Compliance Bits and Pieces for October 28

These are some compliance-related stories that caught my attention recently:

The Role of Compliance and Ethics in Risk Management by Bruce Carton in Compliance Week’s Enforcement Action

Carlo V. di Florio, director of the SEC’s office of compliance inspections and examinations, recently spoke at the National Society of Compliance Professionals’ National Meeting held in Baltimore, Maryland. di Florio focused his remarks on three main points:

Ethics is fundamental to the securities laws, and ethical culture objectives should be central to an effective regulatory compliance program;
Leading standards have recognized the centrality of ethics and have explicitly integrated ethics into the elements of effective compliance and enterprise risk management; and
Organizations are making meaningful changes to embraced this trend and implement leading practices to make their regulatory compliance and risk management programs more effective.

SEC Raises the Bar on Tone at the Top by John T. Dalton in SAI Global’s Viewpoint

A Reuters article last week revealed that the Securities and Exchange Commission (SEC) has begun taking a new tact when conducting its compliance examinations at brokerage firms. Of note, this new practice by the SEC will require more direct involvement by a company’s executives and members of senior management in the compliance exam process, including on-site meetings and interviews with examiners. According to the article, the SEC had previously relied upon chief compliance officers as its primary points of contact for examinations, but that by involving top management, the SEC now hopes “to get more respect for chief compliance officers.

Everything Old is New Again: Alcoa and Olympus by Tom Fox

In an article in the Wall Street Journal (WSJ), entitled “Kickback Probe at Alcoa Heats Up”, reporter Dionne Searcey takes a look at the arrest of two figures in the bribery investigation of Alcoa’s activities in Bahrain in connection with the government owned manufacturing company known as Alba. In an article in the New York Times, entitled “Acquisitions at Olympus Scrutinized,” reporter Hiroko Tabuchi reviews “a tale of deals and advisors, with puzzling results.” Both cases present novel twists and turns that, if you told someone the facts, you would be accused of making up both stories.

Stay Away From These 5 Investigation Interview Mistakes by Lindsay Walker in Corporate Compliance Insights

1. Not Prepping for the Interview
2. Failing to Ask the Question
3. Failing to Build Rapport
4. Failing to Stop Denials
5. Showing Judgment

Firms Must Protect Customer Information – Always by Mark Astarita in SEClaw.com

The SEC has provided another example of an unintentional violation [of Regulation S-P], and charged three former brokerage executives for failing to protect confidential information about their customers. According to the Commission, when GunnAllen Financial Inc. was winding down its business operations last year, its former president and former national sales manager violated customer privacy rules by improperly transferring customer records to another firm. The SEC also accused the firm’s compliance director with failing to enforce the supervisory procedures in an unrelated incident.

DOL issues final rule on 401(k) investment advice exemptions By Hazel Bradford in Pensions & Investments

The Department of Labor on Monday finalized a rule spelling out permissible scenarios for giving investment advice to 401(k) participants without running afoul of prohibited transaction rules. The rule, which will goes into effect in 60 days, allows for providing investment advice under one of two scenarios: through the use of a computer model certified as unbiased, or through an adviser paid a “level,” or flat, fee that does not change based on investment choices.

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