While it is unusual for a chief compliance officer to face government sanctions individually for compliance failures in the anti-corruption arena, the Securities and Exchange Commission and FINRA seem to be testing the waters. Last year, the SEC issued two enforcement actions against CCOs in the financial services section and, just this week, FINRA announced a disciplinary action against former Raymond James CCO Linda Busby. The penalty was drastic, as Busby, who was CCO from 2002 to 2013, agreed to leave the industry for three years and paid a fine of $25,000.
In its press release, FINRA enforcement chief Brad Bennett said, “Raymond James had significant systemic AML failures over an extended period of time, made even more egregious by the fact the firm was previously sanctioned in this area. The monitoring for suspicious transactions is an essential part of protecting our financial system and firms must allocate adequate resources to their AML compliance efforts. This case demonstrates that when there are broad-based failures within specific areas of responsibility, we will seek individual liability where appropriate.”
In its Letter of Acceptance, Waiver and Consent, FINRA noted that Busby individually had identified certain red flags regarding a $250,000 transfer to a Panamanian bank account but had failed to clear the red flags she had identified. She was also alleged to have failed to enforce the company’s existing due diligence program and failed to perform periodic reviews to ensure accounts were consistent with the initial representations made when the accounts were opened.
While neither Raymond James nor Busby admitted or denied the allegations, a Wall Street Journal article noted that Busby was retiring, effective immediately. In a statement, her lawyer said, she “looked forward to putting this matter behind her and enjoying her retirement.”
If this trend of the SEC, and now FINRA, bringing enforcement actions against CCOs personally continues, it does not seem a stretch that the Justice Department may well look in that direction for an appropriate FCPA case.