Compliance Newsflashes: Weston Capital to Use Financial Tracking Technologies, and more

Weston Capital Signs On With Financial Tracking

Weston Capital Management LLC, a fund management firm specializing in alternative investments, selected Financial Tracking Technologies, LLC for its automated compliance solutions.

Financial Tracking could not comment on exactly how it would service Weston Capital, but a spokesman did explain, “typically we help these types of firms automate compliance with the Investment Advisors Act compliance requirements and the SEC Code of Ethics requirements.”

Weston Capital sponsors numerous funds and designs custom portfolios consisting of single and multiple investment styles and trading strategies. The Westport, Conn.-based firm offers its investment services to large institutional investors, high-net-worth individuals and family groups.

Financial Tracking is an online financial software and financial data processing company, which offers automated investment compliance and monitoring services and reporting among its services. Its clients utilize Financial Tracking’s solutions to fulfill regulatory compliance initiatives, investment management decision support, data aggregation, competitive advantages in sales and client services, automated fiduciary oversight and liability reduction.

Best Practices Mitigate SOX Compliance Burden

There are several key areas in which compliance with Sarbanes-Oxley is leading to hidden costs, according to the results of business advisory firm The Hackett Group’s study on the cost of SOX compliance.

The study examined the business processes of 32 companies with median revenue of $5.2 billion.

In 2005, the study revealed a finance cost increase over the previous year for the first time in the 13-year history of the Hackett Group’s reports – a fact the group attributes in large part to Sarbanes-Oxley accounting and reporting compliance initiatives.

There are, of course, the direct costs of compliance, but the report brought to light the indirect, or “hidden,” cost of compliance – the slowing down or, in some cases, complete halt of business improvement programs and the commitment of resources to compliance.

Some companies, however, are performing considerably better at reducing their compliance costs than their peers. The results presented a sizeable disparity between the amount and effectiveness of compliance spending of the “leading group” (those companies that are successfully minimizing their SOX compliance costs) and the “peer group” (everyone else).

“In the view of The Hackett Group, it is the underlying business processes that are fundamental drivers of these costs and the reasons for the gaps between the two sets of companies,” explained Bill Marchionni, senior business advisor at The Hackett Group.

The most effective way to avoid excessive compliance spending is to implement best practice strategies – automation, simplification, standardization and centralization -- in standard business processes, thus structuring an organization in such a way to be prepared for the worst.

“What we begin to see emerge is that the practices that leading companies had pursued and implemented prior to the arrival of Sarbanes-Oxley, initiatives they undertook in order to drive better business performance and to transform their finance organizations, put them in a better position to absorb the unexpected – in this case Sarbanes-Oxley,” said Marchionni.

“We heard the message, loud and clear, that the nature of the underlying business processes is critical,” added Allen Carney, vice president of marketing at 170 Systems, a provider of transaction optimization solutions and sponsor of the report.

By making these best practices business standards, The Hackett Group suggests that a company can minimize the controls and systems devoted to SOX compliance, reduce costs and free resources for the development and advancement of the business with value added activities.