SEC’s White: Compliance officers not a target of the agency
Members of the five-person commission have clashed over whether the regulator unfairly cracks down on such professionals.
Securities and Exchange Commission Chairwoman Mary Jo White assured compliance officers Tuesday the agency has not put a bull’s-eye on their backs.
“To be clear, it is not our intention to use our enforcement program to target compliance professionals,” Ms. White told about 1,000 broker-dealer compliance officials at SEC headquarters in Washington. “We have tremendous respect for the job you do. You have a very tough job in a complex industry where the stakes are extremely high.”
Members of the five-person commission have clashed over whether the agency unfairly cracks down on professionals whose job revolves around making sure an advisory firm adheres to securities laws.
In June, SEC member Daniel Gallagher issued a dissent to two recent cases that the agency brought against compliance officials for failing to monitor advisers’ outside business activities and failing to set up procedures to stop theft from client accounts.
A couple weeks later, SEC member Luis Aguilar countered that Mr. Gallagher’s statement was off the mark. He provided statistics showing that only a small percentage of SEC enforcement cases over the past several years had involved compliance personnel.
Both Mr. Gallagher and Mr. Aguilar are scheduled to leave the agency this year. But the debate is sure to continue over the culpability of compliance officers when their firms breaks the rules.
In her remarks Tuesday, Ms. White said chief compliance officers doing their jobs well should not have run-ins with the agency.
“Being a CCO, obviously, does not provide immunity from liability,” Ms. White said. “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 deserves sanction.”
Industry experts have said SEC rules on compliance officers’ responsibility are vague and leave them vulnerable to agency enforcement.
As she often does when addressing compliance officers, Ms. White called them “critically important” to investors and the financial markets. She said they augment SEC oversight.
“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,” Ms. White said. “We want to support you in your efforts and work together as a team.”
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