Evolution of Compliance

I watched a recorded webinar presented Complinet: Compliance Evolution: Lessons Learned, Forgotten and Ignored. (March 13, 2008) Betsy Prout Lefler, the Deputy Director of Compliance at Piper Jaffray and Co. gave the presentation.

There are many different perspective on compliance and what compliance professionals do. In part because the role has changed very quickly.

At first is was only about procedures and monitoring designed to deter and deter violations of applicable laws and regulations. Now, compliance is involved in the CEO certification process, internal controls (SOX) and risk based reviews of company action.

Regulators originally gave little guidance on the role of compliance. Now compliance officers need to be involved in the SEC review process. Compliance officers need to understand not only the regulations, but also need to know the industry, the operations of the company and the products offered. CCO is not a risk manager and a strategist.

Betsy referred to the SIA 2005 Role of Compliance White Paper. This white paper tries to establish a model for compliance professionals thorughout the industry. She also notes that in 2003 the SEC began a formal approach to assessing a company’s culture of compliance.

What has caused evolution?

  • Regulatory changes – there are increasing number of regulations in the financial industry
  • Scandals – each scandal triggers more regulations and more concerns
  • Technology – more and more technology means more and more information

She things technology has made some of the biggest changes. Technology can be a compliance officer’s best friend. It is much easier to find and track issues and trends. Technology can help automate compliance. But technology can also be your worst enemy. There are lots of smoking gun emails. Technology can also automate non-compliance. Technology glitches can cause misstatements.

Don’t get stuck on “how we used to do it.” The role is evolving.


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