MyComplianceOffice doubles client base with Charles Schwab subsidiary deal

Irish fintech company MyComplianceOffice (MCO) has more than doubled its client base after acquiring a subsidiary of the financial services giant Charles Schwab Corporation.

MCO is buying Schwab Compliance Technologies (SCT), a provider of advanced employee monitoring services, for an undisclosed sum. The acquisition is expected to close in mid-2022.

The new combined company will support more than 1,200 clients in about 100 countries.

The Chicago-headquartered company, which together with Schwab Brokerage Services formed part of Schwab’s Compliance Solutions business, has developed cloud-based compliance tools and technology that is used by about 700 corporate clients and nearly 100,000 licensed system users. Its products automate tasks associated with monitoring employee trading activity and administrating a firm’s code of ethics.

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Industry leadership

Speaking to The Irish Times, MCO founder and chief executive Brian Fahey said the deal "cemented the company's position as a leader in conduct risk technology. This is our first major acquisition and it is a deal that is hugely complementary as SCT is operating in the same space as us and with some of the same clients. It is a company we have admired and competed against for many years."

Mr Fahey founded the firm in 2005. It has about 500 customers across 80 countries with clients including Piper Jaffray and employs about 170 people globally.

The Dublin-based company provides compliance management software that enables companies to reduce their risk of misconduct. Its software platform monitors employee stock trading, manages material non-public information, analyses vendor risk and performs other key compliance requirements.

MCO does not disclose revenues, but Mr Fahey said the company was growing at a rate of about 40 to 50 per cent a year.

The company’s parent, FBF Investments, which owns an 82 per cent stake in MCO, reported turnover of $14.4 million (€13.2 million) in 2020, up from $11.35 million a year earlier with the company reversing a $53,477 pretax loss to record a $296,556 profit.

MCO, which is ranked in 38th place in Deloitte Ireland's Fast 50 list of tech companies, last year secured close to €10 million in debt financing from Silicon Valley-based investment firm Accel-KKR Credit Partners.

The company was originally founded as the result of a management buyout from Fidelity, one of Charles Schwab's main rivals. Mr Fahey led the buyout after seeing an opportunity to establish a produce-based firm around a software solution developed by Fidelity subsidiary TerraNua.

Charles Schwab Corporation is a leading Nasdaq-listed investment services firm with $7.8 trillion in client assets.