SEC Official Describes “Compliance Initiative”
The SEC’s Associate Director of Enforcement, Stephen L. Cohen, recently described the SEC’s “Compliance Initiative” aimed at bringing enforcement actions against investment management firms lacking effective compliance programs. Mr. Cohen described the initiative as a joint effort among the National Exam Program, the Investment Management Division, and Enforcement’s Asset Management Unit. He said: “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.” In the same speech, Mr. Cohen said that quality compliance programs will reduce penalties and the likelihood that the SEC will bring charges. He cited the U.S. Sentencing Guidelines, the Seaboard Release, and the FCPA Resource Guide.
OUR TAKE: The SEC wants to make good compliance programs a pocketbook issue for senior management by punishing firms with weak compliance programs and rewarding firms that spend the resources necessary to create an effective compliance infrastructure.