Enforcement actions by financial regulators can cause compliance professionals to rethink their career choice.
In the majority of cases the SEC brings against CCOs, (1) the compliance officers are involved in misconduct that is unrelated to their compliance function or (2) the CCOs have engaged in efforts to obstruct or mislead the investigation. Typically in these cases, the targeted compliance officers wore more than one hat.
But not always. Take a look at the Southwind Case.
Court E. Golumbic, a Participating Managing Director and the global head of Financial Crime Compliance for the Goldman Sachs Group, Inc. put it this way:
“Regardless of the cause, the resulting ‘chilling effect’ on financial sector compliance officers should raise an alarm. The level of ensuing ‘brain drain’ could diminish significantly the efficacy of financial sector compliance programs, and the integrity of the industry more generally.”
http://www.hastingslawjournal.org/wp-content/uploads/Golumbic-69.1.pdf
SEC Commissioner Hester Peirce tried to assuage fears at the National Membership Conference of the National Society of Compliance Professionals. She agreed that the SEC should tread carefully when bringing enforcement actions against compliance personnel and should not pursue enforcement actions based on strict liability for CCOs under Rule 206(4)-7.
Sources:
- Costumes, Candy, and Compliance: Remarks at the National Membership Conference of the National Society of Compliance Professionals October 30, 2018
- Thaddeus J. North, Exchange Act Release No. 84500 (Oct. 29, 2018)
- The Big Chill: Personal Liability and the Targeting of Financial Sector Compliance Officers, 69 Hastings L.J. 45, 49 by Court E. Golumbic
- CCO Liability for Wholesale Failure
- Another CCO Liability Case and the SEC Complains about “May” Instead of “Will”