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New Year's Resolution: Evaluate Your Compliance Program

By Bridget M. Rohde

At conferences during the past few months, leaders of the SEC’s Enforcement Division have been delivering a consistent message regarding compliance: a company with a robust and well-enforced compliance program, tailored to its specific risks, will stand in good stead with the SEC. At the annual conference of the Society of Corporate Compliance and Ethics, Associate Director of Enforcement Stephen Cohen put it in a particularly intriguing way. A company should tout its compliance program up front in advocating to the SEC and not simply refer to it as remediation. Potential advantages of having such a compliance program are that a parent corporation may avoid being tagged with the violations of a subsidiary, any monetary penalty may be for a lesser amount, and the corporation may not even be prosecuted at all.

Starting off the new year by proactively taking a look at your compliance program, including doing a current risk assessment and fine-tuning the policy and procedures accordingly, would be time well spent. Since you developed or last reviewed your compliance program: Have you entered new markets domestically or abroad? Are you working with new or additional third parties? What other risks is your company facing as it expands or matures? These questions are among those you should ask as you customize your compliance program.

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Chip Phinney