Companies subject to enforcement actions will get more credit from regulators if the alleged misconduct is an exception in a compliance-driven corporate culture rather than a remedial step after discovery.
In cases where the SEC finds fraud, there often are early warning signs, and inadequate corporate compliance may not have seen them. The SEC believes compliance personnel must be on the lookout for people, who are overly technical in their approach to issues of ethics and professional responsibility, and should be skeptical of explanations that do not make sense, regardless of who provides them. A strong compliance and ethics program must start with proper governance, from the top, involving the board and senior management. Integrating ethical values into a firm's culture may be accomplished through performance management systems and compensation so proper behavior is encouraged and rewarded.
In sum, the SEC believes compliance is king.
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