Name: Managing Compliance in the Grey Zone
Uploaded: 2026-10-20T16:21:05.043Z
Duration: 1 h 5 min 12 s
Description: Managing Compliance in the Grey Zone

Transcript for "Managing Compliance in the Grey Zone": Hi, everyone. Welcome to today's webinar, managing compliance in the gray zone. My name is Allison Cooley, and I am the director of product marketing here at Comply. I'm really excited for today's webinar. I am joined by Bridget Donato, who is the chief compliance officer at Peaceville Street Capital. And I'm so happy to have you here today, Bridget. We're gonna get into the agenda and a little housekeeping to start, and then I'll let you introduce yourself. So let me just advance this slide. Alright. So just so everyone knows who's on today's webinar, we will be sending a recording of this after this session, so look out for an email within the next twenty four hours. We're gonna be rolling... Or running rather poll questions throughout today's webinar, and so you're gonna see those pop up. And we would love for you to fill those out. We're gonna... Bridget and I are gonna take a look at them with our team and kinda take the temperature on some of the questions that we've popped up to see just how you're managing compliance and some of the challenges that are, bubbling up right now, especially in this deregulated environment. We're also offering our continuing education continuing education credit for our ICCP designees, and so you'll get an email after this session. You'll just need to take a screenshot of that and submit it to your portal. But if you have any questions, my colleague, Caroline McCully, is in the right side of your screen where you see the q and a chat. So feel free to pop in any questions you might have. We'll also share Bridget's LinkedIn information in case you wanna check-in with her and connect with her. I know it's so important for compliance leaders and CCOs to be able to share information and network in this space. It's something I'm passionate about. It's something Comply is passionate about. So we'll be able to provide that information to you as well. And then any questions that you have, please submit them. We'll take a look. We'll get back to you. You know, the the goal of this session is to share information, and I'm really excited for what we have in store today. So to, get into the agenda, we will, talk through what a reasonably designed compliance program looks like. Right? And then we're gonna talk through a little bit about what's changing in today's regulatory environment. We've got the the the push and pull of of more of a deregulated agenda with all of these new things like prediction markets and AI governance and, you know, different rules being considered to be, eliminated. And then we're gonna get right into the heart of it, which is CCO liability and ethical decision making as you navigate your reasonably designed compliance program. I know how... Bridget has a lot to share on that front. And, with that, I'm gonna give Bridget the opportunity to kinda give her thirty seconds skinny or sixty seconds skinny, let's say, on her background and what brings her here today. Forgive me as these slides take a little bit of time to push the next one forward. Alright. Bridget, take it away. Hi. Thanks for having me, Allison. This has been great. I... As Allison mentioned, I'm the CCO of Peaceful Street Capital. We are... We provide preferred equity in the real estate space for, various investment types. And I have a background that kind of ranges from a wide variety of different regulatory bodies. So anything from mutual funds, I've done the compliance programs for them, investment advisers, private equity. I'm currently in the private fund space, broker dealers, and even insurance companies and and some banking. So I'm excited to be here, and thank you, and, talk about... More about compliance program and kind of what's important and how we can manage it. Fantastic. So I'm gonna get into our next slide here, which is the big question. Right? So the SEC is... Says, hey, firms. You need to create a reasonably designed compliance program. And it has... Needs to have a certain amount of components. But it's really a blank canvas, and I know that we talked about that a lot when we were preparing for today's session. And that can kind of be a little bit intimidating, especially, you know, as a compliance leader, you might work at one firm that has this type of clients and this type of firm profile and different things that are going on there and then a completely different firm, but it's all under the umbrella of a reasonably designed compliance program with the SEC. So let's talk through really what that looks like at a high level and then how firms can adapt that themselves as they, you know, evaluate their own risk and firm profile and client base. Yeah. Sure. So I I think this is a great framework to really look at what your compliance program should entail. You know, you have the SCC, you have the Investment Company Act, the Investment Advisor Act, and then FINRA has its own regulations. But I really think this captures everything within that. Under the investment advisers, for instance, right, you have the two zero six four seven, but it's very minimal on what it's asking advisers to really have a place, a CCO, policy and procedures, code of ethics, etcetera. But as the industry has grown, this really captures, you know, looking at culture. It's not just compliance where culture matters. It's really across the entire business, but really making sure that culture is important from a compliance standpoint and the compliance has a seat at the table that people understand what compliance is. And that really kind of goes into all of these other bullets that we have, right, from policies and procedures. It's not just the written document and having the compliance manual and knowing that, okay, there's one in place, and we do kind of an annual training every year about it. But it's having business units understand how that applies on a day to day basis. And if there's a change in their policies and their procedures and their daily activities, that compliance is aware of it, and they're incorporating that into their overall updates and programs on a a recurring basis. You know, going through all of these, it's all... It's really relevant. I think across the industry, I've done a number of different firm types, and I've even been in consulting space where, you know, marketing review can be really important with the new rule that just came out. It was very simplified from an investment adviser standpoint in the past. But now we have all these other layers that we need to consider, and we really