The U.S. Securities Industry and Financial Markets Association released a set of best practices Thursday that provides guidance to broker-dealers on using so-called expert networks.
U.S. regulators have recently be examining the use of expert networks by traders such as hedge funds, and whether the sort of information they provide can stray from simply offering insight that informs trading decisions into providing confidential information that could facilitate illegal insider trading.
“By issuing these best practices we seek to provide our members with guidance in complying with existing laws and regulations, and avoiding the appearance of impropriety,” said said Ira Hammerman, senior managing director and general counsel at SIFMA.
SIFMA’s best practices for firms that use expert networks, includes: developing policies and procedures concerning the use of these services; that firms should provide training for their employees who interact with expert networks; firms’ supervisory oversight should be designed to assess the use of expert networks, and they should develop procedures to identify possible red flags; they should also have procedures for advising consultants associated with expert networks on their policies regarding the use of material non-public information at the outset of any new engagement, and have procedures for determining whether the consultant may have access to such confidential information.
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SIFMA issues best practices for use of expert networks
Best practices provide guidance in complying with existing laws and regulations, and avoiding the appearance of impropriety
- September 30, 2011 September 30, 2011
- 07:35