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SEC: We aren’t targeting compliance professionals, but . . .

Over the past couple of years, the SEC and its chair, Mary Jo White, have given compliance officers plenty of face. Compliance officers are gatekeepers. They guard the integrity of the markets. They have a hard job and need to be protected.

But with that special standing comes something else. Accountability. These days the SEC is holding compliance officers to a higher standard. Do your job well or face the music.

Mary Jo White said it again last week at an SEC compliance outreach for broker-dealers.

She said:

The work you perform as compliance professionals is critically important to investors and the integrity of the markets. You are on the front lines working to create, implement, and enforce a strong and comprehensive set of policies, procedures, and systems to govern and supervise firm employees. 

Your work helps ensure that investors are armed with the information they need to make fully-informed decisions. Importantly, you help prevent problems from occurring in the first place and, if and when problems do arise, you use those experiences to inform your future work to promote early detection and remediation.

. . . We want to support you in your efforts and work together as a team.  As an agency, we have tried to send a clear message about the importance of compliance to your boards and senior management, as well as the importance of strongly supporting you and compliance generally. Compliance and risk management must be an organization-wide effort and responsibility.

We know firsthand how challenging that work can be with limited resources. . . .

To be clear, it is not our intention to use our enforcement program to target compliance professionals. 

We have tremendous respect for the work that you do. You have a tough job in a complex industry where the stakes are extremely high. 

That being said, we must, of course, take enforcement action against compliance professionals if we see significant misconduct or failures by them. 

Being a CCO obviously does not provide immunity from liability, but neither should our enforcement actions be seen by conscientious and diligent compliance professionals as a threat. 

We do not bring cases based on second guessing compliance officers’ good faith judgments, but rather when their actions or inactions cross a clear line that deserve sanction.

*     *     *

Mary Jo White’s full remarks at the SEC’s compliance outreach program for broker-dealers in Washington, D.C. on July 15, 2015 are here.


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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