The Evolving Role of Compliance Professionals

Posted on May 29th, 2014 at 10:24 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

Today compliance personnel have to address more complex and novel financial products, as well as new trading and communication technologies.  They also face intensive new laws and regulations released in response to the financial crisis. Some jokingly called Dodd-Frank the Compliance Officer and Securities Attorney Full Employment in Perpetuity Act of 2010.

In response, securities firms have increased the amount of resources devoted to compliance matters. Demand for compliance officers has increased exponentially.

The compliance system of oversight for regulated entities is a shared responsibility, in which the SEC oversees the firms that, in turn, oversee their associated persons. And it is predicated upon the active participation of compliance personnel. Broker-dealer and investment advisor firms are the first line of defense in this system. The system does not work if firm legal and compliance officers can not operate effectively.

The Exchange Act authorizes the SEC to impose sanctions on persons associated with a broker-dealer if the individual has failed reasonably to supervise another person commits a violation of the securities statutes, rules and regulations. The SEC’s ability to impose sanctions for failures to supervise encourages managers and executives to monitor compliance with laws and regulations proactively.

Unfortunately, Dodd-Frank and heighted SEC scrutiny also have led a branch manager and compliance officer to head for the exits rather than take on the uncompensated risk of being responsible for firm compliance. 

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

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