Compliance and Innovation to Support Growth

Regional Bank

Supported a major regional bank’s expansion into wealth management services in line with U.S. regulations.

Objective: Develop the business plan for a new wealth and investment management service.

Background/Opportunity

• The client is a strong and established regional bank in South Florida, the fifth largest financial institution in its state and one of the top 50 most profitable banks in the U.S. The client wished to serve an increasing segment of international and high net worth prospects moving to the region. To tap into this new target audience, the client planned to launch a wealth management advisory service.
  

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Challenge

• The client wanted help with assessing the market potential for the wealth management business and then designing the optimal operational structure to launch it.

InnReg's Solution

• InnReg developed a launch strategy leveraging the strong foundation built on the client’s history and longevity coupled with forward-thinking innovation.

Client Results

• The client has been acquired by a large global bank based in South America. The new management team is leveraging the InnReg business plan as a foundation for the launch strategy for its new wealth management and investment services program.

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Trading Education Service

Helped an innovative company avoid potential regulatory gray areas with user-generated investment content.

Objective: Help a non-regulated entity prevent inadvertent regulated activity and maintain data security.

Background/Opportunity

• A provider of tools, education, and community features for investors sought InnReg’s help to build and operate a compliance program supporting the activities on its platforms. Although it does not act as an investment advisor or broker dealer, it needed to ensure that content on the platform did not cross the line into activities that are regulated by the SEC. In addition, it is critical to follow FTC rules and regulations around marketing content publication.
  

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Challenge/s

• By offering an environment where end-users contribute content and interact with each other, the firm needed to monitor compliance at scale within an active community.
• The firm needs to tread a careful line avoiding the appearance that content directly offers investment advice or impacts equities markets.
• The firm also must ensure the security of user data that it manages and maintains.

InnReg's Solution

• Planned and implemented a fully-outsourced compliance program and manage it on behalf of the client.
• Provided a one-stop-shop for 1) content and data analytics around user activity, 2) review of content, social media, and advertising in accordance with FTC rules, and 3) data protection and security.

Client Results

• The client is one of the market-leading companies in its space with a thriving and engaged user community.
• Risks of inadvertent regulated activity have been mitigated.
• The client continues to remain on the right side of the line and is able to demonstrate that its activities do not require registering as a regulated entity.
• The security of user data is managed effectively.

Testimonial

“Operating a business in a highly regulated industry carries risk. InnReg has provided us with an individualized compliance program that they manage and monitor. It's a relief to know that we have expert industry professionals taking care of both our compliance and information security programs. Their services allow us to focus on growing our business and offering a great experience to our users, knowing our compliance program is in good hands.” — Client CEO

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

ATS

Scaled an alternative trading system to become one of the largest in the U.S.

Objective: Help an alternative trading system (ATS) build a technology-based compliance platform to support its unique and disruptive business model.

Background/Opportunity

• The client came to InnReg looking to develop a sophisticated set of compliance processes and workflows to support a groundbreaking peer-to-peer ATS for retail investors.
  

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Challenge/s

• An ATS and its broker dealer operator are typically subject to enhanced regulatory scrutiny by their functional regulators, primarily FINRA and the SEC. The many unique components of the ATS’s business model, such as the near-total reliance on operational processes that were based on proprietary algorithms, compounded the frequency and depth of regulatory interactions.  While the broker dealer and ATS had a compliance program in place, the client wanted to upgrade its workflows and processes to optimize its compliance strategy, execute on it efficiently, and satisfy regulatory expectations.

InnReg's Solution

• Devised and implemented a comprehensive set of compliance processes to accommodate the complexity of the ATS business model.
• Leveraged fintech compliance expertise and experience in regulatory relations to satisfy regulators’ requirements and expectations.
• Successfully demonstrated the efficacy of the new compliance processes to three separate regulatory agencies.
• Advised on process design to ensure compliance with all regulatory guidelines, as well as scalability to accommodate the high volumes of users and transactions in the ATS.   
• Ongoing delivery of a fully managed, outsourced regulatory compliance solution, including having a licensed professional serve as the Chief Compliance Officer of the broker dealer and ATS.

Client Results

• The ATS has been able to facilitate a high-volume of retail transactions in a scalable, compliant manner.
• The ATS has become one of the largest in the US in volume of transactions.
• The client has begun expansion in foreign markets.

Testimonial

Our business model is based on algorithms and high-volume trading. Using InnReg as our outsourced compliance program allows us to keep up with the frequency and depth of complex regulatory requirements. I also see it as an important strength for our continued growth in the U.S. and beyond.

-- Client CEO

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Bank-Owned Broker-Dealer

Allowed a bank to add new investment services and grow its global business with a U.S. presence.

Objective: Guide a bank through the processes of setting up and then operating a broker-dealer subsidiary for international investors wishing to trade in the United States.

Background/Opportunity

• The client came to InnReg with a strong business idea, but needed guidance for navigating relevant regulatory regimes, building out its operations, and then supporting its compliance function once it launched.
  

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Challenge/s

• A publicly-traded foreign bank with an established presence in the U.S. wanted to be able to target retail investors from all over the world to invest in U.S equities. The client came to InnReg to seek in-depth, detailed knowledge on how to establish a compliant brokerage operation with a global footprint.

InnReg's Solution

• Conceptualization of the bank’s broker-dealer compliance model for international investors.
• Leveraged compliance expertise and experience in regulatory relations to manage regulatory exams and inquiries.
• Devised and implemented a comprehensive set of compliance processes.
• Advised on process design to ensure compliance with all regulatory requirements for international investors participating in U.S. markets.

Client Results

• Successful launch and growth of the broker-dealer’s international business.
• Positive outcomes of regulatory exams.
• Efficient compliance processes and workflows to maximize internal resources.

