Chief Compliance Officer Fines And Possible Prosecution Has Changed Their Role In Corporate AmericaApril 29, 2016 - Author: steph
Chief Compliance Officers have a much higher-profile in the business world these days. Before the 2008 financial debacle, chief compliance officers were protected by the old rule that said executives were not held accountable for their decisions if the Corporation violated federal laws, especially in the investment, healthcare, and chemical industries. But the Department of Justice and the Security and Exchange Commission have changed how they view the duties of chief compliance officers, according to Helane Morrison, the Chief Compliance Officer of Hall Capital Partners LLC in San Francisco.
Morrison is well-known in the investment industry. As the Managing Director and General Counsel for Hall Capital and a former regional director of the Security and Exchange Commission, Morrison has been involved in cases where chief compliance officers were not held accountable for serious SEC violations in the past. It was Morrison’s job to hold CCOs responsible when she was a regional director for a five-state region of the SEC. But federal resources or other internal issues got in the way of pursuing CCOs personally. Morrison recently told an audience of potential compliance officers that Deputy Attorney General Sally Yates is on a mission to change the way the DOJ handles violations.
Yates recently appointed former federal prosecutor Hui Chen General Counsel of the Department of Justice, and her role is to prosecute chief compliance officers that, for whatever reason, allow their company to violate regulations. chief compliance officers could be held liable and might have to pay fines or even face jail time, according to Ms. Morrison. General Counsel Hui Chen has set guidelines for CCOs, so the DOJ and the SEC enforcement staff can identify violators and prosecute them. The National Society of Compliance Professionals (NSCP) put out a statement a few years ago that said chief compliance officers do not operate the business they only advise and support the corporation. The NSCP also said CCOs should not be blamed for the actions of rogue employees or the directives given by executives that test the boundaries in order to show a better bottom line on operating statements.
But the Department of Justice and the Security and Exchange Commission has changed its stand on the what CCO responsibilities are. CCOs are held accountable for the decisions of employees and the directives of other executives if they are violating regulations. The new role of a CCO in a corporation is to make sure that everyone in the company knows the regulations and follows them to the letter.
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