B-Ds to get compliance insight from updated RegEd service

RegEd Inc. soon will add human consultation to its software-based branch-audit service to give its broker-dealer clients deeper insight into their compliance efforts.
While RegEd historically has been consultative, the audit solution it has offered broker-dealer branches is an application that discharges readable analytics from mounds of data. Now, through partnerships with independent audit consultants, RegEd intends to provide its broker-dealer clients with a more “risk-centric” approach to branch audits.
“This is certainly part of the industry’s shift towards a focus on risk,” said John M. Schobel, RegEd’s chief executive. “We’re bringing in consultants to help provide parameters for risk indicators.”
In December 2011, the Securities and Exchange Commission and the Financial Industry Regulatory Authority Inc. issued a joint national examination risk alert that warned independent-broker-dealer branches of increasing frequency of surprise audits. More recently, Finra has beefed up its automated methods of identifying illicit activities.
“Finra recently introduced new technology to target firms that have tended towards bad behavior,” Mr. Schobel said. “When clients see that Finra is using advanced analytics, they also need to use analytics if they want to accurately judge their compliance risk.”
RegEd sees the formal partnership with industry consultants as particularly useful for firms as they grow.
“What it can be useful for is scale,” Mr. Schobel said. He sees the new service as particularly appealing to firms with an outpost in a remote location or branches located in states that require off-cycle audits.
“We’ve seen compliance transformed from a checkbox exercise to a complex, risk-centric approach,” he said.