It seems that the word “red” now has a negative connotation. If you are part of a successful business is likely to rely on the networks (networking) – social, extracurricular, educational or professional – to have more visibility and make decisions based on reliable information. However, after a brief review of the headlines this year as well as regulatory actions and the unfortunate experiences of hedge funds, remember that the use of networks may involve both benefits and risks.
In fact, many recent cases of insider trading (illegal use of inside information) investigated by the SEC and U.S. Justice Department are focused on financial sector professionals nonpublic information acquired through contacts in the networks.
It is important to consider these risks and the economic situation begins to thaw and investment activity is recovering. The new capital and new investment opportunities will lead to a resurgence of networking and as a result, fund managers and their employees will face new risks of communicating with people who really are not what they say and they can have hidden conflicts of interest or willingness to push the limits of ethical behavior.
Then we added some questions you should ask to assess your organization’s potential exposure to the risks of networking:
* Could you monitor their networks and still maintain their competitive advantage?
* Can avoid receiving improper information if you make a thorough investigation?
* Are your consultants and advisers properly informed and educated about compliance procedures
* Are there any gaps in their own internal compliance programs relating to the valuation of networking?
* Can ensure their compliance and control procedures are updated in accordance with the regulatory changes taking place internationally?
If you want to prevent these risks from becoming a problem for your company, it is critical to apply the planning tools and perform the appropriate due diligence.
K2 Global Consulting
