Government Agency: SEC and FINRA

Solution or Platform Selected: Kaulkin Information Systems (KIS) KISTrack(tm) multi-tenant SaaS platform

1. The Government agency's challenge that led to the Cloud or SaaS adoption.
   Contact: Michael Binko president and CEO Kaulkin Information Systems (KIS) 240-499-3830 mbinko@kistrack.com www.kistrack.com Given the current happenings on Capitol Hill related to Congressional Hearings investigating the Madoff Scandal and otehr improper oversight guidelines by government and industry officials, this case study is particularly timely and meaningful. The case study directly relates to SEC and FINRA (the primary financial services industry regulatory entity) efforts to monitor best-practices and supervisory procedures of financial services organizations. In this instance the finserv organization was a securities broker-dealer. Under the Securities Act of 1934 and other SEC/FINRA guidelines securities firms are required to maintain strong checks-and-balances of their business processes -- particularly as they related to document and data storage and retention. Both the SEC and FINRA actively regulate these efforts. In fact, SEC, FINRA and even state regulators often show up unannounced on the door-steps of securities firms to inspect their adherence to these and other compliance guidelines. This case highlights how a SaaS-Cloud computing platform is already being used by securities firms to store critical documents that often need to be retrieved and reviewed during "instances of compliance scrutiny" by government and industry regulators. The benefits highlighted below are likely to be key goals for new transparency initiatives in the US government.



2. The solution that was chosen and why that particular solution was selected.
   The solution that was used in this situation is named KISTrack(tm) and was developed and marketed by Kaulkin Information Systems (KIS). KIS is a technology and solution services company that offers simple, yet powerful and affordable, hosted multi-tenant Software-as-a-Service (SaaS-Cloud) compliance, workflow and risk mitigation technologies. KISTrack is a multi-module SaaS technology platform that integrates the following application modules together: * TrackFile -- document management, scanning, indexing, archiving, storage * TrackFlow -- workflow, business process management, supervisory procedures, compliance audit trail, risk mitigation * TrackMail -- e-mail, eDiscovery message surveillance, archiving and compliance response engine * TrackCash -- check imaging and electronic transaction systems that utilizes ACH/Check21 and other capabilities to remove paper from transaction processes * TrackBatch -- patent-pending import/export technologies and methodologies for placing structured data into KISTrack of exporting similar data from KISTrack. KISTrack and its multiple SaaS modules are unique in that the systems is comprehensively integrated into a single platform. This integration makes sophisticated search and retrieval simple across all modules. Combined with unique audit-trail technologies, this integration allowed both the regulators and the securities firm to drastically minimize hourly down-time during compliance audits. A 9-month ROI Benchmark study was completed to measure these results.



3. Results of the implementation. How did the vendor meet the agency's needs?
   In 2007 a 9-month ROI Benchmark Study was conducted to evaluate how much time and resources were being saved using SaaS-based document management and workflow during instances of "audit scrutiny" in the Financial Services securities community. The results were dramatic -- even to our internal vendor team members. When standard manual (non-automated) processes for responding to SEC and FINRA audits were compared side-by-side with the same processes that had been automated via SaaS the avergage amount of hard-dollars saved by avoiding staff down-time was more than $2,700 PER AUDIT INSTANCE. The reasons for this reduced down-time were many and relate directly to the power of employing SaaS-based applications in critical compliance best-practice and audit mitigation activities. In summary, the chief compliance officer of the field office in which the ROI Benchmark Study was conducted estimated that the average SEC/FINRA or internal audit took between 12 and 32 man-hours of time for response. At an average hourly rate of more than $145/hour the costs were often considerable. Using KISTrack, the firm reduce dthe down-time in these matters to less than 1 hour (45 minutes on average). This represented an annual savings of more than $2.0 million for the firm.