RICHARDS WANTS FIRMS TO CREATE COMPLIANCE INCENTIVES
In a recent speech, Lori Richards, the SEC’s Director of its Office of Compliance, Inspections, and Examinations (OCIE), urged firms to not just punish compliance violations but to “incentivize” good compliance. Ms. Richards suggested that firms reward managers who achieve compliance by compensating managers based on some compliance metric such as customer satisfaction or internal reviews. She also suggested that firms reward employees who raise compliance issues and create incentive programs based on client satisfaction levels. She also stressed that firms must adequately compensate compliance professionals and ensure they have sufficient resources.
OUR TAKE: We don’t know if OCIE will raise a deficiency for not having these types of incentive programs. However, a firm may get merit points if it has such a program, which may help if it has other issues.