JPMorgan Unit Helps Clients Sort Out Compliance Puzzle: Pending CCO Report Currently Commands Greatest Attention
November 7, 2005
With a number of new Securities and Exchange Commission regulations either recently implemented or looming on the horizon, an enormous administrative burden has been placed on the mutual fund industry.
As a result, a number of the industry's leading service providers have rolled out new business units specifically designed to help funds and their trading partners meet those new requirements. One such player is JPMorgan Worldwide Security Services of New York. Its JPMorgan Compliance Solutions unit supports the needs of chief compliance officers and registered investment advisors in delivering coordinated services, and provides the infrastructure and documentation needed to assist clients in documenting that fund policies and procedures are designed to prevent violation of federal securities laws.
Most recently, the group added a Web site function - one for the public and one for clients only - that contains compliance-related information and resources designed to support CCOs in meeting their responsibilities. The public page includes an overview of the JPMorgan Compliance Solutions program and offers information about the compliance-related products and services JPMorgan provides its clients.
The client-only page is an extranet site that allows CCOs and their teams to access relevant information and tools 24 hours a day, seven days a week. Resources include materials that would help them meet their obligations under SEC Rules 38a-1 and 206(4)-7.
Money Management Executive Associate Editor James M Amend recently spoke with Virginia Meany, head of global fund administrative services at JPMorgan Worldwide Security Services, about the firm's compliance services program, what it's like operating a new business unit in a regulatory environment that's still evolving and where the industry stands in meeting the obligations of the new regulations.
MME: What's the genesis behind the JPMorgan Compliance Solutions program?
Meany: You know, we deal with seven out of the top 10 asset managers in the business, and I think that creates a need for us to be leaders on industry issues. In the period we are going through right now, where there have been substantial regulatory changes, we've had an opportunity to do what we do best and that's to showcase the talent and the technology that we have. Our program has been around for almost a year now and we've had a number of different iterations, so we continue to expand and enhance the program.
MME: Could you bring us up to speed on those enhancements?
Meany: Initially, we coordinated all the different facets of our program to ensure that all of our particular product disciplines are represented in gathering policies and procedures - that's a big first deliverable of the new requirements, that CCOs are able to confirm to their boards that their internal and external service providers have a well-developed set of compliance policies and procedures.
We've taken it to the next step and summarized the policies and procedures and related them to the regulation. All of this is housed on our Web site for CCOs, at www.jpmorgan.com.
That's one part of our services. Another is consulting. We have conducted client visits, shared metrics and coordinated periodic conference calls on current topics. We provide a comprehensive series of operational performance metrics, measuring service delivery against industry benchmarks and SLAs [service level agreements].
We've also been spending a lot of time developing the Web site, because we recognize that many of us work a lot of different hours, and our clients can be at any point on the globe and need to connect with us.
MME: What elements of the Web site do your clients find particularly helpful?
Meany: The news and information allows our clients to be up to date with what we're doing, what's going on in the industry and what the regulators are doing. Being current is always valuable. Not only do we publish the policies and procedures, but also the matrix and the summaries, and we're able to tie them into specific regulations to provide a valuable analysis of the regulations.
MME: There's PDF of a typical SAS 70 report, which is the audit report for services providers, at the site. How does viewing that static document help your clients?
Meany: We provide our clients the opportunity to access the SAS 70 vis-a-vis our Web site at any time because we all know we work around the clock. Perhaps they're planning a site visit or planning a periodic update to the board or developing a system of metrics. Having access to that at any time is important. And, of course, we augment that with access to our industry experts, so we're providing information and consultative support.
MME: You mentioned that JPMorgan conducts site visits. Does that in any way prepare firms for the day when the SEC might arrive to conduct its review?