Compliance searches up 20% this year, says headhunter

While most investment management companies are reluctant to start firmwide hiring, many are looking to bulk up their compliance departments, according to executive search firm Russell Reynolds Associates Inc. Compliance-related searches are up 20% from last year at this time, officials for the firm noted. “This is the strongest area of hiring we are seeing,” said George Wilbanks, managing director in Russell Reynolds’ investment management practice. Mr. Wilbanks said both buy-side and sell-side firms are stepping up their compliance areas and looking to hire managers from various areas, ranging from head of compliance to auditors and employees in the risk management department. In the wake of the Bernard Madoff investment scam, both the Financial Industry Regulatory Authority Inc. and the Securities and Exchange Commission are being more aggressive in their exams. This has become even more evident in the expanding probe of the insider-trading ring that allegedly ran through hedge fund manager Galleon Group. Firms are hiring now to make sure they keep in good standing with regulators, said one compliance executive at an investment management firm that expects to expand its compliance department this year. “What I see at our own firm, and I imagine is the case at other firms, is that there are understaffed compliance departments coming out of the down market,” the executive said. “Now we are all being pushed by regulators to step up our focus on compliance and surveillance.” Specifically, the firm is looking to hire up to five new compliance managers to oversee audits of its brokers throughout the country.