Q&A with Charles Weeden, Managing Partner at 17a-4, llc
Charles Weeden is Founder and Managing Partner of e-communications compliance technology firm, 17a-4, llc. Last month, we shared a piece by Charles on how technology can be used to streamline compliance. Today, we share details on Charles’ background, as well as his thoughts on behavior analytics, competition and “sunshine policies.”
Maurice Gilbert: How did you get started on a career in compliance?
Charles Weeden: I got involved from an IT perspective, where we provided compliance teams with tools to perform their jobs more efficiently and cost-effectively. We are huge proponents of capturing and analyzing real-time textual content to make business teams work smarter. Before, voice communications would be lost; today, textual (email, IM, text) are the raw materials for smart workers and, in turn, a smart company. We believe that a “culture of compliance” starts with the correct technology tools.
MG: Who helped shape your views?
CW: I started in tech in 1974, when computers were just hitting Wall Street. Our company developed the first real-time system that updated trading and sales information to help businesses make smart management decisions. For instance, if a customer in one office wanted to sell IBM stock and another one wanted to buy it, we developed systems for traders to share such information. Even today, most companies can do a better job of “knowing what they know.”
MG: How do you stay current on ethics and compliance issues?
CW: We are believers in compliance leveraging “sunshine policies.” The more people have access to communications, the more ethical the company where they work will be. In the old days, for instance, bankers had their desks side-by-side in an open room so that conversations could be heard by other bankers. The same applies today, but with messaging and collaboration technologies rather than a physical office.
MG: What are some of the significant issues facing CCOs, Risk Managers, etc.?
CW: Business moves too fast, and rules can’t keep up. The U.S. has a significant long-term advantage in that corporate communications are the property of the company and not the employee. This means the company can search employee emails and use textual analysis to find information about questionable deals or ferret out unethical behavior. For instance, we just developed a program using Microsoft’s Azure analytics that determines whether an email thread has positive or negative sentiment. If the latter, then the conversation should be reviewed, as it may disclose a customer complaint or employee wrongdoing.
MG: What do you believe is the optimal reporting structure for the CCO and why?
CW: We believe that compliance is a function of the legal department. One of compliance’s most important roles is to find instances of misbehavior before they become a legal or regulatory matter.
MG: How do you affect change within your clients’ environments?
CW: We help clients transition to a more productive compliance environment by meeting regularly with our clients’ compliance and IT teams to advise them on which tools will enable them to comply with regulations and find instances of inappropriate behavior. The technologies go by many terms – AI, business intelligence, semantic analysis – but, simply, they all extract information from textual streams.
MG: How do you see the CCO role evolving within the next three years?
CW: Compliance teams will become much more tech-savvy. They will understand pockets of risk within the company and understand how they can analyze behavior to keep unethical or illegal behavior from occurring.
MG: What do you see as the greatest business risks facing companies today?
CW: Competition has become more intense today, with competitors finding either available business opportunities or avoiding issues of misbehavior. There is always evidence of wrongdoing within companies; compliance departments just need the tools to find them.
MG: What do you see as the greatest regulatory risks facing companies today?
CW: Simply, that there is too much of it.
MG: How might Chief Compliance Officers, Chief Audit Officers and Chief Risk Officers prepare to face these risks?
CW: Engaging the IT team to roll out the tools necessary to analyze behavior is a great way for compliance, audit and risk officers to manage risks. We insist that teams from both compliance and IT departments attend our client meetings. Too often we find compliance and IT personnel introducing themselves to each other in these meetings. Both groups have to have an ongoing, constructive working relationship.
MG: How does your company help its clients mitigate risk?
CW: We aid in reducing client risks by helping them find and implement tools to search, analyze and uncover situations that otherwise would not be found.
MG: What new service offerings do you have in the queue?
CW: One starts with having all messaging retained in smart repositories, for instance, Microsoft’s Office 365 or OpenText. Once the data is captured, it is relatively easy to find effective analysis tools.
MG: Compliance departments are often asked to accomplish their work with limited resources… do you see this situation changing any time soon?
CW: We don’t see limited resources as an issue. In one instance, we worked with a large insurance company to deploy better tools and reduce the number of people reviewing emails from 22 to eight. We’d be surprised if most of our engagements don’t, in fact, save money for the client.
Charles Weeden is Managing Partner of 17a-4, llc, a compliance software and services company focusing on e-communications and archive technologies that meet the regulatory and e-discovery requirements of institutional clients subject to SEC, FINRA and CFTC rules (including SEC Rule 17a-4) reporting. The company consists of two divisions, DataParser software solutions products, and 17a-4, which offers compliance counseling, including designated third-party services as mandated for broker-dealers by the SEC. He can be reached at [email protected].