The old adage that inside every regulation lurks a business opportunity was proved true again today as Capco announced that it has teamed up with hedge fund PR specialists LJH Financial Marketing Strategies to form what they call “911 For the Financial Sector, ” or a “crisis management” service for financial services companies needing a rapid, confidential and structured approach to solving major problems arising from operations, technology and business control lapses. The two firms are looking to capitalize on Capco’s expertise in helping companies manage and improve risks and controls related to the business, operations and technology and LJH’s experience in crisis management control and communications
With the US mutual fund industry imploding in the wake of the market timing and late trading scandals, and the hedge fund industry under tighter regulatory scrutiny, “911 for the Financial Sector” is clearly an attempt to capitalise on the sense of crisis gripping the fund management industry. The two partners promise to “remediate” issues arising from trading “blow-ups,” fraud, control lapses, securities processing problems, reconciliation breaks, other back office issues, and technical or functional systems failures. They also identify regulatory investigations (e.g. NYSE, NASD, SEC or Fed), audit items, and issues related to specific regulatory or compliance requirements (e.g., Sarbanes-Oxley, Patriot Act, Anti-Money Laundering, 15(c)3 / Possession & Control) as likely occasions to call on their services. LJH will provide a crisis management communications service to square customers, investors, regulators, and the public.
The goal of the service, say CapcCo and LJH, is to assist firms experiencing difficulties in mitigating urgent risks and addressing the concerns of customers, investors, regulators and the firm’s management. They say the service is available as a preventive program or one that can be implemented upon identification of a crisis.
“When a crisis occurs, companies experience loss of credibility, damage their industry reputation, and run the risk of increased regulatory scrutiny and loss of business,” says Christopher Kundro, Partner at Capco. Stuart Feffer, also Partner at Capco adds that “by gaining control of the current situation and taking preventive steps to mitigate future operational risks, companies protect themselves and their reputation.” Feffer and Kundro are co-heads of the Capco’s global Private Client and Asset Management practice, and are known for their work in operational risk management, most recently through their study on “Understanding and Mitigating Operational Risk in Hedge Fund Investing.”
“A carefully constructed crisis communications plan must be in place to effectively deliver key messages and maintain the confidence level of key constituents,” says LJH Financial Marketing Strategies President Charlotte Luer. “It is important to protect against further reputational and/or financial damage by determining the likely impact of each potential crisis and then preparing accordingly.”