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News November 1, 2004 Issue

Creating a Culture of Compliance

Looking for ways to create that "culture of compliance" regulators keep talking about?

Consider the following list, provided by none other than OCIE director Lori Richards. In her remarks at last week’s NSCP conference, Richards suggested a non-exclusive list of "concrete steps that firms might take to instill, in a meaningful and lasting way, a strong culture of compliance."

Here’s an abbreviated version. For more, see her speech (the portion covering the list is worth a read).

  • Senior management should demonstrate tone at the top.
  • Provide employee training, using specific and practical examples.
  • Firm leaders should make decisions that demonstrate commitment to compliance regardless of profits.
  • Establish strong policies and procedures to prevent and detect violations.
  • Implement policies and procedures.
  • Test for compliance.
  • When problems are detected, deal with them quickly and appropriately.
  • Implement a superior compliance program, giving compliance staff necessary resources, respect, and access.
  • Empower employees to question conduct.
  • Report problems to senior management and to the board.
  • Self-assess honestly and periodically.
  • Think long term before risking the firm’s reputation on short-term gains.
  • Keep your regulator informed about the problems you're dealing with and the changes you are implementing.

Richards said that none of the steps, taken alone, would be adequate.