CCO - Behind the Scenes Episode 4

In this episode of CCO - Behind the Scenes, Jeffrey Hiller talks about what "Tone at the Top" means, and why it's important to embed the Compliance Department within the firm.   Listen as, during these short discussions, Jeffrey shares his real experiences and lessons learned during his vast experience as both a CCO for several global investment firms and Senior Counsel for the SEC's Division of Enforcement. Being CCO is more than just checking boxes.    

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Episode Transcript

Jeffrey Hiller (00:13):
Welcome to the October 7th episode of my Oyster
Stew podcast, mini series, CCOBehind the Scenes I'm Jeffrey
Hiller and in this episode, I'dlike to talk about"tone at the
top" and the importance ofembedding the CCO in the firm's
culture.
I've mentioned"tone at the top"in other podcasts, but I think
it's critically important to asuccessful compliance program.

(00:35):
In fact, the former Director ofthe SEC's Enforcement Division,
Andrew XXXX stated in a speechthat the SEC would ask the
following questions:"AreCompliance people included in
important meetings?
Are Compliance views typicallysought and followed?
Does the CCO report to the CEOand does the CCO have Board

(00:57):
access?
Is the Compliance departmentconsidered an important partner?
W here i s it considered anexpense a nd overhead?
And does the Compliancedepartment have sufficient
resources?" I always add whetherthe firm rewards good compliance
and sanctions bad compliance isanother important factor.

(01:19):
I once had a trader call me andreport he thought that he had
received material nonpublicinformation from a broker and
that if he acted upon it, itwould benefit his clients.
The security was blocked and afew weeks later the facts proved
true.
The CEO accepted the compliancerecommendation and rewarded the
trader with a bonus.

(01:39):
That is"tone at the top." Inmany firms, I have observed that
the Compliance department hasits own unit, and because they
have confidential informationmay be segregated from other
departments.

(02:00):
While this may meet privacy andsecurity concerns, it's not
particularly helpful toCompliance.
Compliance needs to be visibleand informed.
I've always ensured thatCompliance has a seat in the
trading room, and having someonethere during market hours.
You need to get to know thembefore there's an issue so that
when a matter arises, you'vealready built rapport and have

(02:22):
credibility with them.
A now-defunct business magazine,MBA Jungle, used to reach out to
business people for lessons theylearned in the course of their
career.
Each month they'd share commentsfrom three or four business
people.
In one issue, they asked VivianTam, a fashion designer and
business founder, Brian Cashman,Senior VP and General Manager of

(02:45):
the Yankees, and me at the time,a Managing Director of CitiGroup
Asset Management.
Tam shared the Chinese notion ofharmony and that she practiced
it with her clients.
She would intently listen to herclients in a non-threatening,
but informative way.
Mr.
Cashman shared that he respondsto everyone, even if he doesn't

(03:07):
know them; you never know whenyou meet someone how you may
interact with them in thefuture.
Even if there's no foreseeablebenefit, he corresponded with
someone over the years and thiscommunication led to signing an
unknown ballplayer, OrlandoHernandez, who helped the
Yankees win three world series.

(03:27):
I told a story of how I got apromotion.
I hope you found these insightsvaluable, and thanks for
listening.
Don't forget to follow theOyster Stew podcast on whatever
platform you use.
If you have any questions orwould like to request a
consultation, call us at(804)965-5400, or visit us on the web

(03:48):
at www.oysterllc.com.