Why Care About Ethics?

A 2013 speech by Stephen L. Cohen, Associate Director of Enforcement of the SEC, highlighted the importance of corporate compliance and ethics. Importantly, the speech set out to explain how a good, effective compliance program can often help a firm mitigate their risk ranking with the SEC’s National Examination Program. So in other words, being able to evidence the tone at the top and the culture of compliance within your organization can help keep the regulators at bay longer between routine visits.

But don’t take our word for it, listen to what Cohen said:

“First, there is no doubt in my mind that a strong compliance and ethics program not only provides direct economic benefits to your company but will also allow you to reap significant credit should you ever deal with us or our law enforcement colleagues. The alternative may be squaring off against our vigorous enforcement program…. More broadly, in the firms the SEC regulates, our National Examination Program staff meets with senior leaders, boards and compliance personnel, to assess the culture of compliance and ethics in the organization. These assessments can factor into the level of risk the staff ascribes to a firm, which can affect how frequently they are examined. And, they do not hesitate to emphasize the importance of supporting these functions through enforcement if necessary.”

So what are the consequences for not having a robust compliance program? As Associate Director Cohen explains:

“Working closely with our National Exam Program and colleagues in our Investment Management Division, Enforcement’s Asset Management Unit is coordinating efforts to identify and bring cases against registered investment advisers who lack effective compliance programs and procedures. Effective compliance programs and personnel are instrumental to protecting the investing public from investment adviser fraud. To date, the Commission has brought six actions arising out of this initiative, which is particularly timely because hundreds of private fund advisers have recently registered with the Commission under Dodd Frank. And there are more in the pipeline.”

No one wants to find themselves in the crosshairs of enforcement so it is important to not just implement a compliance program, but to have it permeate the entire organization.

“A strong ethical culture flows from good governance and requires leaders to promote integrity and ethical values in decision-making across the organization,” Cohen said. “This entails asking not just ‘can we do this,’ but ‘should we do this?’”

A culture of compliance and ethics can and should be measured from interaction with leadership across the organization as well as from front line employees who are often a revealing barometer of what the culture and expectations really are.”

And remember that compliance is not a ‘set-it-and-forget-it’ type function. Rather, it has to be an active, continuous process, constantly striving to be better and more enhanced. As the Associate Director points out:

“…your organization must proactively keep pace with developments and leading practices as part of a commitment to a culture of ongoing improvement. Business models, rules, ethical standards and compliance tools are continually evolving. Yet, recent studies show that compliance officers may not be focusing on emerging risk areas such as social media and privacy issues. Leading organizations ensure that they stay in front of these changes through a process of ongoing improvement that leverages new technology and best practices.”

So, are you on the front lines looking out for the next compliance enemy, or simply getting lost in the trenches?

Latest Content

Ascendant’s Jason Morton to Speak on RegTech at Strata Data Conference

Alongside technology experts from American Express, Credit Suisse and CIBC, Ascendant’s Jason Morton will speak on developments in regulatory technology at the ‘Fintech Data Day’ at the annual Strata Data Conference on September 26, 2017 in New York. The Strata Data Conference is an annual conference for technology and business professionals who are seeking innovative … Continued

Hurricane Season: How Does your BCM Program Stack Up?

As Hurricane Harvey touches down on U.S. soil and we hope for the safety of the millions in its path, we encourage all firms, even those outside Harvey’s path of flooding and damaging winds, to consider their BCM readiness for such an event. Business Continuity Plans are designed to ensure firms have conducted sufficient advance preparation so … Continued

Surprise, Surprise: SEC Conducting Unannounced Exams

The Boston Regional Office of the SEC has recently conducted roughly 20 unannounced visits to registered investment advisers in the region. This fact, confirmed during the recent meeting of the New England Broker-Dealer and Investment Adviser Association (NEBDIAA), is in keeping with the SEC’s renewed focus on a more robust examination program. While onsite, the … Continued

One Phish, Two Phish, Red Phish, Blue Phish: How to Detect and Mitigate Social Engineering and Ransomware Techniques

Ransomware attacks like WannaCry and NotPetya are increasing in both frequency and damage, routinely making headline news with their abilities to bring down networks of established companies. Yet these cyberattacks typically start by compromising the weakest point in your security chain – people – through simple or complex phishing techniques before spreading to other parts … Continued

DOL Fiduciary Rule Transition Period Extension to 2019 Requested

The Secretary of Labor, Alexander Acosta, made a court filing on August 9 requesting the Transition Period and Delay of Applicability for the Department of Labor Fiduciary Rule be extended from January 1, 2018 to July 1, 2019. This court filing included extending the deadlines for the following Prohibited Contract Exemptions: Best Interest Contract Exemption … Continued

Mailing List

Subscribe to the Ascendant Compliance email list for the latest compliance resources, conferences, ComplianceCasts™, and more.

Loading form...

Contact Us

Ascendant works together with clients to identify and assess critical needs through customized plans. If you need assistance with compliance functions, regulatory services, cybersecurity or technology tools, we’d love to speak with you.