I was interested to read this article by Compliance Week last month about how stressed-out compliance officers are these days. A study by the Society of Corporate Compliance and Ethics showed that of nearly 1,000 compliance professionals surveyed, "58 percent [] often wake up in the middle of the night from job-induced stress, and a stunning 60 percent say they have considered leaving their job in the last 12 months due to the amount of stress." Oooofffff.
Unfortunately, this stress level is about to go even higher for compliance officers at investment firms if the SEC follows through on a recent decision that such compliance officers may themselves be sued as "supervisors." According to Investment News, the SEC "sees compliance as an area ripe for scrutiny." At a compliance seminar in January, the SEC Enforcement Division's Bruce Karpati, co-chief of the Asset Management Unit, said that “compliance programs are front and center for us. There's going to be more soon on that in terms of enforcement actions.”
In January 2012, an SEC case against Theodore Urban, former general counsel of Ferris Baker Watts, was dismissed after the Commission split 1-1 on whether to pursue the matter (3 commissioners recused themselves). The dismissal and the recusals left unresolved the issue of whether compliance officials also are supervisors, as previously found by SEC administrative law judge Brenda Murray.
Linda Riefberg of Fried Frank Harris Shriver & Jacobson LLP told Investment News that the split in the Urban case was "good for Mr. Urban, but it leaves everyone else in a state of confusion on this issue.” She added that in light of the ALJ's finding, “from this moment, [compliance officials] should assume they will be seen as supervisors, if they take on the sort of responsibilities that Ted [Urban] did, even if they are not the direct-line supervisor.”