Case Study

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Interactions between Bankers and Research Analysts


Situation

Ever since the bursting of the dotcom bubble interactions between Research Analysts and Bankers have been subject to significant regulation aimed at addressing actual and perceived conflicts of interest. Subject to the jurisdiction, these requirements include bans on certain types of meetings and information exchange. In 2011 a leading international bank approached Eukleia to design a workshop that would remind staff about the applicable rules and policies as well as to educate them about allowable interactions. Aside from the very strong compliance message, the course also had an important commercial message which was, while always operating compliantly and ethically, to utilise better the skills of Research to benefit both issuer and investing clients.

Solution

Working closely with the Bank’s Global Head of Research Compliance, Eukleia designed an innovative two-hour workshop. The workshop incorporated video introductions, in which business heads voiced their support for the course; this was followed by a quiz based examination of the rules which used hand-held voting buttons. The heart of the course was a sophisticated case study that followed the chronology of a hypothetical deal and explored the impacts of both good and bad interactions on commercial, legal and regulatory outcomes. The course was designed around the Bank’s global policy but variants of the course were developed to address the specifics of regulation the US, India, Hong Kong, Brazil and Mexico.

The course was delivered to around 1000 Bankers and Analysts through some 30 workshops held in nine different locations around the globe.

Outcome

Qualitative feedback to the course was overwhelmingly positive with many stating that is was the best compliance training they had ever had. At the quantitative level its impact was also significant. After the course compliance breaches dropped considerably and in addition the requests for allowable Banker / Analysts interactions rose. This is exactly what the Head of Research set out to achieve - to get Research and Banking talking more, to have Research leveraged more but without breaches of policy and without the tension when inevitably on certain occasions the two constituencies diverge in their opinions of the value of a company coming to market.

Here is some feedback from one of the Research Analysts who attended:

“this was far and away the most engaging and entertaining compliance presentation I have ever been to, and in case that isn't saying enough, it was just outstanding compared to any presentation, compliance or otherwise. If all the mandatory training was this entertaining, I'd be (almost) willing to go voluntarily.”

 

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