Confluence, Backed by Clearlake Capital and TA Associates, to Acquire Compliance Solutions Strategies (CSS)
Combination will establish a leading investment management software platform of unmatched global coverage
Pittsburgh, PA, November 9, 2021 – Confluence Technologies, Inc. (“Confluence”), a global technology solutions provider helping the investment management industry solve complex investment data challenges, today announced that it has agreed to acquire Compliance Solutions Strategies (“CSS”), a global regulatory software (“RegTech”) company that enables financial services firms to meet mandatory regulatory compliance requirements. Confluence is backed by Clearlake Capital Group, L.P. (together with its affiliates, “Clearlake”) and TA Associates (“TA”).
Founded in 2017 and headquartered in New York, CSS offers clients a next-generation global RegTech platform underpinned by its proprietary Regulatory Book of Record (RBOR) data management solution. Servicing more than 600 clients globally, including nine of the top 10 global asset managers and six of the top 10 global hedge funds, CSS is a respected and fully integrated Compliance-as-a-Service provider, bringing together innovative SaaS-driven technology solutions, deep regulatory expertise and white-glove managed services to support the investment management community. CSS’s extensive solution capabilities span regulatory reporting, investment monitoring, transaction reporting and compliance program management.
This acquisition further advances Confluence’s strategy to expand its regulatory compliance offering and will create a unique and comprehensive cloud-based RegTech solution for the financial industry. With global coverage and SaaS solutions for enterprise risk, regulatory reporting, and compliance, the combined company will build on a culture of customer-centric innovation to better serve the asset management industry. The transaction is expected to close in the fourth quarter of 2021.
“Confluence is pleased to welcome CSS to the team as we look to deliver on our growth strategy. We have long respected their SaaS-based solutions and admire their depth of in-house regulatory expertise,” said Mark Evans, CEO of Confluence. “We see tremendous demand in this space as global regulators continue to refine and expand compliance and reporting obligations, furthering the need in the market for technology that streamlines operational efficiencies and drives scale. The CSS and Confluence offerings are highly complementary and together we will continue to deliver a truly innovative, end-to-end regulatory solution to our clients.”
“We are excited about Confluence’s acquisition of CSS and believe that it significantly enhances Confluence’s regulatory compliance capabilities,” said Behdad Eghbali, Founder and Managing Partner, and James Pade, Partner, of Clearlake. “With its second acquisition announced this month, Confluence is reshaping the investment management industry. Working alongside TA and the Confluence team, we will continue to look for opportunities to grow the business organically and through acquisitions, while optimizing its operations.”
“We are excited to join forces with Confluence to create an unmatched regulatory compliance platform of scale, resilience, and global reach,” said Doug Morgan, CEO of CSS. “Confluence is an innovator in the investment management industry with highly complementary solution capabilities and a stellar reputation earned by helping clients manage complex requirements. This compelling combination will accelerate the efforts of both organizations in driving the digital transformation of regulatory compliance for our clients.”
Sidley Austin LLP served as legal counsel to Confluence.
About Confluence
As a leading global technology solutions provider to the investment management industry, Confluence helps clients solve complex investment data challenges across the front, middle and back office. From innovative portfolio analytics to regulatory and financial reporting solutions, Confluence invests in the latest technology and data and in its team of industry experts to meet the evolving needs of asset managers and service providers. Headquartered in Pittsburgh, PA, Confluence services over 400 clients in 40 countries, with locations across Europe, North America, South Africa, Australia and Asia. For more information, visit www.confluence.com.
About CSS
CSS is a trusted global RegTech partner that uniquely brings together innovative technology-driven solutions to support financial services firms in navigating a clear and strategic path through the complex and fragmented global regulatory space. CSS’s solutions and services help firms meet regulatory deadlines while optimizing compliance data, operations and technology. CSS covers a full range of global compliance disciplines spanning fund reporting, transaction reporting, investment monitoring, compliance management, compliance services and managed services with a complementary, centralized approach to the strategic management of regulatory data called RBOR (Regulatory Book of Record). For more information on CSS, please visit: www.cssregtech.com.
