Sell-Side Compliance: No Friends in the Coffee Room?

Guest Contributor: Denise Valentine, Senior Analyst, Aite Group

I’m feeling sad today. In fact, I lay awake this morning reflecting on dozens of conversations I’ve had with compliance officers at asset managers, hedge funds, and broker/dealers. It’s difficult not to empathize. I don’t recall ever feeling this way after interviews in other functional areas…

Here are people with a job that is growing in range and responsibilities, in effect expanding into operational risk, yet they have few to no resources. Compliance is considered a cost center — in and of itself a death knoll in a time of cutbacks — not that compliance departments had a budget before the crisis. Instead, the compliance officer must build a business case and go hat in hand to management, timing a good day of course. Few are optimistic.

Often, compliance staff is treated adversely by the business, which sees them as a deterrent to conducting business. (No friends in the coffee room?)

Compliance staff rely on technology best suited for other functional purposes. The firm has technology, so management assumes compliance is all set. Never mind that these systems were built for other purposes.

At any given time, a surprise regulatory audit may appear — sometimes multiple audits at once. If you are a chief compliance officer in a firm with less than 100 people, you are likely alone with no support staff. At a firm with a few hundred people, you may have one or two staff members.

A compliance officer balances needs in every functional area of the firm and is viewed as a risk mitigator by management. High expectations are placed on chief compliance officers to cross the company’s t’s and dot the i’s every time. One CCO told me, “I can get 10 things right every time for years, yet if one thing goes wrong — regardless of fault or how minor — I’m hauled into management’s office.”

Here are a few of my favorite quotes from my interviews. I asked, “What keeps you up at night?” He replied:  Nothing, I’m too tired.” In response to “Please tell me about your typical day…” I heard, “Whoever’s at my door in the morning goes first.” And lastly, regarding the new regulatory front, “I’m expecting it to get worse before it gets better.”

 I wrote about buy-side compliance for Aite Group late in 2009. Shortly, I will put pen to paper on our sell-side compliance report. …I just need a few days to recover.

About Maureen Lowe

President and Founder of Financial Technologies Forum, LLC. Editor-In-Chief of FTF News. Entrepreneur, Jersey Girl that recently returned to Jersey, Loves to Bake, Married to a Kiwi, First Time Mom
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