Some people believe that a formal enforcement action is the obvious response to every compliance infraction. In my view, a better approach is to build certain norms into the industry that foster compliance. Hitting someone over the head with a criminal conviction is a sure way to scare all trick-or-treaters, even those not breaking the rules, into ceasing and desisting from trick-or-treating. More subtle approaches, however, can actually be of greater long-term value. These approaches seek to encourage compliance by building an understanding of the purpose behind rules and suggesting ways to comply with those rules.
Subtle approaches do not work with people who are not well-intentioned. I trust, however, that in a room full of compliance professionals, the majority of you are trying to do the right thing. It does not take an enforcement action or the fear of one to convince you to care about investors. You strive to improve the industry by working with your firms to build cultures of compliance. You are motivated by a desire to protect your firm’s customers, its brand, and thus your own reputation. We assist you in cultivating healthy habits not by targeting you when something goes awry, but by assisting you in understanding how the rules apply to the unique features of your firm and the products and services it offers.
‘Enforcement 40’ for 2020
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