About Clearlake
Clearlake Capital Group, L.P. is an investment firm founded in 2006 operating integrated businesses across private equity, credit, and other related strategies. With a sector-focused approach, the firm seeks to partner with management teams by providing patient, long-term capital to businesses that can benefit from Clearlake’s operational improvement approach, O.P.S.® The firm’s core target sectors are technology, industrials, and consumer. Clearlake currently has over $50 billion of assets under management and its senior investment principals have led or co-led over 300 investments. The firm has offices in Santa Monica and Dallas. More information is available at www.clearlake.com and on Twitter @ClearlakeCap.
About TA Associates
TA is a leading global growth private equity firm. Focused on targeted sectors within five industries – technology, healthcare, financial services, consumer and business services – the firm invests in profitable, growing companies with opportunities for sustained growth, and has invested in more than 535 companies around the world. Investing as either a majority or minority investor, TA employs a long-term approach, utilizing its strategic resources to help management teams build lasting value in high quality growth companies. TA has raised $47.5 billion in capital since its founding in 1968 and is committing to new investments at the pace of over $3 billion per year. The firm’s more than 100 investment professionals are based in Boston, Menlo Park, London, Mumbai and Hong Kong. More information about TA can be found at www.ta.com.
Media Contacts
For Confluence:
Michael Kingsley
Forefront Communications Group, Inc.
+ 1 212-320-8984
mkingsley@forefrontcomms.com
For Clearlake:
Jennifer Hurson
Lambert & Co.
845-507-0571
jhurson@lambert.com
For TA Associates:
Marcia O’Carroll
TA Associates
617-574-6796
mocarroll@ta.com
Compensating Advisers: Compliance Updates from the Department of Labor
On Monday, October 25, 2021, the Department of Labor (DOL) issued Field Assistance Bulletin No. 2021-02 that covers compensating advisers and further delays enforcement against investment advice fiduciaries who receive compensation that would otherwise be prohibited without full compliance with PTE 2020-02. Among the compensating adviser topics covered are includes the receipt of commissions, 12b-1 fees, revenue sharing, markups and markdowns in certain principal transactions, and investment management fees covering retirement assets.
First, for the period from December 21, 2021, through January 31, 2022, the Department will not pursue prohibited transactions claims against investment advice fiduciaries who are working diligently and in good faith to comply with the Impartial Conduct Standards for transactions that are exempted in PTE 2020-02 or treat such fiduciaries as violating the applicable prohibited transaction rules. Second, the Department has determined that it will not enforce the specific documentation and disclosure requirements for IRA rollovers in PTE 2020-02 through June 30, 2022. All other requirements of the exemption, however, will be subject to full enforcement as of February 1, 2022. So, for now, the methods for compensating advisers remains unchallenged.
Why Compensating Advisers Is Changing
These other requirements include: (1) compliance with best interest standards, (2) acknowledgement of ERISA fiduciary status to owners of covered retirement assets, (3) delivery of a written description of services and disclosure of conflicts of interest, (4) policies and procedures to implement best interest standards and mitigate conflicts of interest, and (5) conducting an annual retrospective review of compliance with the requirements, which must be signed by a Senior Executive.
Second, the DOL has determined that it will not enforce the specific documentation and disclosure requirements in PTE 2020-02 through June 30, 2022. The delayed documentation and disclosure standards require documentation of the determination whether the conflicted investment advice is in an investor’s best interest, and delivery of that information to the investor. Currently, RIAs should already be documenting how they are compensating advisers as well as how investment decisions and recommendations are in a client’s best interest consistent with the SEC’s July 12, 2019 Commission Interpretation Regarding Standard of Conduct for Investment Advisers. CSS has emphasized specific relevant documentation of rollover advice, and that practice should continue by RIAs. Broker dealers who have relied on the DOL relief to begin providing conflicted advice will continue to move towards full implementation of the documentation and disclosure requirements with overlap to Regulation BI systems addressing best interest standards for retail investors.
For CSS’s clients, upcoming changes around compliance for compensating advisers with PTE 2020-02 will be adaptations of existing practices already covering retirement assets and rollovers rather than whole new practices.
