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December 23, 2013 at 07:00 PM
Well, another month has passed, and this administration still loathes the financial services industry. On a positive note, at 55 years old, I now have pre- and post-natal care covered by my medical insurance policy—ah, progress. Thank you, Washington.
Last month, I warned the advisory community that the SEC is coming. I discussed SEC Chairwoman Mary Jo White’s “felt and feared” and “Giuliani-style approach” comments. I respectfully submit that those comments, as they relate to the advisory community, were when made—and continue to be—misplaced. Nevertheless, this is the SEC’s position, and all SEC-registered advisors must take notice. Advisors who have never been examined should take particular notice given comments by Andrew Bowden, director of the SEC Office of Compliance Inspections and Examinations, that all such advisors can expect to be examined in 2014. In addition to never-before-examined advisors, advisors to private investment funds will also face an aggressive examination schedule.
The aggressive enforcement posture announced by White may not be unanimously shared by all commissioners, but it will dominate the regulatory landscape in the foreseeable future. Given the landscape and recent SEC pronouncements, what should advisors do now from a macro perspective to demonstrate the appropriate culture of compliance from the top down?
First, in an address to the National Society of Compliance Professionals, White indicated: “We want your firms to know, at every level, how important your work is to investors and to us. And we will be looking for more cases to bring to drive that message home.” Thus, does your firm have the right chief compliance officer? Has he or she been empowered by senior management to discharge his or her compliance-related duties? Does the CCO have a thorough understanding of those duties? These are very important issues for the SEC during an exam, and rightfully so. Remember, the commission will want to meet with the CCO as the point person during the examination process, and it will be able to discern quite quickly whether or not the CCO is competent and has been given the resources and authority to discharge his or her duties.
