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It’s No Secret: New Regulations Prompt Confidentiality Concerns

The Financial Services Industry and Dodd-Frank

I attended SIFMA Compliance & Legal Society’s 44th Annual Seminar in Miami on March 18-21. The seminar is a meeting of the most prominent experts on legal and compliance topics facing the financial services industry.

Many of the panels discussed Dodd-Frank and its wide-reaching impact on the financial services industry. While the panels covered myriad discrete subjects, the consensus is clear: Dodd-Frank has empowered existing regulatory agencies while also creating new agencies to which the financial services industry is answerable, imposing an even heavier burden on a sector already stretched thin by stringent regulatory requirements.

As an example, Dodd-Frank allowed for the establishment of the Office of Financial Research (“OFR”), a division of the newly established Financial Stability Oversight Counsel (“FSOC”).

Financial Stability Oversight Counsel, FSOC

The primary purpose of the FSOC is to monitor risk in non-bank financial services institutions, such as bank holding companies. Membership of FSOC is composed of the heads of financial regulatory agencies such as the Secretary of the Treasury and the chairpersons of the SEC, CFTC and FDIC.

Office of Financial Research, OFR

The OFR’s sole purpose is to collect and analyze data, and then create reports for FSOC based on that data. Importantly, the OFR has been given free rein to collect data from any state or federal regulatory agency. In addition, the OFR may subpoena financial institutions directly for information.

That information may or may not remain confidential. It is unclear if the documents collected by the OFR will be protected from the Freedom of Information Act.

What does that mean from an e-discovery perspective? Now, more than ever, it is critical for financial services companies to have a consistent, defensible plan to deliver documents to regulators in a timely manner. Most important is the need to identify and account for sensitive and confidential information such as trade secrets, suspicious activity reports, and client and employee personal information, which is contained in most – if not all – financial services document productions.

At DiscoverReady, our highly skilled Dynamic Data Analysis team has been helping our clients identify this highly sensitive data for years. The DDA team can assist you in locating sensitive data even before it even proceeds to review. Once in review, our veteran financial services reviewers will make nuanced decisions to protect you from the risk of delivering sensitive client data into the public domain.

Maureen O'Neill