Compliance officers as entrepreneurs?

In a paper recently published by Boston University School of Law – The Law Office (LO) and Compliance Officer (CO): Status, Function, Liabilities, and Relationship  – Emerita Professor Tamar Frankel of that school quotes a former SEC official (John Walsh, then Chief Counsel, Office of Compliance Inspections and Examinations) as noting the following:

[C]ompliance officers have the characteristics of entrepreneurs. They have the “what next” mentality. They are excited about change and interested in the unknown; perhaps because the unknown is where their opportunities lie. They are not afraid of what they do not know and are eager to learn. With continuous learning come recognizing problems and ideas for solutions. They focus on creating and implementing new ways of doing things. Often, they are more interested in the future than in the present or the past, particularly if the future promises better methods and results. This process and the ideas it brings, are the exciting for entrepreneurs. In this respect COs are similar to entrepreneurs.

Note that these remarks are from a speech given in 2002, and compliance is not quite as new a profession now as it was then. On the other hand, the expectations of COs are now escalating steadily and the need for COs to have an entrepreneurial mindset – and entrepreneurial reputation within their respective companies – is as great as ever.

But COs are not the only members of the compliance universe who need be entrepreneurial in how they approach their work. Prosecutors should do so too, as the Department of Justice seemed to recognize in 2015 by creating the position of Compliance Counsel for the Fraud Section. The lawyer appointed to that post – Hui Chen – noted in an interview with Ethical Systems:

By creating the Compliance Counsel role, the Fraud Section in the Criminal Division sought to bring in-house expertise to that evaluation [of target companies’ compliance programs]. In doing so, the Fraud Section both recognizes compliance as an area of professional expertise, and heightens the significance of that expertise as something that is critical to companies.

Chen was (and is) clearly a compliance expert. And she seemed to bring an energy and engagement to her work that could fairly be called entrepreneurial.

However, she resigned in 2017, and last month the head of the Criminal Division announced that the position would not be filled. He noted:  “Our expectation is that the [Criminal] Division will develop a training program [for prosecutors] that addresses compliance programs generally, as well as issues specific to each section and unit.’”

Perhaps this new approach will work out okay. But without a true expert accountable for achieving compliance success at Justice I am doubtful that it will happen, as accountability is also part of what makes an entrepreneur.

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