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Importance of a Robust Compliance Program in a Post-Dodd-Frank World

Wednesday, November 13, 2013

The SEC Associate Director of Enforcement gave a speech on October 7, 2013 concerning the importance of a robust compliance and ethics program, and the SEC’s role in supporting compliance programs. He noted how the SEC’s Whistleblower Program created under the Dodd-Frank Act in October 2013 awarded over $14 million to a single whistleblower, and stated how the purpose of this program is to bolster the private sector compliance program. He pointed out how in September 2013 JPMorgan Chase agreed to pay $920 million in total penalties in a global settlement with regulators, and acknowledged that it violated the federal securities laws, and how JPMorgan recently announced it was spending billions of dollars and hiring or focusing 5,000 people to compliance/control functions.

The Associate Director went on to emphasize the importance of empowering compliance staff, and viewing them as trusted advisors that minimize risk. The SEC considers compliance programs when they decide how to credit an internal investigation. Though the SEC discusses a company’s compliance program during settlement negotiations, the Associate Director expressed his surprise at the lack of compliance culture studies during normal times. Regulators give much more credit when it can be demonstrated that misconduct is an outlier and a compliance-driven culture, rather than as a remedial step after investors have suffered losses due to the misconduct. The SEC’s 2001 Seaboard Release Framework laid out a framework which rewards the role of self-policing compliance programs that help ferret out misconduct, whereas the SEC considers a company’s compliance program as a factor in charging decisions, since the actions of compliance programs make it more likely the problem is caught early. To read the full speech please click here.

If you have any questions about this article or want to make certain your compliance program will stand up to an audit, please call Red Oak Compliance today. We are here to help.

About Red Oak Compliance Solutions

Red Oak Compliance Solutions is a leading provider of intelligent compliance software, offering a range of AI-powered solutions designed to help firms of all sizes successfully navigate the increasingly complex regulatory landscape. Our suite of 17(a)-4/WORM compliant features offer risk minimization, cost reduction, and process optimization capabilities with features that are designed to evolve with our client’s needs. Our flagship advertising review software enables firms to deliver compliant content to the market with confidence, faster. Our Disclosure Management and Intelligence solution simplifies the management of disclosures, while our Registration Management solution automates and streamlines the licensing and registration process, further enhancing your internal processes. 

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