Chief among concerns faced by regulated firms is improper securities trading. The number and types of firms required to monitor employee securities trading is growing rapidly. Employees may be prohibited from trading a specific security for a variety of reasons, such as the firm possessing material non-public information. 

To address this, Schwab has introduced proactive trade blocking, which prevents employees from accidentally executing a prohibited trade, notifying them that the prohibited trade was blocked according to their company’s rules. In other systems, even if a prohibited trade is detected, it is after the fact, which creates a poor experience for the employee as well as the employer, often requiring the trade to be canceled and unwound.

The advantages of proactive trade blocking are a more streamlined approach, saving time and minimizing hassles, according to Scott Rister, vice president of compliance solutions at Schwab. “These trading errors are typically honest mistakes made by honest people,” he said. Schwab’s solution helps them avoid making the mistakes in the first place.

Compliance Solutions offers additional tools and technology resources to simplify and streamline compliance processes, including:

• Proactive enforcement of company trading policies;  
• Distribution and tracking of employee affirmations and disclosures; 
• Logging and reporting of gifts and entertainment;
• A cloud-based software application;   
• A scalable, flexible platform;
• Easier maintenance of compliance policies and procedures;
• Dedicated service and support teams;  
• Bundled pricing for cost savings;   
• Employee access to brokerage services from Charles Schwab & Co. Inc.; and
• Employee access to banking services from Charles Schwab Bank.

(Cont’d…)

“Consumers value open and transparent business practices, and positive perception in this area may benefit a company’s bottom line,” said Trish Cox, senior vice president for corporate brokerage services at Schwab. “A compliance program can be an opportunity to position a company favorably in the marketplace, build trust with clients, and enhance value and market share for a firm.”

 Schwab is seeing growing concern among its own client base of employers regarding compliance issues, according to Rister. He noted that the firm’s clients face an increasingly complex regulatory environment that often outpaces their ability to manage compliance processes. “The business risk for our clients is real,” Rister said.

“Thinking bigger about compliance can benefit businesses beyond just fulfilling regulatory requirements,” Cox noted. “Building on a foundation that includes both advanced technology solutions and ethical best practices can help protect a firm’s biggest assets: its people and its reputation.”

Compliance Solutions represents the fulfillment of an initiative started in November 2011 when The Charles Schwab Corporation acquired Compliance11 Inc. and paired it with Schwab Designated Brokerage Services (DBS). Compliance11 provides regulatory compliance software and DBS provides trade monitoring services. Since the acquisition, the firm has focused on creating a suite of tools and resources for clients.