SEC culture

“SEC Staffer Is Charged In Probe Into Holdings,” November 20, 2013 C3

I mentioned this investigation the other week.  But the points bear repeating, where compliance fails and information is hidden.

What’s the culture in an organization in charge of monitoring others, where one of the compliance examiners was charged with three counts of criminal false statements due to his false certification re stock ownership.  Alleged conflict of interest that might “‘appear to compromise his integrity.'” Violated SEC’s internal policies.  Looking at 15 years in jail.

He allegedly transferred to a joint account stock he could no longer hold in his own name when SEC rules changed in 2009.

So, even though there are legal prohibitions on the conduct, you have strict policies against the behavior, you have a process for certification by employees of their compliance, and you try to be selective in hiring compliance officers, an employee still (1) hides stuff and (2) lies.

What do you do?  Change policies? Monitor employees more closely, more often? Or is the root cause (I truly hate that term) a management culture that allows this behavior?  Does his boss face additional scrutiny/penalty? Would the response be different if the misdeed was done by a corporate employee regulated by the SEC?


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Filed under Business Case, Compliance, Controls, Culture, Governance, Information, Internal controls, IT, Legal, Policy, Requirements, Risk, Value

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