SEC Chair Mary Jo White Sets the Tone at the Top

 In her opening remarks at the 2015 National Compliance Outreach Program for Broker-Dealers SEC Chair Mary Jo White set the tone for the program, and addressed a number of issues.  Most significant was her attempt to calm the growing concern of compliance officers that the targets on their back are going to result  in enforcement actions against them for failures in compliance programs.  She stressed the  importance of compliance professionals by noting that  the work performed “as compliance professionals is critically important to investors and the integrity of the markets”.  She also noted from her perspective, both the SEC and compliance officers have similar goals  issues in that the work of compliance rofessionals  “helps ensure that investors are armed with the information they need to make fully-informed decisions”, and like compliance professionals, “much of our work at the Commission centers on protecting investors”.  
While compliance officers have long faced the dilemma of having adequate resources, Chair White personalized that and compared those issues to the issues faced by the SEC.   She noted the “we know firsthand how challenging that work can be with limited resources.  You may have heard me highlight the need for additional resources in general and especially for our Investment Adviser/Investment Company Examination Program.” 
However, the lack of resources by the SEC is not totally analogous in that it has not resulted in the same sleepless nights enjoyed by compliance officers as they contemplate the potential personal regulatory exposure related to a failure of a broker-dealers compliance program.  However, to address this she did note  that “we must, of course, take enforcement action against compliance professionals if we see significant misconduct or failures by them.  Being a CCO obviously does not provide immunity from liability, but neither should our enforcement actions be seen by conscientious and diligent compliance professionals as a threat.  We do not bring cases based on second guessing compliance officers’ good faith judgments, but rather when their actions or inactions cross a clear line that deserve sanction.” 
With respect to the SEC exam program it was noted that transparency is a priority and to address that, the SEC has worked to advise broker-dealers and investment advisers of  what their priorities are, as evidence by the  annual release of its examination priorities letter for each of the last three fiscal years.  Additionally, where special risks are observed by the SEC, they published risk alerts that highlight new initiatives and areas of focus, as well as sharing observations from examinations. The Retirement-Targeted Industry Reviews and Examinations (ReTIRE) Initiative and alerts that shared examination observations from last year’s Cybersecurity Initiative were noted, in part so that compliance professionals could evaluate controls and procedures in these areas and make proactive improvements as appropriate.
While the focus of the program was to provide participants with  further insights into three key priority areas: cybersecurity, anti-money laundering and firm and branch office supervision and sales practices, White observed that the current SEC “examination priorities include: fee structures; suitability; order routing conflicts; recidivist representatives; microcap activity; excessive trading; and transfer agent activity.  Additionally, as evidenced by the ReTIRE initiative, the SEC is also focused on issues of importance to retail investors and investors saving for retirement.
 For the full text of Chair White’s opening statements, Click Here.