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Investment Firm Combines Smarsh and Actiance to Solve FinServ Compliance Issues

Two major financial services and regulated industry compliance firms, Smarsh and Actiance, have combined to better serve industry’s increasingly complex requirements around communications, archiving and discovery regulations. Actiance has been acquired by K1 Investment Management, and combined with Smarsh.

Two major financial services and regulated industry compliance firms, Smarsh and Actiance, have combined to better serve industry’s increasingly complex requirements around communications, archiving and discovery regulations. Actiance has been acquired by K1 Investment Management, and combined with Smarsh.

“The Financial Services sector is undergoing rapid change,” explains Neil Malik, Managing Partner at K1; “legacy technologies are no longer sufficient to comply with SEC and FINRA standards, let alone MiFID II. This combination of capabilities from Actiance and Smarsh provides the industry with a means to get ahead — and stay ahead — of compliance trends, while introducing the latest communications technologies to increase efficiency and effectiveness in the modern enterprise.”

Smarsh provides cloud-based archiving and compliance solutions for companies in regulated and litigious industries. It provides a unified compliance and e-discovery workflow across a range of digital communications systems, including emails, public and enterprise social media, websites, and instant and mobile messaging. Actiance  is a major provider of communications compliance, archiving, and analytics — providing compliance across a broad set of communications channels with insights on what’s being captured.

Before the acquisition, the two firms could be considered competitors, and there is overlap in their solutions. Together, however, they provide a more complete compliance service from a single provider. “Together, Actiance and Smarsh uniquely enable global customers across industries to capture, record, store, and analyze over 100 content types,” said Kailash Ambwani, CEO of Actiance. “Together we will enhance our combined sales and distribution capabilities, offer our customers additional resources and services, and accelerate our product development.”

“Perhaps most importantly,” added Stephen Marsh, founder, chairman and CEO of Smarsh, “organizations with legacy, on-premise capture and archiving solutions can make the overdue transition to upgraded and more modern solutions. All of this is now possible through a single provider.”

Compliance is an increasingly important part of the risk management portfolio. New regulations are affecting all industries; but none more so than financial services. Coupled with the growth of regulations is an increasingly active regulator. The annual Eversheds Sutherland analysis of Financial Industry Regulatory Authority (FINRA) cases shows that FINRA fines on FinServ firms increased by around 435% in 2016.

Two particular areas of FINRA activity are relevant to the newly combined suppliers: ‘books and records’ actions, and actions against compliance officers. Books and records fines increased by 423%, “driven largely by enforcement actions against 12 firms for, among other things, failing to preserve records in “write once, read many” (WORM) format. FINRA fined these firms a total of $14.4 million.”

FINRA also cracked down on individual compliance officers. In one case, a firm’s former compliance officer was fined $25,000 and suspended for three months. Eversheds Sutherland (US) partner Brian Rubin commented, “These cases are a signal to compliance officers that they are in FINRA’s crosshairs. They ought to take heed and try to ensure that adequate compliance-related policies and procedures are in place.”

Few details of the new Smarsh/Actiance arrangement have been made public. It is not described as a merger, and there is no current indication of a new name for the combined firms. The statement merely says, “Together, the combined company offers deployment options (cloud, dedicated, on-premise, and hybrid) to meet the needs of its customers… It will continue to support both company’s product lines while providing customers greater value and flexibility. Near-term priorities include more investment in product capabilities, increased flexibility in deployment options, accelerated expansion in Europe and development of a joint channel partner program.”

Existing operations of both Smarsh and Actiance will be maintained in Oregon, California, New York, Massachusetts, Georgia, North Carolina, Canada, India, and the United Kingdom. Terms of the deal were not disclosed.

In September, K1 Investment Management acquired SecureAuth for $225 million, with plans to merge it with Core Security, a firm focused on vulnerability discovery, identity governance, and threat management. K1 had previously acquired Damballa in a deal reported to be under $10 million. 

Related: Financial Firms Struggle on Compliance for non-Email Communications 

Related: eDiscovery – An Enterprise Issue That Can’t be Ignored 

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