What risks are present for investment platforms, investment advisory firms and broker-dealers in retail investing?
Investment platforms, investment advisory firms and broker-dealers (collectively “Financial Services Providers”) all face exposure to fines from regulators as well as litigation from investors. Regulatory agencies including the Consumer Financial Protection Bureau (“CFPB”), Securities and Exchange Commission (“SEC”), and Financial Industry Regulatory Authority (“FINRA”) can impose large fines and file lawsuits against Financial Services Providers for violation of industry specific rules and federal laws. The costs of these regulatory actions can reach billions of dollars. Financial Services Providers need a better method of protection to defend against regulatory actions and disputes filed by their investors.
What risks are present for investors in retail investing?
Investors must be aware of the benefits and risks of investing in securities. Investments can be very complex and require a high level of sophistication and education for the investor. Traditionally, investors have relied upon the advice of Financial Services Providers to help recommend and purchase investments. Investors must use every tool available to understand the risks associated with their investments. If investors are mislead or otherwise defrauded by their Financial Services Providers, they can seek recourse by filing complaints with the above listed regulators or file a lawsuit or arbitration claim. Investors need to ensure the appropriate risks and disclosures are made to them prior to their decision to invest.
How does Contract Cloud help?
Customer litigation and dealing with a regulatory action can be incredibly damaging for your business. Contract Cloud helps investors and Financial Services Providers avoid these costly burdens. Contract Cloud is a patent-pending mobile and web based video-recording service that acts as a digital witness to investor acknowledgment of investment and firm disclosures, increasing investor trust. The investor and Financial Services Provider communicate more clearly and can ensure the investor receives the appropriate disclosures and understands the terms of an investment. Using video as a witness, the investor is recorded while reading aloud brief scripts relating to the investment.
Common examples of Contract Cloud’s uses include:
- Accredited investor representations
- Acknowledgment of receipt and/or review of offering materials
- Acknowledgment of receipt and/or review of risk disclosures
- Attestations surrounding overconcentration of assets
- Trade request acknowledgments
- Alternative investment disclosures and acknowledgments
How do I implement Contract Cloud into my workflow?
For electronic investment platforms and/or e-disclosures, Contract Cloud’s application program interface (“API”) plugs into the Financial Service Provider’s (or its vendor’s) workflow at any point where an investor makes one of the above listed attestations. The scripts displayed to the investor through the API are curated by the Financial Services Provider to ensure compliance with regulators and to communicate all adequate terms and disclosures to the investor.
Contract Cloud can be used as a stand-alone app in circumstances where the investor’s attestations or acknowledgments are done in traditional paper processes. The Financial Service Provider simply needs to download Contract Cloud’s app to their representatives’ iPads. The Financial Services Provider manages scripts for the investor through a secure web-portal.
In both API and App products, the recordings are securely uploaded and stored by Contract Cloud’s patent-pending system. The recordings are managed, sorted and retrievable at anytime.
Demand a better method of contracting, prevent unnecessary disputes, and increase investor trust. Contract Cloud is beyond a signature; it is your video witness.Back