TheCorporateCounsel.net

Earlier this week at the New York City Bar’s Compliance Institute, SEC Enforcement Director Gurbir Grewal outlined the rare circumstances in which the SEC may bring enforcement action individually against compliance professionals. Grewal noted that these circumstances include when the individual affirmatively participates in misconduct unrelated to compliance, when an individual misleads regulators or when there has been a wholesale failure in carrying out compliance responsibilities. Grewal further stated “We don’t second guess good faith judgments of compliance personnel — good faith judgments that are made after reasonable inquiry and reasonable analysis.” In the speech, Grewal noted:

But it is clear that we cannot reverse those trends and enhance Americans’ trust in our financial institutions through our efforts alone. We need your help to do so. We need to work together to create what I call a culture of proactive compliance.

In many ways, it’s each of you – the compliance professionals, consultants, attorneys, accountants, and others in this space – that serve as the first lines of defense against misconduct.

You are the ones that can work with firms to implement effective policies and procedures to ensure that those firms comply with their legal obligations on the front end, so that, instead of reading about compliance failures, the public understands that organizations like yours are proactively doing what they can to be compliant.

This is by no means easy work. Creating a culture of proactive compliance requires three things: education, engagement, and execution.

Grewal outlined actions necessary for proactive compliance and the need to execute based on meaningful policies and procedures.

– Dave Lynn