- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Kyle Brasseur2022-09-16T14:30:00
To see a prominent representative from one regulator accuse another of “regulation by enforcement” might raise the eyebrow of some observers. But it shouldn’t—not when that’s the other regulator’s stated strategy.
As far back as November 2021, Gary Gensler tipped his hand regarding how his Securities and Exchange Commission (SEC) would pursue what he termed “high-impact cases.” Making an example of one company prompts the compliance departments, lawyers, and accountants of others to change their internal procedures, he said in a speech, thus sending a message on where the agency’s tolerance lines are drawn.
“Some market participants may call this ‘regulation by enforcement,’” acknowledged Gensler. “I just call it ‘enforcement.’”
So when Caroline Pham, a new Republican commissioner at the Commodity Futures Trading Commission, accused the SEC of “regulation by enforcement” in a recent cryptocurrency case, it likely did little to faze Gensler. Neither will threats from Republicans forecasting an investigation into the agency’s authority should they win the House following mid-term elections in November.
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The Securities and Exchange Commission’s two Republican commissioners dissented from an agency order against transfer agent DST Asset Manager Solutions they deemed to be an example of regulation by enforcement.
Not knowing with certainty whether the business you’re conducting meets all relevant regulatory standards is a recipe for trouble, as Seagate learned in paying $300 million for its restricted dealings with Chinese telecom Huawei.
Christy Goldsmith Romero, a commissioner at the Commodity Futures Trading Commission, is lobbying the regulator to use its existing authority to conduct “heightened supervision” over derivative exchanges to create more oversight in crypto markets.
Top-of-mind issues addressed at Compliance Week’s Third-Party Risk Management & Oversight Summit, held June 3-4 in Atlanta, included safe deployment of artificial intelligence, assessing vendor viability and sustainability, understanding the role of procurement in risk ranking, the intersection (or lack thereof) between data privacy and cybersecurity, and many others.
Anne Morriss, co-author of “Move Fast and Fix Things,” advises compliance officers to tap into curiosity, communicativeness, and comfort with discomfort to build organizational trust, fast.
Regulators and government agencies often speak to the value of empowered corporate compliance programs to advancing their mission. Why not practice what they preach by empowering compliance among their own ranks?
