Magazine article American Banker

Service Offers Early Warning on Brokerage Compliance

Magazine article American Banker

Service Offers Early Warning on Brokerage Compliance

Article excerpt

By CHERYL WINOKUR David M. Sanderford knows that even simple mistakes can cost banks millions-and that incipient problems are often known to line employees but not to management.

So Mr. Sanderford, a lawyer who for 15 years has focused on the distribution of financial products through banks, has designed ProtectLine, a service to help banks identify compliance-related problems.

Starting Feb. 1, bank and brokerage employees whose institutions subscribe can use a toll-free number to report concerns anonymously about their company's investment sales practices or about a specific broker.

In response Mr. Sanderford would write up an incident report, classifying the concern as sensitive, probably not sensitive, or not sensitive and send it to the bank's compliance department.

Mr. Sanderford said his service would help banks avert costly legal actions. "It is very low-cost, and the bank employee can choose whether or not to use it," he said.

Mr. Sanderford formed Maxford Co. in Dallas last November to offer banks ProtectLine and other compliance-related products and services. He said recent articles on compliance pitfalls helped persuade him that the time was right to found his own company.

Previously he headed bank sales for Life Insurance Company of the Southwest, a unit of National Life of Vermont. He has also done stints at Aetna of Hartford, Conn., and Great Northern Annuity in Seattle.

ProtectLine would help shield banks from punitive damages, as well as class actions, Mr. …

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