Delivering the keynote speech that kicked off Compliance Week 2014 on Monday in Washington D.C, the Securities and Exchange Commission's Kara Stein sought to allay concerns emerging from recent enforcement actions against chief compliance officers. She also proposed that a greater use of attestations is worthwhile for the Commission to consider.

Stein, a Democrat who joined the Commission late last year, described compliance as “a bedrock of good markets.” “It is clear to me that the vast majority of CCOs are working hard and getting good results,” she said, adding that many are understandably concerned about enforcement cases that could put them in the crosshairs. Last month, the Treasury Department's Financial Crimes Enforcement Network notified a former chief compliance officer of MoneyGram that he could face personal fines of up to $5 million for anti-money laundering compliance failures. The SEC also recently brought a case against the CCO of Parallax Investments for violations of custody and compliance rules.

One concern is that charges against CCOs will have the unintended consequence of actually weakening the compliance function. “I've heard it said that these cases may lead to a drop in the quality of CCOs because the best candidates won't be willing to serve,” Stein said. “Those CCOs that may be willing to assume the role will be less effective because they may actually avoid certain functions, such as participating in firm committees. That is not the intention.”

Stein stressed that the cases in question are not against CCOs that were promoting compliance, “instead they are cases against CCOs that were assisting fraud, ignoring red flags not asking tough questions and not demanding answers.”

“These cases should empower you and your firms to continue to be vigilant and assertive,” she said, adding that it is also important to note that the commission will “have your back when others try to prevent you from doing your job.”

What does the SEC expect CCOs to do when they find themselves entrenched in a questionable situation, especially amid liability concerns? Stein hopes it may soon offer some additional guidance. “We owe it to you to remove some of this uncertainty so that you can fully unleash your power,” she said. “One way to do this is for the commission to provide guidance that sets clear expectations on what it means to act appropriately. And, when those expectations are met, a CCO can have comfort that he or she will not face liability.”

That guidance could contain basic obligations, standards for escalating issues, and best practices if the CCO receives an unsatisfactory response. “There are no easy answers here, but we must make the effort to bring guidance and clarity to you on these issues,” Stein said.

The broader use of attestations is another tool Stein says may help strengthen compliance efforts. “I personally believe that having an executive sign an attestation leads to a more rigorous internal assessment of a firm's business,” she said. “Nothing focuses the mind like signing your name. It strengthens a firm's compliance program and if gives you some heft when making the case to your firms that you need to bolster compliance.”

In addition to the better known attestations required by the Sarbanes-Oxley Act, attestations have also been applied in other areas. For example, the CEOs of broker-dealers are required to make an annual certification and the Volcker Rule demands that CEOs do the same for its requirements. Stein gave a few examples of new attestations that could be considered, including for registered municipal advisers or for lawyers on the accuracy of disclosures. “Although attestations have cost, they can dramatically help avoid even greater costs down the road,” she said.