Citing the crucial role compliance serves for not just a company, but financial markets at a whole, Securities and Exchange Commission Chairman Mary Jo White today pledged to continue agency efforts that support and empower those professionals. That includes escalating enforcement against some firms that fail to maintain adequate the compliance programs and a greater focus on compliance matters by examiners.

White made her remarks during a speech before the National Society of Compliance Professionals at its annual membership meeting in Washington D.C.

Investors benefit from a strong compliance program and a strong compliance culture, White said. “Your firms also benefit because your work protects the business and ensures that reputational risk is managed,” she added. “We [at the SEC] rely on you because as much as we strive to be everywhere we can be, our resources are limited and always stretched.”

Compliance, although a “critical line of defense against violations of the securities laws and regulations, inadequate policies, procedures and systems, and inadvertent errors,” cannot do it alone, White said. Others who must play a key role include managers of business units, internal auditors, the CEO, senior executive team, and  board of directors.

“We want to encourage companies to give you the recognition that you deserve, the resources that you need, and the authority your role demands,” she said. Questions staff may ask: Do you have the necessary independence, access, authority and support to do your job effectively and ensure effective compliance controls? Are you empowered to do what you need to do?

White explained that the SEC recently launched an outreach effort where senior examiners and other officials meet with executives and boards at firms. Among the matters assessed are the standing, authority, and resources of compliance personnel within the organization and its affiliates. “We look to see whether your role is woven into the fabric of the firm,” she said. “By engaging senior management and the members of the board in this dialogue, we seek to promote the role of compliance and ensure that the firms recognize and acknowledge the importance we place on your role.”

The SEC hopes to assist compliance personnel by increasing transparency about its priorities and exam observations, highlighting practices and policies that suggest a pattern of non-compliance throughout an industry. This includes issuing risk alerts on the most frequently observed instances of non-compliance and a list of current priorities by the examination program.  

The SEC's enforcement program will also focus on compliance efforts. Recently, it filed its first-ever charge against an individual for misleading and obstructing a compliance officer of an investment adviser. Examiners discovered that an assistant portfolio manager had forged and altered brokerage statements, trade pre-approvals and other documents. He also attempted to conceal from his firm's chief compliance officer his involvement in more than 600 unauthorized personal trades, many of which involved securities held or acquired by funds managed by the firm.

“This was a very important case because it held the portfolio manager directly accountable, not only for his substantive violations, but also for obstructing the compliance officer's work,” White said.”We want your firms to know, at every level, how important your work is to investors and to us.We will be looking for more cases to bring to drive that message home.”

The case involved charges against the firm and not the compliance officer, White stressed. “Although we occasionally bring enforcement actions against compliance personnel, compliance officers who perform their responsibilities diligently, in good faith, and in compliance with the law are our partners and need not fear enforcement action.”

In another effort, the SEC's Compliance Program Initiative, the Enforcement Division's Asset Management Unit, examination staff, and others are teaming up to identify and recommend enforcement against registered advisers who have failed to adopt or implement an adequate compliance program after repeated notifications of that deficiency. Hundreds of private fund advisers have recently registered with the Commission for the first time under the Dodd-Frank Act.This “underscores the critical function that effective compliance programs and personnel play in protecting the investing public from fraud,” White said.