These are some of the compliance-related stories that recently caught my attention.
Protecting the Compliance Officer: A Balanced Approach by Michael W. Peregrine in Corporate Counsel
From a governance perspective, it matters not that these chief compliance officer (CCO) enforcement actions appear to be narrowly focused in particular industry sectors. Rather, what matters is the potential these actions may have to more broadly destabilize the role and function of the compliance officer. The job is hard enough as it is. Should compliance officers feel (fairly or unfairly) that they are exposed to regulatory sanction for simply errors of omission or commission, the job will become even more challenging. Interest in compliance positions–especially in heavily regulated industries–may decline. Companies will be frustrated in their attempt to maintain effective compliance programs if they are unable to attract and maintain qualified, experienced compliance officers.
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Expanding personal liability for chief compliance officers by Brett Ingerman, Michael D. Hynes, Brian H. Benjet, Christian Michael Van Buskirk of DLA Piper
The imposition of personal liability on chief compliance officers is part of the regulators’ broader interest in compliance failures at the highest levels of financial institutions. Last Thursday, the Financial Industry Regulatory Authority (FINRA) sent letters to a dozen financial firms, inquiring about the methods by which the firms establish and maintain a culture of compliance. In addition to requesting general information on the firms’ practices, FINRA specifically requested information on how the firms established a “tone from the top.” FINRA characterized the request letters as an attempt to better understand how culture affects compliance, but the focus on the “tone from the top” suggests FINRA perceives or is at least particularly concerned about deficiencies among the highest ranking executives of financial firms. [More…]
Outsourced Compliance Officer Trend Renews Standards Debate by Stephen Dockery is WSJ.com’s Risk & Compliance Journal
It was also eventually cited by the SEC in a detailed risk alert in November on the “growing trend” of outsourcing chief compliance officers. The deep dive by the commission mentioned cases of strong compliance work by outsourced officers, but it also said some practices by off-site CCOs were cause for concern, where outsourced CCOs’ attention was lacking, or implementation of their suggestions never occurred. [More…]
Compliance Careers Might Get Interesting, Part II by Matt Kelly in Radical Compliance
There we were, me and a small group of compliance professionals, talking shop about where good compliance officers come from these days. One person, a recruiter for asset management firms, told the tale of how she recently placed a chief compliance officer at a hedge fund in the Midwest. This CCO was “a dream candidate,” the recruiter said: accomplished scholar, top-ranked law school, work at two major law firms, a stint in investment banking, some time on the regulatory side, “and just a friendly person people would want to talk to.” [More…]
Rob Cohen Discusses SEC’s Analysis and Detection Center by David Smyth in Cady Bar the Door
Enter the Analysis and Detection Center. I have a friend whose job requires him to think about insider trading for, oh, probably more than half of every day. When the SEC filed its first case referring to the Analysis and Detection Center, he emailed me asking something like, “There is one?” We both wondered what it was. So did Bruce Carton. It turns out the SEC is using it, whatever it is, to generate its own insider trading cases, without relying on FINRA or CBOE or any ol’ whistleblower. [More…]