Compliance Solutions Strategies Partners with Grasp
Partnership brings a unique combination of local market presence and global regulatory compliance coverage to South Africa and Sub-Saharan Africa
NEW YORK, November 4, 2021 – Compliance Solutions Strategies (“CSS”), a leading RegTech platform providing technology-driven solutions which enable financial services firms to meet mandatory regulatory compliance requirements, today announced a partnership with Grasp to expand CSS’s presence into Africa. The combination of Grasp’s local presence and expertise, together with CSS’s global Compliance-as-a-Service platform, will bring unique value to financial institutions in the South African and Sub-Saharan markets.
The partnership with Grasp strengthens CSS’s position as a world-class RegTech solutions provider to institutional asset managers, asset servicers, hedge funds and insurers, with an expanded presence into Africa. Financial services clients in South Africa and Sub-Saharan Africa will benefit from having access to an innovative end-to-end RegTech platform that covers a full range of global compliance disciplines spanning fund reporting, transaction reporting and investment monitoring.
“Our strategic collaboration with a world-class technology partner like Grasp further expands the reach of our global end-to-end regulatory platform,” said Doug Morgan, Chief Executive Officer of CSS. “Our shared value proposition will help investment management firms in the region meet mandatory compliance requirements and stay ahead of regulatory changes across jurisdictions.”
“Grasp is delighted to announce its partnership with CSS, a global leader in technology and services that supports financial services companies in navigating the complex global regulatory landscape,” said Chris Lourens, Director of Grasp. “We are keenly aware of the challenges faced by firms in keeping up to date with fluid regulatory requirements. This partnership will enable us to offer more effective solutions to enable our clients to remain compliant at all times.”
About CSS:
CSS is a trusted global RegTech partner that uniquely brings together innovative technology-driven solutions to support financial services firms in navigating a clear and strategic path through the complex and fragmented global regulatory space. Our solutions and services help firms meet regulatory deadlines while optimizing compliance data, operations and technology. CSS covers a full range of global compliance disciplines spanning fund reporting, transaction reporting, investment monitoring, compliance management, compliance services and managed services with a complementary, centralized approach to the strategic management of regulatory data called RBOR (Regulatory Book of Record). The company currently serves over 600 software clients in the financial services vertical comprising of hedge funds, traditional asset managers and fund administrators, including Tier 1 buy-side and sell-side institutions. CSS maintains a global footprint across both North America and Europe with customer-facing offices in New York, London, Dublin, Amsterdam and Stockholm. For more information on CSS, please visit: www.cssregtech.com
About Grasp:
Grasp is a specialised service provider to the investment industry, with a management team combining more than 50 years of experience. Leveraging from CSS expertise and technology, Grasp will support investment businesses from all African countries in managing their compliance to an ever expanding and complex regulatory environment. For more information on Grasp, please visit: http://www.graspregtech.co.za/
MiFIR Transaction Reporting Validation Rules Update
ESMA has recently published a document outlining updated validation rules for MiFIR Transaction Reporting. The changes are applicable from Q2 2022 with the exact date for go live to be confirmed at a later stage. Most of the updated validation rules are minor tweaks and clarifications including checks that the date of birth fields of the Buyer/Seller and Buyer/Seller decision should not be later than the trade date, that the MIC also needs to be valid in the reference data on transaction date, and that the ‘EntityStatus’ shall be active on trading date for Buyer/Seller and Buyer/Seller Decision Maker ID codes. The ESMA update, including a change log with all updated validations, can be found here.
Update on UK PRIIPs 2.0
Good news from the FCA Policy Statement where it was confirmed the proposed effective date for the proposed UK PRIIPs RTS would no longer be 1st January 2022. The FCA indicated they will publish the outcome of their consultation on PRIIPs in Q1 2022 – when we will receive an update on the RTS and new effective data for compliance for this RTS.
FinDatEx Opens Consultation on EPT Version 2.0
The FinDatEx TWG (Technical Working Group) for PRIIPs has published the proposed changes to the EPT template to account for the new draft RTS published by the European Commission on 7 September 2021, as well as the changes needed to account for the ending of the UCITS grandfathering period. In line with the typical governance of the template adjustment process, the proposed version EPT 2.0 is now under public consultation until 22 November 2021. The template is available here and feedback can be sent to directly to the TWG via email to priips@findatex.eu.