Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations, spoke at the National Society of Compliance Professionals 2007 National Membership Meeting in Washington, D.C. She began by saying that she is pleased to see recently that more compliance conferences are focusing attention on the process of compliance, and not just on specific legal obligations. She speculated that this is due to an increasing appreciation of the fact that compliance plays an operational role and has a toolkit that is different from that used by lawyers in a firm's legal department. She noted that the operational aspect of compliance is the essence of our CCOutreach program at the SEC, which is designed to provide a forum for compliance professionals and the SEC staff to communicate about compliance practices that are effective, and ultimately, to strengthen industry compliance for the protection of investors.
Ms. Richards defined "culture of compliance" as instilling in every employee an obligation to do what's right. In her view, this culture must underpin all that the firm does, and must be part of the essential ethos of the firm, so that when employees make decisions, large and small, and regardless of who's in the room when they make them, and whether or not lawyers or regulators or clients or anyone else is looking, they are guided by a culture that reinforces doing what's right. Importantly, a firm's Culture of Compliance exists outside the compliance department -- it exists throughout the firm.
She further stated that that firms can technically have all the elements of a compliance program -- the policies, the procedures, the training -- but not actually have an effective compliance program. In measuring the effectiveness of compliance programs, Ms. Richards strongly suggests that CCOs think about measurements that include not just output, but that also include outcomes. That is, that the CCO should not just measure the number of new surveillance reports, new training programs, new guidance provided to firm employees, but also seek to measure the reduction or elimination of violations.
Please click http://www.sec.gov/news/speech/2007/spch101807lar.htm for a copy of her speech.