Lawyer Monthly Magazine - September 2021 Edition

party money, when you have a fiduciary duty, and when you are in a regulated industry. So, stay practical, and this means developing and documenting your risk controls at least alongside your business ventures – preferably in advance, but at least alongside – and certainly not after the fact. Number 3: Stay current. We are in an everchanging world, what with COVID-19, cybersecurity concerns, the emergence of new asset classes (cryptocurrencies), and global integration in general. While the fiduciary duty is a long-recognised responsibility, regulators always apply it to current realities — indeed, that is part of their job. So, for example, today, we are focused on ESG metrics, and we have the pandemic’s impacts on valuations. Hackers are consistently finding new ways to breach cybersecurity advances, and now we also have cryptocurrency as ransomware as well as for client portfolios. So, part of the firm needs to be agile enough to consider, or bring to the appropriate committee, consideration of current realities, so that the firm can develop written policies and procedures that reflect thoughtful risk parameters and evidence fulfillment of the fiduciary duty. WWW.LAWYER-MONTHLY.COM | SEP 2021 74 THOUGHT LEADER - EUGENIE WARNER What these three “To Dos” require is healthy coordination internally and with your significant vendors. Behind healthy coordination are honest self- assessments and transparent internal conversations – working together, not undermining one another or focusing blame. Utilise your team in a way that supports growth while maintaining stability. If there is this healthy coordination and communication, then I believe that this helps ensure that clients and investors are receiving timely and comprehensive disclosure – a perennial concern for regulators. What are recent developments in this space and additional concerns for a growing firm? I touched on some above: cybersecurity threats, ESG, and considerations around a firm’s use of or investment in blockchain technology and digital assets. Firms also should consider use of leverage, credit facilities, and similar products for accounts or for its own growth. Additionally, under the Advisers Act, the industry is preparing to meet the 4 November 2022 compliance date for the amended Marketing Rule. Also, high on the gravity scale, many financial institutions must or should incorporate more robust anti-money laundering controls and adhere to mandates and advisories published by the Financial Crimes Enforcement Network. Overall and in summary, find a mixture of human and technological solutions that can both meet your current demands and expand with your growth, whether that growth may be, for example, geographic expansion, new products, or an acceleration of assets under management. You do not want to be relying on luck when you are managing third party money, when you have a fiduciary duty, and when you are in a regulated industry.