The development of a compliance culture

Abstract

Purpose

To provide the investment management industry with a summary of the expectations of the Securities and Exchange Commission (SEC)'s examination staff with regard to the development of a culture of compliance.

Design/methodology/approach

A review of certain elements identified by an SEC staffer that are necessary for a firm to have a strong and effective control environment and culture of compliance was carried out. The article explores a firm's strategic vision or “tone at the top,” risk identification, establishment of controls, documentation, accountability and self reporting, and cooperation.

Findings

Confirmation that a firm's success in establishing a culture of compliance is difficult to prove and harder to document. However, an understanding of the concept of developing a compliance culture can allow compliance officers to demonstrate a commitment to ethical and compliant practices.

Originality/value

The SEC's new inspection program evaluates each firm's commitment to compliance and moral and ethical practices. This article provides a basic understanding of the minimum expectations of the SEC's inspection staff.

Citation

Morton, J.C. (2005), "The development of a compliance culture", Journal of Investment Compliance, Vol. 6 No. 4, pp. 59-66. https://doi.org/10.1108/15285810510681919