THE RISE OF PERSONAL LIABILITY IN COMPLIANCE
R&C: To what extent are you seeing a trend toward chief compliance officers (CCO) and other senior executives being held individually responsible for company wrongdoing, including regulatory violations?
Fitzhugh: If you Google ‘chief compliance officers’ and ‘violations’, the results show story after story of leaders held personally responsible for wrongdoing at their organisations. The truth is, individuals are being held accountable and there is no hiding from it any longer. No longer can anyone claim ignorance about an issue, since all compliance-related activity now forms part of their job responsibilities. In fact, the Approved Persons register and the Senior Managers Regime recently extended enforcement action against individuals from three to six years. These individuals can also face significant personal liability long after they leave a role, so they need to keep that in mind. Trends show that punishments are becoming both longer and more severe.
Cropper: Personal accountability is not really on the rise, we are just hearing about it more. The 2015 Yates Memo, for instance, states that for every investigation held for an organisation, the specific individuals to blame will also be involved. Organisations will still get the same level of blame, it is just that regulators now also look for the individuals responsible. This is not just happening in the US either – the Senior Managers Regime in the UK holds managers accountable for regulatory breaches and decisions made that bring a company to its knees. Regulators are no longer just providing a tone about personal liability. There are actual frameworks and requirements, such as the Department of Justice’s (DOJ’s) Corporate Compliance Program, that explicitly state what you are responsible for and hold you accountable if you are not performing your duties.
Oct-Dec 2018 Issue