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Build, Buy or Outsource: Tax Reclaims and Class Action Recovery

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This article is sponsored by Goal Group.

Written by Bill Salva and Noah Wortman

The arguments in favor of outsourcing or buying a commercial enterprise solution from a qualified Tax Reclaim and Securities Class Action Recovery provider are compelling. One common guideline applied by many for this decision is to buy or outsource when you need to automate a commodity business process, and to build only when you’re addressing a core process that differentiates your company. The reality for most financial service firms is that Tax Reclaims and Securities Class Recovery processing is rarely considered a core business process, no matter how much many of us in the recovery business like to think it is. That said, banks, brokers and other financial institutions that provide securities trust, custody and related services for clients often have an obligation to perform these services either under local fiduciary standards, regulations or customer service level agreements. The fact is that many organizations have been forced to recognize this obligation by either their regulators or their clients and have had to decide whether to build, buy or outsource.

Tax Reclaims

The business of filing tax reclaims is not rocket science. However like rockets themselves, it has many moving pieces that require constant vigilance and attention to detail. The technology platforms that support tax reclaims need to have the functionality to account for and manage changes over time in many details such as investor tax status, income types, tax rates, filing regulations, reclaim forms, tax treaties, and other requirements imposed by various actors in the value chain.

The main problem with tax reclaim systems built in-house is that they require constant business-rule updates and upgrades to accommodate new markets, regulations, and other modifications. Keeping these systems up to date requires a commitment to sufficient resources, including expert staff and/or access to professional advisory services that many organizations overlook or under estimate. As with other in-house built solutions, the classic issues also often arise including; such systems usually cost more to develop than to buy when all costs are factored in; requirements, design and development expertise are often hard to find and keep; and internal competition for limited resources constantly threatens an in-house system’s viability.

Buy an Off-the-Shelf Solution

A tax reclaim solution from a qualified provider offers a myriad of benefits. Since a truly qualified and experienced provider will have been in this business for decades and provides its solution to many firms, the solution will likely have all the needed functionality built-in. An off-the shelf solution can also be deployed much more quickly and at a lower cost. The best providers also include business-rule maintenance that provides timely upgrades and updates. It just doesn’t make sense to “reinvent the wheel” when it comes to the right choice for a tax reclaim solution.


For many firms an outsourcing model makes even more sense. As noted above, it’s clear that an off-the-shelf solution is preferable to building one in-house. However, it still requires firms to hire, train, and keep qualified staff to manage and perform all operational activities. These are not insignificant challenges for many firms due to budget constraints and shortages of qualified staff. On the other hand, outsourcing enables a firm to provide clients a world-class tax reclaim service in the shortest amount of time, at the lowest possible start-up cost and without having to staff up and support another operations team.

Securities Class Actions Recovery

When a securities class action settlement is announced, the terms under which a class member can claim a loss and seek recovery under a settlement agreement can vary substantially from case-to-case. In general, the purchases, sales and certain other trading activity in publicly traded securities of potential class members need to be evaluated to determine whether they qualify to lodge a claim, and each court approved settlement administrator has its own defined terms, manner and timing required to lodge valid claims. Moreover, the U.S. is no longer the only country for which there may be an option to pursue recovery, and each global jurisdiction brings its own set of rules and procedures to participate in class actions. This analysis is complicated and not for the faint of heart and should probably be left to the experts.

Here, the choice is whether a firm should do it themselves or outsource. An in-house solution primarily requires the development of internal expertise in the mechanics of class actions litigations and nowadays, even more so, given its ever growing global phenomenon. As with tax reclaims, qualified class actions staff are difficult to find and retain, and it is often difficult to justify dedicated staff and technology resources to securities class action activities. Like tax reclaim outsourcing discussed above, outsourcing securities class action monitoring and recoveries to a qualified, experienced provider is arguably the best way for a firm to offer securities class action recovery services to clients at the lowest possible cost.

About Goal Group
Goal Group is the world’s leading class actions and tax reclamation services specialist. With headquarters in London and offices in Philadelphia, San Francisco, Melbourne and Hong Kong, Goal Group monitors client assets with a total value in excess of £8 trillion. It has a truly blue-chip client base including many of the world’s largest global custodians, asset managers, private banks, pension funds, local government authorities, hedge funds, investment banks, prime brokers, and fund managers spread widely across the Americas, EMEA and Asia Pacific.

