Compliance and risk officers should keep in mind Ben Parker’s advice to his web-slinging nephew: “with great power comes great responsibility.” Following recent disciplinary actions against compliance officers, FINRA’s head of member regulation says CCOs and risk officers need to be aware of their role (and of the potential liabilities if they fail to fulfill it).
“You have a responsibility, if something is brought your attention, you need to take action on it,” Michel Rufino said of compliance officers to attendees at Pershing INSITE attendees Wednesday.
The potential liability for compliance officers came to the forefront after FINRA”s $8 million fine against New York-based Brown Brothers Harriman & Co. in February. The regulator’s move to fine compliance officer Harold Crawford w $25,000 and suspend him for one month really hit home for many in the role.
Rufino said that while the regulator doesn’t want to scare compliance officers, these executives are responsible if compliance issues come to their attention and are not properly handled. “It’s not a gotcha mentality,” Rufino says of the exam process and the evaluation of compliance and risk officers’ actions. “We look at you as the people who are helping the firm, guiding the firm,” Rufino says.
And that guidance should be in both developing procedures, as well as executing them successfully. Compliance shouldn’t be just the “no” team at the backend. Instead, chief compliance officers should have a seat at the table when a firm is making decisions on new products, Rufino says, not the back end. These firm executives should (and do) play a greater role with greater responsibly, Rufino says.