Testimonial

“Operating a business in a highly regulated industry carries risk. InnReg has provided us with an individualized compliance program that they manage and monitor. It's a relief to know that we have expert industry professionals taking care of both our compliance and information security programs. Their services allow us to focus on growing our business and offering a great experience to our users, knowing our compliance program is in good hands.” — Client CEO

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Crypto Exchange Broker-Dealer

Objective: Enable a crypto trading platform to offer a seamless customer experience between crypto and equities trading by offering registered broker-dealer services.

Background/Opportunity

• Uphold, a well-regarded traditional and crypto trading app, had already attracted millions of users worldwide with its crypto trading experience and user-friendly approach. But the company had a bigger, more ambitious vision, which “embraces a future where people and businesses around the world have access to safe, transparent, fair and affordable financial services.”
  

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Challenge/s

• While equities are a core element of investing and trading, purchasing them with cryptocurrencies creates significant regulatory complexities and adaptations to special middle- and back-office requirements.
• Uphold wanted to make it simple to use the value stored in their crypto wallets to purchase fractional shares of publicly traded companies.

InnReg's Solution

• Helped guide Uphold through the regulatory requirements around acquiring a broker-dealer to settle fractional buy- and sell- trades that initially originated from an end-user’s crypto wallet.
• Advised on moving the acquired broker-dealer from a fully-disclosed to an omnibus structure so that it could manage trades within one, proprietary set of digital books and records in the broker's name.
• Provided essential input on obtaining regulatory approval from FINRA to provide these new services and persisted with the process through several rounds of inquiry.
• Designed the strategy for Uphold to mitigate risks and quickly build a compliance program to meet all regulatory requirements for its new broker-dealer business model and operations.

Client Results

• On March 31, 2021, Uphold announced that it received regulatory approval to purchase JNK Securities, a U.S. broker-dealer, making it one of the first cryptocurrency firms to own a broker-dealer approved to offer equities.
• News of the approval made big waves in industry press covering cryptocurrency, fintech, and regulation, as well as lifting Uphold’s search traffic by roughly 1,000%.
• The ability to offer equities to U.S. investors will drive new account openings and trading volumes to greater heights of success, giving Uphold customers greater wealth-creation opportunities.

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.

Mobile App Broker-Dealer

Objective: Interim outsourced CCO role, setup and enhancement of compliance workflows, and onboarding of a full-time, in-house CCO

Background/Opportunity

• Our client, a fast-growing startup broker-dealer, was expanding its client base and investing into the next growth phase. Unfortunately, they had a critical gap in their senior leadership structure – the Chief Compliance Officer (CCO). The absence of a CCO posed a threat to the firm's regulatory integrity and operational effectiveness, which increased regulatory risks and potentially hindered growth.
  

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Challenge/s

The broker-dealer was confronted with three key challenges. They needed to:

1. Immediately hire a competent and professional CCO on an interim basis.
2. Establish robust compliance workflows to streamline operations, promote transparency, and ensure continued adherence to regulatory standards.
3. Facilitate the onboarding process for the hired, permanent CCO, ensuring a seamless transition and immediate effectiveness in the role.
   

InnReg's Solution

Our team of outsourced compliance experts stepped in to tackle these challenges head-on:

Interim CCO Support: We immediately filled the leadership void as one of our seasoned compliance professionals assumed the role of interim CCO. Leveraging their extensive industry experience, they guided the broker-dealer through complex regulatory landscapes, ensuring full compliance with financial regulations.

Compliance Workflow Setup: We then focused on the creation and implementation of effective compliance workflows. Our team performed a comprehensive analysis of the broker-dealer's operations and crafted tailored workflows to ensure regulatory compliance, efficient processing, and risk management.

New CCO Onboarding Support: Finally, as the broker-dealer hired a permanent CCO, we facilitated the transition. Our team worked closely with the new hire, providing comprehensive training on the established compliance workflows and offering insight into the changing regulatory requirements of broker-dealers.

Client Results

Our engagement with the startup broker-dealer resulted in significant tangible outcomes:

• Continuous Compliance: Our interim CCO ensured the firm remained compliant with all necessary regulations, preventing potential violations and associated penalties.
• Efficient Operations: The new compliance workflows streamlined operations, reduced errors, and increased transparency, leading to greater operational efficiency and risk reduction.
• Smooth Transition: The onboarding process for the new CCO was seamless, ensuring the firm's ongoing compliance and operational effectiveness. The new CCO was able to hit the ground running equipped with a deep understanding of the firm's compliance workflows and regulatory requirements.

This engagement was an example of our commitment to providing comprehensive, tailored compliance solutions that empower financial firms to operate efficiently, maintain regulatory compliance, and navigate growth stages with confidence.

Client Testimonial

"Partnering with [InnReg] during a pivotal period of our growth was one of the best decisions we made. The vacancy in our Chief Compliance Officer position was a significant concern, but their team seamlessly stepped in, providing an experienced professional who guided us through complex regulatory landscapes with proficiency. They further created and implemented compliance workflows that were tailor-made to our business model, increasing efficiency, transparency, and risk management across our operations. Lastly, the onboarding support they provided for our new CCO was invaluable – it ensured a smooth transition and equipped our new officer with a deep understanding of our firm's specific requirements. Their comprehensive solutions not only ensured our regulatory compliance but also empowered us to focus on our core business and growth. We couldn't be more grateful for their support." 
- Client CEO

InnReg helps innovators succeed in regulated markets. We do not publicly disclose client names in order to protect their confidentiality and their unique business models. We rigorously guard our clients’ intellectual property and competitive advantages. However, we can make references available to prospective clients by request.