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Transforming Saudi Arabia’s Capital Markets

This article is sponsored by State Street.


– Vision 2030 and the Aramco privatization mark a decisive point to advance Saudi Arabia’s financial sector — a critical ingredient to the country’s economic transformation

– Saudi’s “Financial Triad” remains partially incomplete with a sound banking system and a rapidly emerging equity market, but an immature bond market.

– The privatization of Saudi state assets (including Aramco) could deliver a boost to the depth and sophistication of the Saudi equity market and — if cleverly designed— have positive spillover effects into other areas of finance and policy.

– The timing is ideal to launch an accompanying systematic drive to build local currency bond markets, which is a prerequisite for achieving the broader economic goals of Vision 2030.

Saudi Arabia’s Vision 2030 is remarkable in its aspiration to engineer far-reaching economic transformation. As a global asset manager, we note that one of the three pillars of this vision sets out the aim to make the country a “global investment powerhouse.” 1

While Saudi Arabia has a strong legacy as a sovereign investor in foreign markets, this ambition also requires its local financial system to deepen across all sectors. Strong capital markets work together with a banking system to channel investment and ensure efficient capital allocation across the economy. In the absence of such channels, many worthwhile business ventures never take place, capital is misallocated and underutilized, and economic growth remains below its potential.

To read the full study please click here.

1 Foreword to Vision 2030,

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Sovereign Wealth Funds as a Driver of African Development

This article is sponsored by Quantum Global.

Sovereign wealth funds (SWFs) are becoming important sources of development in many countries. African SWFs have been growing in recent years, as many countries joined the international trend in establishing SWFs, while many others are preparing to join. Growth of SWFs has been driven by rising commodity prices until 2014 and improving economic growth rates. At the same time, Africa continues to face a number of development challenges, raising the question of whether SWFs can play a role in fostering economic development on the continent. This paper analyses the dynamics and role of SWFs in promoting development in Africa. The paper notes that SWFs can play a more active role in Africa’s development by bridging the infrastructure funding gap, supporting industrial development and economic diversification, reducing macroeconomic volatility and enhancing intergenerational equity. For SWFs to be effective in delivering their mandates and supporting economic development, they need to have clear goals and objectives, improve their governance and transparency frameworks, improve their risk management frameworks and embrace the Santiago Principles. African governments need to develop more attractive frameworks and climates for SWFs to invest in the continent, especially in sectors that contribute more directly to addressing Africa’s development needs.

To read the full study please click here.

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Collateral: The New Performance Driver

This article is sponsored by BNY Mellon.


In 2017, the global buy-side community faces considerable liquidity and funding pressures, stemming from market and regulatory reforms that are causing disruption. As a result, access to high-quality collateral, funding and liquidity is not only a pressing concern but has emerged as the essential new performance driver for the buy-side.

This disruption is the result of two opposing forces. Stringent regulatory requirements are forcing market participants to seek collateral — generally of high quality — in order to secure trading exposures. At the same time, the sell-side — or dealer-sponsored financial plumbing used to supply liquidity and collateral to the market — is experiencing challenges due to Basel III capital and liquidity constraints.

A major concern among multiple buy-side firms is that the next market-stress event will occur not because of a lack of collateral in the financial system but rather due to the inaccessibility of this collateral.¹ This scenario is forcing firms to reevaluate their collateralized trading portfolios, recalibrate asset allocation strategies and in some cases review the investment products offered to end clients.

This paper presents the findings from BNY Mellon–PwC outreach to senior buy-side executives from over 120 global firms conducted during the first quarter of 2017. It provides insights on demand-supply imbalances that are being experienced by buyside firms and the possible solutions they are exploring in response to fears that ready access to liquidity and high-quality collateral may become scarce in the years ahead.

The picture that emerged from these discussions was one of a buy-side community both grappling to adjust to its new collateralized trading obligations as well as striving to secure access to sustainable sources of funding and liquidity.

To read the full study please click here.

1. Collateral can be inaccessible due to decreasing velocity of collateral, which indicates how much, on average, a single dollar of collateral is reused over a period of time. This is analogous to the concept of “velocity of money.”

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