What Are the Hallmarks of a Strong Compliance Program?


Risk -blocks on ball smallerI thought it would be interesting to hear it from the horse’s mouth once more. Speaking before the Society of Corporate Compliance and Ethics’ 12th Annual Compliance & Ethics Institute, Stephen L. Cohen, the SEC’s Associate Director of Enforcement, laid out what makes a good compliance program.

Among the hallmarks of a “robust” compliance program, Cohen listed the following in his remarks:

  • Governance:  A strong compliance program begins with the “tone at the top.” This means that the board of directors and senior management must provide the Chief Compliance Officer (CCO) with the necessary resources, independence, standing and authority to be effective.
  • Culture and values: Firm leaders must promote integrity and ethical values in decision-making across the organization. According to Cohen, this means asking not just “can we do this, but “should we do this?”
  • Incentives and rewards: A company should put in place a performance management system and compensation that ensure that the right behavior is encouraged and rewarded.
  • Escalation, investigation and discipline: Employees must be able to raise concerns confidentially and anonymously, without fear of retaliation.  Matters must be  effectively investigated and resolved fairly and consistently.
  • Continual self-evaluation and improvement: Compliance programs do not exist in a vacuum. Firms must continually reassess business models, rules, ethical standards and compliance tools in light of new legal standards and emerging risks.

“Risk-taking in the area of legal and ethical obligations invariably leads to bad outcomes. Any company or person prepared to come close to the line when it comes to legal and ethical standards is already on dangerous ground,” he noted.

In my experience it’s the last point where many firms are lacking.  Compliance programs should be living and breathing organisms that need to adapt to the ever-changing environment. One is never ever really “done” with them.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Eckerle Law | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.