McGuireWoods Atlanta partner
Cheryl Haas and associate
Natasha Cooper commented in a Feb. 5 Ignites article about the Securities &
Exchange Commission’s increased scrutiny of technology systems to safeguard
against the misappropriation of retail investors’ assets.
The article references a McGuireWoods
detailing recent enforcement actions by regulators to penalize
broker-dealers for negligence or misconduct due to faulty systems.
Sources quoted in the article said regulators have “unrealistic standards”
for compliance departments, but Haas noted that regulators are reasonable
if a company demonstrates “great lengths to prevent misconduct.”
Haas, who serves as chair of McGuireWoods’ Financial Services Litigation
Department, underscored the importance of developing controls while
“implementing any new rule or any new system.”
Cooper, who focuses her litigation and regulatory practice on representing
financial institutions, broker-dealers and investment advisers, added that
firms should also test their systems so businesses can “see whether mock
transactions that would indicate fraud are picked up by the firm’s
The article, “Regulators' Expectations of 'Flawless' Tech Systems Prompt Pushback,” is available online to subscribers.