Managing Syndicated Loans: Avoiding the Headlines (In a Good Way)
More than ever before, personnel at financial services firms are increasingly at risk of exposure to material non-public information (MNPI).
14 December 2015
Most of us are aware of the high-profile insider trading investigations, where the likes of Martha Stewart, the “Junk Bond King,” and SAC Capital suffered significant sanctions. But what’s sometimes forgotten is that it’s incumbent upon organizations to have controls in place to protect private information and reduce the risk of insider trading.
This is especially important for the financial services industry where an increasing number of institutions are dealing in both public and private securities. More than ever before, personnel at these firms are at risk of exposure to material non-public information (MNPI).
According to a report published by PwC’s Financial Services Institute, insider trading is top priority among SEC examiners. (Even the US government can’t escape their probes.) PwC is seeing a number of leading financial institutions that are re-evaluating their existing protocols and making changes to try to minimize the risks of trading while in possession of MNPI. These changes include:
- Conducting current assessments of the possible sources of MNPI across the firm
- Reviewing and enhancing firewalls
- Implementing new controls over the use of experts and any trades in names where an expert was used
- Identifying high-risk areas based on the firm's activities and personnel, and conducting special reviews of controls and trading
- Implementing new control and surveillance tools
- Conducting new and tailored employee education
How Intralinks can help
According to PwC, MNPI can come from a variety of sources — former colleagues at prior jobs, strategic partners, and high-net-worth investors with connections to public issuers. Employees with access to Intralinks Virtual Data Rooms (VDRs) are also at risk of being exposed to MNPI. As such, we have solutions in place to help compliance officers ensure that their institutions comply with insider trading policies when working with Intralinks VDRs.
Access Monitoring Service for VDR surveillance and reporting
- Pain point: A hedge fund with access to multiple Intralinks VDRs had no way of knowing what information their employees were exposed to. The compliance officer sought to create reporting and surveillance protocols to monitor VDR activity and the flow of information.
- How we help: For the client, Intralinks implemented its Access Monitoring Service (AMS) to provide the firm with visibility into users’ exposure to Intralinks VDRs and the information stored on them. At the end of each business day, a report was automatically generated and delivered to the compliance officer through Intralinks, containing information such as aggregate access detail for a list of monitored users.
- Positive business outcomes: Intralinks helped the firm gain a clearer picture of employee activities, which helped to close compliance gaps and reduce risk around Intralinks VDR access.
Access Gatekeeper Service to restrict access to private information
- Pain point: The syndicated lending unit of a large investment bank had only a basic policy in place concerning MNPI — one that trained its employees but did not have any controls around their handling of MNPI.
- How we help: The bank leveraged Intralinks’ Access Gatekeeper Service (AG) to give compliance officers the power to manage and restrict employees’ access rights to Intralinks VDRs and private information. These centralized controls allowed the team to lock down and intelligently direct the flow of loan information into the organization.
- Positive business outcomes: Working with Intralinks, the bank could better enforce policies and procedures that prohibited their employees from viewing private information and ensured compliance with insider trading regulations.
Get in touch with us to request a sample report for your organization.
Kylie Horner is an Associate in Strategy and Product Marketing at Intralinks. She is part of the team responsible for determining go-to-market strategies for the debt capital markets and alternative investment businesses. Prior to joining Intralinks, Kylie worked in marketing and communications at ACTIV Financial, a financial information technology firm. She graduated from the University of Colorado at Boulder with a degree in Journalism, and a specialization in global media.