(thanks to toonpool.com)
Following on from my previous post on general counsel and compliance officers, it's worth reading Michelle Garlick's post on what can happen to compliance officers when things go horribly wrong...as they will.
In the case she describes a brokerage firm, ActivTrades plc, failed to put into place proper client money protection procedures. The Financial Services Authority (or if you prefer Private Eye's name: the Fundamentally Supine Authority) fined the compliance officer £3,000 for the breaches even though no client money was actually lost. The fine was reduced from £20,000 because the CO settled early.
Moreover, according to one commentator on the post, the firm was also fined £85,750 for, among other things, the co-mingling of clients' monies.
Since the philosophy and principles of the SRA in outcomes-focussed regulation are taken from the FSA, one can see how this might apply. Both COLPs and senior management will be culpable for breaches. The fact that the CO in ActivTrades didn't seem to know much or been trained properly did not excuse him nor did it exempt him from punishment.
Future COLPs will have to think very hard about their positions especially in relation to the SRA and their firms. They could easily be hung to dry.
PS. My blog turned 6 this month...