Missing or undisclosed OBAs pose a significant regulatory risk, as they can create conflicts of interest, obscure the true scope of an individual’s financial activities, and lead to violations of FINRA Rule 3270 or SEC disclosure obligations. Ensuring timely and accurate OBA disclosures not only protects firms from enforcement actions and reputational harm but also strengthens their overall compliance posture.

FINRA Rule 3270 specifically addresses Outside Business Activities of registered persons, requiring that individuals provide prior written notice to their employing firm before engaging in any business activity outside the scope of their relationship with the firm. The intent behind this rule is to give firms the opportunity to assess whether the proposed activity could interfere with the individual’s responsibilities or pose a conflict of interest. If the firm determines that the activity could impact its regulatory obligations or client relationships, it may impose conditions or prohibit the activity altogether. Non-compliance with Rule 3270 can lead to regulatory sanctions, including fines or suspension, making it imperative for firms to implement robust systems for identifying, reviewing, and tracking OBAs. By utilizing tools like OpenCorporates in conjunction with Red Oak’s compliance solutions, firms can stay ahead of potential violations and maintain a high standard of regulatory adherence.

Red Oak had previously relied on general web searches to identify potential business relationships linked to monitored individuals. This method was inconsistent, time-consuming, and often missed key connections, especially when businesses used alternate names or were registered in different states. Their clients also attempted manual searches through individual Secretary of State websites, which yielded limited results due to fragmented data access, varying search capabilities across states, and a lack of centralized information. These approaches lacked both the scale and accuracy needed to effectively detect undisclosed OBAs, leading to gaps in compliance oversight and increased regulatory risk.

Using OpenCorporates’ corporate and individual search APIs, Red Oak was able to implement their solution in a relatively short time with very few people. They had one PM and one developer work on it and it was designed and implemented within a few weeks.

The most valuable feature in addressing their challenge was the ability to search across multiple states and jurisdictions simultaneously. This capability eliminated the inefficiencies of manually checking each Secretary of State website individually, enabling a more comprehensive and efficient review process. Additionally, the inclusion of direct links back to the official Secretary of State websites was a huge help, allowing for easy verification and validation of the information found. Another critical advantage was that the system supported automation, enabling their clients to integrate these searches into their broader compliance workflows. This not only reduced manual workload but also ensured consistent, repeatable checks that enhanced both accuracy and regulatory coverage.

The shift from manual Secretary of State searches to an automated, multi-jurisdictional solution has delivered clear efficiency gains. Each manual search previously required 10 to 15 minutes of staff time and, in many cases, incurred per-search fees charged by the state websites. By streamlining this process through a centralized platform, Red Oak significantly reduced the time and cost associated with identifying OBAs. The ability to run batch searches and automate ongoing monitoring has allowed teams to reallocate resources to higher-value compliance tasks, ultimately improving operational effectiveness and reducing the overall burden of regulatory review.

For their clients, the most significant qualitative outcomes have been a noticeable reduction in compliance risk and an increased sense of peace of mind. By using a more reliable and comprehensive method to identify Outside Business Activities, firms feel more confident in their ability to meet regulatory obligations and avoid potential enforcement actions. This enhanced visibility also supports better decision-making, as compliance teams are equipped with clearer, more actionable information. In turn, this fosters a stronger culture of compliance across the organization, reinforcing trust between compliance personnel, leadership, and regulators.

The overall impact for their clients has been a significant shift in how they manage the identification and review of Outside Business Activities. By eliminating the need for time-consuming, manual searches across individual Secretary of State websites, they’ve been able to save valuable time and resources, often able to find and address issues within weeks of implementing the solution. This has allowed compliance teams to focus more on higher-priority tasks and strategic initiatives rather than administrative work. The streamlined process not only improves efficiency but also strengthens their compliance posture by providing more consistent and reliable data, ultimately enhancing their ability to manage regulatory risk with greater confidence.

As their client base continues to grow, they see significant opportunity to deepen their integration with OpenCorporates and build out more advanced capabilities within their compliance platform. This will allow them to offer even more robust tools for identifying and managing Outside Business Activities, while also exploring additional data sources and automation features to further streamline the compliance review process. Their goal is to continuously evolve their solution to meet the changing regulatory landscape and the needs of their clients.