Compliance Officers Are Going to Get Arrested, Shot, Killed and Then Arrested Again and Sued

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 By Adam Turteltaub
adam.turteltaub@corporatecompliance.org

Lately, there’s been another rash of articles floating around online about compliance officers in trouble and speculating whether the government is going after compliance people.

It’s a neat trick to get attention and turn up the paranoia-o-meter for compliance people.  But, if you read the articles carefully, you’ll see that the fears are often overblown.

For one, they tend to focus on compliance officers in the financial services world where, unlike in the general corporate setting, there are statutory requirements of compliance officers.  That’s a big difference.

Second, many of these compliance officers were allegedly a part of the wrongdoing.  They didn’t fight, kick and scream to stop the bad things from happening.  They were allegedly a part of it.

Third, many were compliance officers in name only.  It was something they did on the side and not the focus of their jobs.  My guess is that someone had to have the title, and they were lucky, or unlucky, enough to be the one who received it.

Finally, you’ll note that sometimes the jobs are very narrow compliance, or not really compliance at all.  The job just had a compliance title to it.

So the next time you see a headline about all the horrors that the government can inflict upon the compliance officer, take a breath.  And, before you reach for the phone to call outside counsel, read the article and ask yourself:  is this really a story about a compliance officer like me?  Or is it an attempt to cause me to be unnecessarily fearful?

My guess is the latter, and you don’t have to worry about being arrested, shot, killed, arrested again and then sued.  Besides, there’s enough real stress in the job to keep you on edge anyway.

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9 COMMENTS

  1. While I don’t believe the government yet conscientiously goes after “innocent” compliance officers, the current law creates a Catch 22 that often puts compliance officers in the untenable position of being employed to help an organization prevent, report and redress compliance issues without the management support, authority or resources to make that happen.

    Compliance officers essentially are employees that the government requires or pushes organizations to hire to serve the interests of the government in monitoring and promoting compliance on behalf of the government. The forced hiring of a government mole at company expense creates an almost unavoidable tension between the company and the compliance officer. Any compliance officer doing his or her job can expect to face tension with management when the government safe harbors conflict with business operations or interests. This is particularly the case, as now, when government “guidelines” draw the line well outside of prohibited conduct. The effect is to put the compliance officer recurrently at risk of being fired or adversely impacted for trying in good faith to do his or her job.
    This pressure is reflected in the relatively high turnover rate and industry exist rate among compliance personnel versus other similarly paid positions. Good – or maybe just smarter – compliance officers become good at recognizing these growing tensions. They keep their resume on the market to preserve their ability to move before or when the tension otherwise would grow to such a level that they might be fired or suffer other job detriment. The less savy, or less lucky, often find themselves caught between the desire to do their job “right” from the government perspective and “right” from the management perspective. The truly unlucky get caught upon in compliance fallout and if they don’t maintain and use documentation to protect themselves, may even be tagged to take the fall in the post-sting clean up.

  2. Compliance officers are not employees of the government or “moles.” Internal Auditors play a similar role and they are not and have never been… considered employees of the government or moles. General Counsel also help companies follow government regulations and have never been considered employees of the government or moles. No organization could follow the rule of law without these people and we should be able to hire them without anyone referring to them as moles. They must be hired and be effective to help companies follow the rule of law. It just won’t work any other way. I have worked with compliance professionals for 21 years and no compliance professional has told me they feel they are a government employee. Had they said it, I would have suggested to them that compliance might not be the right profession for them. I have worked with the enforcement community for 21 years and they don’t think compliance officers are in any way employees of the government. The government has hired compliance professionals. If the government thinks they are moles, why would they themselves hire them? The government hires compliance professionals because they think that compliance professionals are effective at helping organizations follow the rule of law. This assertion that anyone thinks that compliance professionals be considered in any way working for the government is not helpful to the profession, the business community or the government.

  3. Cynthia:

    While I appreciate your concerns, I think it is a mischaracterization of the role of the compliance.

    First, while it’s true that many compliance officers find themselves in difficult positions in their organizations, that should not come as a surprise to anyone accepting the role. Their job is about ensuring that the organization lives up to the law and its own values. That’s not an easy task for compliance officers, nor for others in the company, such as internal auditors, whose job it is to make the difficult call and say, “that’s not permissible.”

    But it’s not as if anyone is being set up and put into a Catch-22 situation. That’s just the nature of the role. It’s going to involve difficult situations in which compliance officers must take on management. That’s why, increasingly, compliance officers have reporting relationships to the Board of Directors.

    Sometimes that does, as you note, mean that they must be prepared to leave if the company doesn’t heed their advice. The profession knows that well and we even address it in the Code of Ethics. It’s just a part of the job.

    But what troubles me most about your comments is the following statement: “Compliance officers essentially are employees that the government requires or pushes organizations to hire to serve the interests of the government in monitoring and promoting compliance on behalf of the government. “

    That to me is a grave misunderstanding of the role. I would strongly argue that the compliance officer’s job it to serve the interest of the company by ensuring that it avoids the incredibly expensive and destructive consequences of failing to follow the law. That’s of great value to the organization, even if the organization doesn’t like hearing it, and management doesn’t enjoy being told “No” by compliance officers.

  4. I don’t see a function to forward this article. I would like to forward individual articles such as this one to certain individuals (boss).

  5. Any compliance officer that believes he or she is a mole for the government needs a new profession — maybe dentistry or something with the NSA . Compliance must enable business to happen “at the speed of business,” working to give business leaders the risk information they need to make good, ethical decisions. This “mole” characterization is incorrect and, more important, unfortunate and a little bit horrifying.

  6. Adam, as a compliance officer in the financial services industry, I’d also point out that many of the CO’s in these actions are/were responsible for Bank Secrecy Act/Anti-Money Laundering Compliance, a set of rules and regulations seen as key in dealing with terrorism.

    Also, with regard to the “government mole” comments, there’s always tension between risk management functions and the other parts of the organization. That’s the way it’s supposed to work. A crucial skill of a compliance professional is being able to get comfortable with that tension, without ignoring it or unnecessarily inflaming it.

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