The SEC Drinks Its Own Champagne

The SEC has named its first chief compliance officer: Kathleen Griffin.

She will be tasked with oversight of employee securities transactions and financial disclosure reporting. The creation of a compliance program to prevent insider trading came from last year’s insider trading scandal at the SEC. The Office of the Inspector General reported that “the Commission lacks any true compliance system to monitor SEC employees’ securities transactions and detect insider trading.”

Ms. Griffin will have her hands full. From the SEC OIG Report:

The current disclosure requirements and compliance system are based on the honor system. and there is no way to determine if an employee fails to report a securities transaction. There are no spot checks conducted and the SEC does not obtain duplicate brokerage account statements. In addition. there is little to no oversight or check;ing of the reports that employees file to determine their accuracy or even whether an employee has reported at all. Moreover. different SEC offices receive each of those reports and do not routinely share that information with each other.

It’s good to see the SEC drinking its own champagne and hiring someone to focus on their own internal compliance issues. (Doesn’t “drinks its own champagne” sound better than “eat its own dog food.”)

Since the announcement came on April 1, I thought it was an April Fool’s Day joke. Why would the SEC hire the comedian Kathy Griffin? Clearly, I was being overly cautious about my news intake. I was not alone in this confusion and I’m sure will not be the last to draw the comparison between the two.

I’m sure Kathleen’s comments to the SEC employees will be less controversial than Kathy’s comments at the Emmy Awards.

Sources:

• SEC Press Release
• Kathleen Griffin’s LinkedIn profile
• SEC Appoints Kathy Griffin Chief Compliance Officer by Jessica Pressler in New York Magazine
• Insider Trading at the SEC – prior post