You’ve surely heard about Goldman Sachs’ settlement with the SEC on fraud charges related to the firm’s disclosure, or lack thereof, of a collateralized debt obligation that purportedly was designed to fail. The $550 million to be paid may seem like a lot, and indeed is said to be the largest SEC fine against a Wall Street bank, but many observers maintain that the firm got off easy, especially when the amount is viewed in light of Goldman’s revenue and profits.
But there’s another way in which Goldman seems to have dodged a bullet. While other companies have had to accept a government appointed monitor working inside the organization, Goldman won’t be subject to such meddling. In my mind, avoiding this kind of intrusive interloping is just as big, if not more so, than the manageable size of the fine – especially for a firm as sophisticated as Goldman Sachs.
There is, however, an annual requirement for filing a certificate, for three years, that Goldman is in compliance with the terms of the settlement. Of considerable interest is that the certificate is to be signed by the firm’s general counsel or global head of compliance. Some pundits are saying this makes eminent sense, while others take the position that it should be the CEO or board, who are ultimately responsible for ensuring compliance, to be putting their signature on the dotted line. In any event, all this puts more of a spotlight on chief compliance officers and compliance programs. One former chief compliance officer reportedly said the SEC “seems to be attempting to elevate importance of the chief compliance officer role,” while an active compliance chief says the settlement shows that compliance officers “are becoming true C-suite level executives.”
There’s a lot going on here, and we can expect to see the focus on compliance officers ratcheting up further going forward.
© Steinberg Governance Advisors, Inc. 2010. The information presented here does not constitute legal or any other type of professional advice. Companies are encouraged to consult legal counsel concerning their responsibilities for legal and regulatory compliance.