Market headlines have been dominated by a Reddit forum scheming to inflate GameStop’s stock price for no other reason than to punish short-sellers who made big wagers the company would soon crash and burn. What this means for GameStop — which is saddled with an aging business model and drowning in uncertainty — and the bearish hedge funds who lost billions betting against is not yet clear.
However, what is more apparent is that the wealth management space should expect regulatory fallout from this mini-market crisis. The Reddit-fueled “short squeeze,” coupled with the seemingly endless supply of online collaboration platforms (including and beyond just Reddit), as well as potential surveillance challenges related to the industry’s mass migration to a remote-work model, could spark a renewed level of scrutiny among regulators at the US Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA).
Get ahead of the curve before it’s too late
The ability of firms to track who their employees and financial advisors are talking to, what they are talking about, and what channels they are using for communication will become even more important than ever. The Reddit-GameStop affair will generate greater urgency for firms to close whatever visibility gaps may exist related to the digital communications and collaboration conduct of their employees and affiliated professionals. Here’s what firms need to do to get ahead of this curve:
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Author: Robert Cruz
The Compliance workload shows no signs of decreasing. An ever-growing list of requirements and regulatory changes makes the compliance role harder than ever.
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