Managing the many conflicts of interest that exist within the average private capital markets firm is becoming increasingly challenging. As company and market complexity has grown, some of the controls and compliance around managing conflicts that arise from this complexity haven’t kept pace.
In a recent webinar, “Conflicts of Interest: Overlooked Risks and Opportunities for Financial Services Firms,” former JPMorgan Chase executive, Nigel Riley (currently General Manager of Risk and Compliance Solutions at Intapp), and Max Haskin, Head of Client Solutions at DealCloud, explored the latest compliance trends in financial services. They also provided an in-depth look at the ways technology can accelerate a firm’s conflicts clearance processes and reduce the administrative burdens placed on front office professionals.
“Managing conflicts effectively has a direct impact on the entire business, and doing it well opens up a competitive advantage.”
Handling Conflicts Process Challenges
One of the many common challenges that firms face is disparate data and system silos. Professionals struggle with searching for data in spreadsheets, and manually checking multiple systems. Errors from manual processes can cause staff to miss potential conflicts or identify them late in the process. Firms also face the risk of information loss, data manipulation, and unauthorized access. Any of these failures can lead to reputational damage and even regulatory actions for your firm.
Another challenge facing private capital markets firms is operational inefficiencies and inconsistencies. These inefficiencies often appear in the conflicts clearance process — especially when there are dependencies on key people who have specific knowledge — and repetitive tasks, which lead to issues retaining staff and manual errors.
Additionally, regulatory and reputational complexity can be a concern; this issue includes time spent saving all confidential files and emails for decisions that were made, as well as responding efficiently to requests from regulators and marketplace changes. Federal securities laws require that investment banking firms regularly disclose certain facts and relationships that could be (or could be perceived as) potential conflicts of interest. Without software to accelerate and manage that process, the firm puts its own reputation at risk.
Creating Scalable Clearance Approvals
Purpose-built conflicts management solutions, like DealCloud, combine your firm’s data with powerful search and workflow tools that help you effectively manage your conflicts review, management, and clearance processes. Because this process grows exponentially as a firm executes more deals, the software solutions that firms leverage to support conflicts clearance need to be scalable and repeatable.
Once staff identify and manage conflicts, they can easily send approvals or conditions back to deal professionals. This process is ongoing as deals evolve, possibly requiring the team to complete further checks. DealCloud’s powerful search technology, for example, looks across multiple data sources; its customized workflow engine helps the team manage the conflicts process and approvals effectively.
To learn how our conflicts management solution works, watch the “Conflicts of Interest: Overlooked Risks and Opportunities for Financial Services Firms” on-demand webinar.