The Justice Department and the Security and Exchange Commission are turning up the heat on corporations that like to bend the rules in order to increase profits. Investors and corporate executives are feeling the heat from Deputy Attorney General Sally Yates. Yates recently told a group of investment bankers that the Justice Department will increase their efforts to prosecute Chief Compliance Officers and other corporate executives that condone corporate misconduct, according to Helane Morrison, the Chief Compliance Office and General Counsel of Hall Partners LLC in San Francisco.
Sally Yates recently announced the hiring of Hui Chen as the compliance counsel for the Department of Justice. Chen is a former federal prosecutor, and she also worked for Microsoft, Standard Charter Bank, and Pfizer. Morrison was the regional director of the Security and Exchange Commission in San Francisco before joining Hall Partners.
The Yates memo did point out there were several challenges involved with pursuing executives for corporate violations. There are endless paper trails to follow and it’s hard to identify the decision-making responsibility in many corporations, according to Morrison. Morrison knows that because she is also an attorney and the Managing Director of Hall Capital. Morrison also said that Chen has the budget to identify and pursue individuals within corporate structures. That is a first since the DOJ, and the SEC have always had budget restrictions that prevented them from going after all the individuals that violate regulations for the sake of money.
Chief Compliance Officers know that trying to follow all the regulations to the letter is a challenge. Almost 65 percent of the Chief Compliance Officers that responded to a recent survey said that the new developments in policing regulations may force them to leave their job as CCO. The stress of being ruined financially as well as having a reputation destroyed that took years to build ay be too much to ask any CCO. Morrison believes that many chief compliance officers will resign or take a position that is not in the line of fire when it comes to prosecuting corporate misbehavior. CCOs know that jail time and large fees are possibilities if Yates and Chen do what they say they are in the process of doing.
Helane Morrison is not one of those chief compliance officers. Morrison is familiar with how the government works, and she makes sure her company is well within the boundaries set by the DOJ and the SEC.