On October 24th, SEC Director of the Division of Enforcement, Gurbir Grewal, spoke to the New York City Bar Association at their Compliance Institute.
He discussed multiple topics focused on compliance, trust in institutions, and the role professionals play in the current regulatory climate. There are some important takeaways below from his remarks.
- Proactive compliance is vital for success, and proactive compliance requires education, engagement, and execution.
- Education – compliance professionals must regularly educate themselves on rule changes and other regulatory requirements related to their business.
- Engagement – compliance professionals must be engaged in the daily activities of their business, giving themselves the proper vantage point to assess business risks and strategies related to compliance.
- Execution – good policies and procedures cannot lead to a successful compliance program without supervision and proper implementation.
- Many of the Firms charged for recordkeeping violations had policies and procedures in place, but employees simply ignored them.
- Firms that self-report and cooperate have been “aggressively rewarded” with substantially reduced penalties. Some behaviors that may help reduce penalties include:
- Preemptive ceasing and remediation of behavior.
- Proactive compensation to victims.
- Providing detailed information about relevant issues to investigators.
- Proactively identifying key documents and witnesses that staff have not identified.
- Facilitating interviews of former employees.
Vigilant’s “Hot Take”
We agree proactive compliance is essential for Firms maintaining a robust compliance program to meet SEC Rules and Regulations. In addition, cooperation during an Examination or Investigation with Regulators is important and certainly should benefit Firms in the long run. This we believe, all would agree.
However, self reporting has been and continues to be a controversial topic. Many are concerned or have a distrust that reporting in good faith, will still lead to the proverbial “book being thrown at them”. Without clear rules surrounding self reporting or actual case studies being presented, we believe this will continue to be a controversial topic.
At a time when billions of dollars in penalties are being handed down by the SEC, proactive compliance is the only cost-effective solution to navigate this aggressive regulatory environment while achieving business success.
Vigilant provides end-to-end, tailored compliance solutions that help your firm evaluate any deficiencies and make quick remediation’s based off current industry standards.
Avoiding a one-size-fits all compliance approach allows us to focus resources where they are most needed, and use of our professionals frees your staff to focus on achieving your business goals.
Our Mock SEC Exams can help identify gaps in your compliance program that provide opportunities to self-remediate.
For further discussion of the ways Vigilant can help support your business, reach out to us today.