If you have ever been a Chief Compliance Officer of a broker-dealer or investment adviser the question “what is your culture of compliance” will resonate. Each regulatory examination notification sends you off to various business persons with the news that they may be interviewed by the regulator and if they are very senior—CEO, CFO, CIO, General Counsel— that they will be required to attend the opening meeting.
But do you then spend each night leading up to the examination sleepless wondering what your management will or will not say during the examination. Will they say something that contradicts the documentation you have provided or almost as bad will they say “I don’t deal with compliance, we leave that to the compliance department”?
You cannot create a culture of compliance for one to two weeks while the regulators are on site, and you shouldn’t want to do that. In order to create a real culture of compliance you have to be part salesperson, part therapist and part drill sergeant.
Sounds overwhelming— so where do you start? Whether you have been the Chief Compliance Officer for a long time or you are new to the job an assessment of your compliance culture starts at the top.
Some questions to ask yourself:
- Do you have access to senior management?
- How often do you meet with senior management?
- Do you have sufficient resources to execute your compliance program ?
- Have you asked for additional resources and been turned down?
- Do you conduct compliance training for all new employees?
- Are you consulted prior to the hiring of registered Representatives, portfolio managers, research analyst, and other producing employees?
- Do you have a mechanism to oversee the line supervision of employees?
These are but a few questions that every Chief Compliance Officer should make an assessment of periodically.
Copyrighted 2011 Sharon M. Davison