Alternative asset managers are starting to take regulatory compliance more seriously, with a spike in hiring of compliance professionals this year. The shift comes even amid evidence that some managers, especially smaller ones, seem to take a dismissive view toward compliance – an attitude that experts say could cost them dearly in the long run.
Managers are responding by creating and filling new compliance positions, and there’s a lot of activity, says Jason Wachtel, founder and managing partner at JW Michaels & Co., a recruiting firm that specializes in compliance and legal hires. “Across the board, everybody’s hiring,” he says. “I’ve never seen it this busy before.” He expects that pace to continue for the rest of this year and into 2015 and beyond, he adds.
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This article originally published in the Wall Street Journal : The Morning Risk Report
The boom in the hiring of chief compliance officers and mid-level compliance staff is driven by not only an explosion of rules and regulations but by the fear of becoming the next poster child for wrongdoing, says an executive at a national recruitment firm specializing in hiring of compliance officers and legal personnel.
Rules and regulations such as the Volcker Rule and Dodd-Frank Act, which marks its fourth anniversary later this month, have served as a wake-up call to banks, hedge funds and private equity firms that it’s better to spend money on compliance than to get fined millions or billions of dollars, then suffer additional losses as investors pull money, said Jason Wachtel, managing partner of recruitment firm JW Michaels & Co. His firm has increased its staff from two people to 50 since the financial crisis hit in 2008. “If you’re a hedge fund or private equity firm with more than $500 million under management, you’re looking for really talented people for compliance and legal,” he said. “Most firms have hired their chief compliance officer in the last two years and now are further building out their compliance infrastructure. They need more hands on deck.”
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The compliance world is busy talking about the recent news that French bank BNP Paribas SA will likely pay a record fine of over $8 billion as part of a settlement with the Justice Department over violations of sanctions related to Sudan.
Bloomberg reports that BNP Paribas conducted billions of dollars of illegal transactions on behalf of companies and government agencies in Sudan over five years.
According to Reuters, authorities are investigating whether the bank stripped out identifying information from wire transfers so the transfers could pass through the U.S. financial system without raising red flags.
In addition to paying the fine, BNP Paribas will likely plead guilty to a criminal charge of conspiring to violate the International Emergency Economic Powers Act and agree to a temporary prohibition on conducting transactions in U.S. dollars.
Sources: Bloomberg Businessweek; Reuters