Law360: "The Compliance Officer Sanctions Debate Heats Up"

Articles / Publications

 

In an article published on August 18, 2015, Tom Potter provides analysis on the recent decision by a U.S. Securities and Exchange Commission (SEC) administrative law judge (ALJ) to dismiss an SEC enforcement case against a former compliance officer who had aided and abetted her firm's books-and-records violations. The decision to dismiss the case and decline to impose any sanctions against Judy Wolf, a former Wells Fargo Advisors compliance officer, continues the ongoing debate over proper balance for enforcement actions against compliance officers. While the SEC has not been shy about charging compliance officers for securities violations, many oppose the practice, including Commissioner Daniel Gallagher. Gallagher claims that such enforcement blurs the lines between the chief compliance officer's function of administering compliance programs and the business-line obligation to implement them (through supervision). In the case of Judy Wolf, ALJ Cameron Elliott supported Gallagher's opinion, saying "there is a real risk that excessive focus on violations by compliance personnel will discourage competent persons from going into compliance, and therefore undermine the purpose of compliance programs in general."

In the article, Potter offers five key takeaways from this case and decision:

1. The issue (where is the appropriate line for enforcement actions against compliance personnel?) is clearly framed and on the table;

2. The public debate is lively among the commissioners;

3. The compliance community's fears have been heard;

4. The ALJs are weighing in on the policy debate - beyond the narrow facts of a given case;

5. ALJ Elliott may be willing to push the issue by his sort of "jury nullification" decision in Wolf; and, whether Enforcement appeals to the commission and, if so, the commission's review of ALJ Elliott's decision will reveal the next stage of the debate.

 

For the full article, please click here.

Related Professionals

Burr
Jump to Page
Arrow icon Top

Contact Us

We use cookies to improve your website experience, provide additional security, and remember you when you return to the website. This website does not respond to "Do Not Track" signals. By clicking "Accept," you agree to our use of cookies. To learn more about how we use cookies, please see our Privacy Policy.

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. These cookies may only be disabled by changing your browser settings, but this may affect how the website functions.


Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.