part of the Banking & Securities Practice at MayerBrown, and before that Senior Counsel at the US Securities and Exchange Commission, Division of Trading and Markets, Washington, DC.
