The SEC has named its first chief
compliance officer: Kathleen Griffin.
She will be tasked with oversight of
employee securities transactions and financial disclosure reporting. The
creation of a compliance program to prevent insider trading came from last
year's insider trading scandal at the SEC. The Office
of the Inspector General reported that "the Commission lacks any true
compliance system to monitor SEC employees' securities transactions and detect
Ms. Griffin will have her hands
full. From the SEC OIG Report:
The current disclosure requirements
and compliance system are based on the honor system. and there is no way to
determine if an employee fails to report a securities transaction. There are no
spot checks conducted and the SEC does not obtain duplicate brokerage account
statements. In addition. there is little to no oversight or check;ing of the
reports that employees file to determine their accuracy or even whether an
employee has reported at all. Moreover. different SEC offices receive each of
those reports and do not routinely share that information with each other.
It's good to see the SEC drinking
its own champagne and hiring someone to focus on their own internal compliance
issues. (Doesn't "drinks its own champagne" sound better than "eat its own
Since the announcement came on April
1, I thought it was an April Fool's Day joke. Why would the SEC hire the
comedian Kathy Griffin? Clearly, I was being overly cautious about my news
intake. I was not alone in this confusion and I'm sure will not be the last to
draw the comparison between the two.
I'm sure Kathleen's comments to the
SEC employees will be less controversial than Kathy's
comments at the Emmy Awards.
For additional commentary on developments in compliance
and ethics, visit Compliance Building, a blog
hosted by Doug Cornelius.