Compliance officers are faced regulatory bodies that are more aggressive than ever, and they must find a way to deal with the evolving regulatory priorities. In order to do so, they must keep current trends in mind and adapt in order to deal with those trends.
I recently spoke with Lisa M. Noller, partner at Foley & Lardner LLP., about her views on current regulatory mechanations. Noller identified three primary trends. First, regulatory bodies are specifically encouraging a proactive approach to compliance. Second, the regulators are endeavoring to hold companies accountable even when no monetary penalties are doled out. And, finally, regulators are finding more creative ways to go after wrongdoers, sometimes using a parallel criminal/civil approach.
“These aren’t necessarily new,” she explains, “but regulators are not using some items in their toolkit more than others. It happens from time to time as leadership changes.”
Noller also explains how the relationship between Fortune 500 companies and the Securities and Exchange Commission (SEC) has changed in the last six years or so. First, the SEC has ramped up its hiring of data analytics staff, IT personnel and specialized personnel who are knowledgeable about market idiosyncrasies. Second, the SEC has tried to be more visible, sending regional directors and enforcement lawyers to be speakers at events, for example, to put a recognizable face on the SEC and encourage people to come forward if there are issues. Finally, the SEC has been continued to tout its whistleblower program, using it to encourage companies and individuals to come forward and hold lawbreakers accountable.
As Noller mentioned, there has been increased coordination between the SEC and the Department of Justice (DOJ), which has been transparent about its investigative priorities. “They demand cooperation, early and significant cooperation,” Noller explains. “They broadcast that they want to partner with companies.” She also sees a growing number of former prosecutors in private practice, people who have a lot of experience working with the DOJ, who can give the agencies pitches about clients who have something to say. These clients are looking to comply with the law and want to work with the DOJ, playing by the rules and following guidelines. The key is for compliance departments to be transparent and proactive.
Noller left me with some advice for general counsel. First, they should know that nothing is off the record. Second, you should point out when you have followed or intend to follow guidelines, as intent will help your case when it comes to a civil or criminal punishment. Finally, she once again stresses being proactive, following all disclosure obligations you may have.