Friday, November 14, 2008

Chairman Cox Addresses CCOutreach National Seminar

Yesterday, Chairman Christopher Cox addressed CCOs and compliance professionals at the latest in the SEC's series CCOutreach meetings.   In his address, he reiterated the Commission's concern that firms may seek to cut costs by cutting compliance personnel and resources, and added a dire warning.
In a profit and loss driven world, there is always a risk that companies facing an uncertain economic future may choose to cut compliance expenses as a shortsighted way to save money. But experience has taught us again and again that giving short shrift to regulatory compliance subjects a company's investors, employees, management, directors, and every other stakeholder to unacceptable risks.

* * * *

When a company cuts compliance, violations will occur. And if violations occur, punitive actions should and will be taken. In the current environment, that is true now more than ever. There will be no favor granted because a company made a cost-cutting decision to minimize their compliance budget. That's because now and always, the interests of investors are inextricably linked to strong compliance.
Given the Commission's obvious, and often iterated, concern that cost cutting may harm firms' compliance functions, directors should bear this in mind when executing their compliance oversight role, and in discussions with their CCOs and fund management. 

The full text of Chairman Cox's address to yesterday's CCOutreach meeting is available at: