Automating Employee Personal Trading Surveillance

Currently many compliance departments are under a lot of pressure to gather together the information required to meet the basic requirements of SEC rules 204A-1 and 17j-1. Keeping track of pre clearance requests, restricted lists, employee accounts, employee trading activity and employee holdings takes up so much of many compliance departments time that having time to analyze this data is a challenge for many. The following diagram outlines the different types of data that the typical compliance department needs to pull together in order to manage their employee personal trading compliance requirements.
Besides the difficulty of gathering all of the above data compliance departments have to deal with the resistance of staff to the adoption of these processes, and the difficulty of analyzing spreadsheet, paper and email based data.

Automation of the personal trading compliance process can save firms a lot of time as well as providing them with the ability to more easily analyze the data and check for trends in the data. Any automated personal trading solution needs to incorporate the following elements.
Incorporate all main Personal trading data points needed.
Flexible rules engine
Flexible reporting.
Ease of use to facilitate easy adoption by employees.
Streamlined processing to save employees time.
Integration with overall compliance program

PERSONAL TRADING COMPLIANCE DATA
The main data required to meet the minimum requirements are:
Trade pre-clearance
Pre-Clearance requests.
Automated broker feeds of trading activity and holdings.
Employee account data.
Firms portfolio trades.
Holdings and trades attestation data.

PERSONAL TRADING COMPLIANCE RULES
Ability to set up rules which can be run against this employee personal trading data and which can be applied to different subsets of individuals within the Investment adviser firm is extremely important. Any compliance management system needs to be able to cover the following rule types at a minimum.
1. Security rules:
Restricted lists
Watch lists
Blackout periods
Approved lists
Transaction rules (Di Minimis rules, short sells)
2. Security type rules
Approved security type rules
Restricted security type rules.
3. Pre clearance checks
Validation that pre clearance requests were made for an employee trade.
4. Employee Trade activity checks
Excessive trading
Holding periods
5. Checks against firms trade data
Front Running
Tailgating

PERSONAL TRADING COMPLIANCE REPORTING
Any automated personal trading solution needs to allow the users to easily retrieve the data they require and should allow easy filtering and sorting of the data so that it can be extracted exactly as the user requires for trend analysis. Adoption and buy-in by employees of any compliance system is extremely important therefore any system will need to be easy to use and intuitive. Centralization of all compliance tasks for employees also causes less confusion and only requires employees to learn how to use one system.


Most Common Clauses In An Employment Contract And Agreement

Employment contracts and agreements defines the terms and conditions of the working relationship between an employer and an employee.

The contract shows the duties and responsibilities of the employer to the employee and vice versa.

Although each company has its own template, an employment contract usually contains the following clauses:

Parties Involved

This will specify that the agreement is between the employer and the employee.

Position and Duties

The employment agreement should also specify the title of the position that the employee will be holding, together with the specific duties that the employee will perform as set out by the job description that will be attached to the agreement.

Place of Work

This refers to the location where the employee will be tasked to perform his/her duties.

Working Hours

This refers to the required number of hours the employee must meet.

The employment contract should specify the number of hours the employee must work per week and the number of days in a week.

It should also specify the time that his/her job starts and finishes.

Pay

In this part of the employment contract, the employer can specify the equivalent annual salary that the employee will receive.

The contract should also specify the following:

The period that will be covered for each pay day
The day the payment will be made
The method of which the payment will be given

Public Holidays

This part of the employment agreement specifies that the employee is entitled to be paid for the time worked during a public holiday.

Conflict Resolutions

This part of the employment agreement can specify the process and policies that apply in resolving possible conflicts in the future.

This could include the grievance processes that can be used by the employee to report any practices or policies that they feel are unfair or unjust.

This clause may also include the preferred alternative dispute resolution (ADR) process to resolve employment disputes.

The most common type of ADR process is arbitration because it is much more similar to a court proceeding compared to other ADR forms.

Other Clauses

The employer may also include other clauses that aim to protect the operations and the interests of the company.
Some of them are:

Non-compete clause This prevents an employee from accepting employment from a competitor or start their own venture that will compete with your own company.
Non-solicitation clause This clause prevents your employee from soliciting your clients, customers or suppliers.
Non-disclosure clause This prevents an employee from divulging non-public or proprietary information. The contract should stipulate what defines confidential information.
Anti-raiding clause This prevents former employees from soliciting current employees to leave their employment.
Anti-disparagement clause This prevents employees from making statements that opposes the interest of the company.

Employers are advised to seek help from an expert employment law attorney to make sure that all important areas are covered and that no existing laws are being undermined.