SEC Commissioner Hester M. Peirce called on the SEC to consider alternative methods when addressing compliance infractions rather than resorting to enforcement proceedings.
In remarks at the National Membership Conference of the National Society of Compliance Professionals, Ms. Peirce stated that enforcement resources should not be used on relatively minor compliance infractions, but should be saved for more serious matters. Ms. Peirce advocated for a more “subtle” approach to resolving compliance infractions, such as building norms that foster compliance, as opposed to initiating “formal enforcement action[s].”
Commissioner Peirce expressed concern that actions directed against a compliance officer can have a “chilling effect” and adversely impact the compliance industry and profession. Ms. Peirce said that the SEC should not bring enforcement actions simply because it disagrees with a compliance officer’s judgment.
Commissioner Peirce also stated that a compliance examiner should help firms to pinpoint issues and, subsequently, work with them to correct those issues in an efficient as well as collaborative fashion without resorting to enforcement proceedings. Conversely, Ms. Peirce emphasized the importance of firms’ cooperation with SEC compliance staff and asserted that, too often, firms “drag their feet” or provide inaccurate information. According to Ms. Peirce, while the SEC’s Enforcement Division has a part to play in countering violations of securities laws, managers and employees at firms are the “first line of defense,” followed by compliance officers.