Originally published in The Review of Securities & Commodities Regulation - September 12, 2012.
Compliance professionals spend much of their time on regulatory compliance examinations. They are either planning for the next exam, being examined, or following up on the lessons learned from the last exam. This constant attention gives them a depth of experience in the field. They need it because their firms look to them for expertise in how to deal with examiners, manage the examination process, and achieve a good result. Chief Compliance Officers know that their leadership will play a critical role in determining their firm’s experience in its next exam.
In this series of articles, two compliance professionals offer practical suggestions on how to manage a regulatory compliance exam. One has been a senior legal official with oversight for the compliance function for many years, and has managed many exams for regulated firms. The other was a long-time examiner, and has conducted many exams.
Often, the authors have observed, an exam’s failure or success does not depend on some technical issue under the securities laws. Instead, common sense plays a critical role. A common sense mistake can push the process in the wrong direction, or a common-sense success can push it in the right. Once pushed, the law of inertia can make it harder and harder for the exam process to change course.
With this is mind, what are these common sense mistakes and successes? In this Part 1, the authors consider the “Top Ten Ways to Help an Exam Go Wrong.” In Part 2, to follow in a future issue, they will consider the “Top Ten Ways to Help an Exam Go Right.”
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