need to think about and make sure that we understand the hypothetical performance and that one on one, communications in the past weren't necessarily deemed, marketing material. But now if you put in some hypothetical, performance or some other factors, it might be deemed as marketing. So knowing those nuances and sharing that with your marketing team, your business units, and making sure that everybody really understands the complexity of this. And we could talk an entire webinar on each one of these topics. Right? So having, in in the works of doing our annual training for our firm. And it's amazing how much compliance continues to grow and how much we're expected to know from an industry standpoint. And that's aside from what the firm even does for their products and services. So it can really be cumbersome, but it's important to just kind of stay on top of this. Is there anything in particular you wanted to call out, Allison? You know, I just think that, like, the the importance of training for the entire employees, whether they're the advisers themselves and have their own, you know, trade monitoring and, you know, complex of interest. But across the entire board, it's like, you know, I think anyone outside of finance understands, you know, you have your your yearly HR training. Right? Ethical training, you know, harassment training, things of that nature. And sometimes it feels like this passive one and done situation. And, like, when I look at firms like yours and other clients that we have, the ones that are so successful are the ones that are building on that training. Right? It's not just like, here we go again. Here marketing. Here's your rules, and, like, everyone's acting like they've heard it for the first time or they've dusted off the cobwebs. But that ongoing training where it's engaging and interactive, I find that firms that focus on that really are way more successful. And the other piece of it is, you know, when you... The news. Right? You see these enforcement actions. You see these things bubbling up in articles online and in, you know, on on mainstream media. Right? And so those are such good proof points of, like, okay. I know here's the, you know, two zero four dot... Or two zero four dash seven. Right? I think I got that right. You know, I know these adviser rules, but when you see it in practice and you open up the Wall Street Journal or, you know, scan... You start doom scrolling, you know, maybe your favorite social media thing, it becomes, like, that much more interesting. And so I think that's such an important piece to helping the culture become really resilient and understand the why versus, like, oh, yeah. I have to, you know, click, click, click, click, click, a test every, you know, quarter or, you know, make sure my account holding statements are in the system or whatever it may be. So No. I think that's a great point. So... Yeah. And tying that back to kind of the culture. Right? So everybody... That's a really hard thing to kinda nail down what should a culture look like even within the firm or a compliance culture. And when your compliance department is approachable, then all of these things become a little bit easier to digest and understand because people are... Find compliance approachable. And you want your employees to be able to come to you whether you're a small firm like I'm at currently, and I'm the CCO, and I interact with the employees on a day to day basis, or you're a large corporation where there might be a couple 100 compliance individuals. And, you know, you have several different business units that are trying to interact or just understand. So you don't want it to be, to your point, this arms length training where people are like, oh, gosh. I have another to do because, you know, my day to day job is already hard enough. So I think it's important, like, to that point. You know, the training is not just... There's this annual requirement, but then it should be ongoing. And it doesn't have to this formalized training. So, you know, in talking to peers and other professionals, you know, it it can be just a conversation in the hallway sometimes. Like, hey. I've got this problem, and what does that look like? And then, you know, sometimes it's like, oh, let me follow-up with an email and figure out what... You know, how we can resolve this. And it doesn't have to be so, formalized in that sense, but it can also be targeted training because some firms are so large that one topic might need and justify an entire hour all by itself. So you want to be able to customize that for whatever your firm's needs are, and I think that's the expectation of regulators. Right? So depending on the size of your firm and how many employees you have and what your business model might look like, it could... You could have, you know, several service... Services and products, or you could just have one focused product. But regardless, you need to make sure that your employees understand how that applies and why is personal trading important and why... You know, making sure that all the beneficiary owners are also in there. You know, I I had a recent conversation, in a roundtable... Compliance roundtable where we were talking about, like, I... My firm works in the real estate industry. And so there's a lot of individuals that we interact with that are actually not in the investment space. So when you start talking to them and explaining to them, like, why we have to follow a certain code of ethics or why we can't market it this way, it's a whole another level of education. And it's important that you can share that with your employees and... So that they can then also have that conversation with all of their additional vendors and partners, so that it's all coming back to the firm in the appropriate way and that we're following the proper guidelines and, you know, all of that. And and that ties into kind of the governance and the testing. And if we're doing our job properly from compliance, but also, like, compliance has that seat at the table, we're able we're able to have that communication with senior leaders and kind of incorporate that throughout the firm, then all of these staple foundational elements kind of become simple in some ways to really implement because everyone's kind of like, alright. Well, compliance has to do their job. We wanna make, you know, we wanna make sure we're getting the revenue and doing what we need to do, but we also... We don't need the SEC or a regulator kind of on our backs or giving us violations. So, there's a way to kind of go about this where everyone wins. And I think that's kind of the challenge with compliance and management is sometimes finding that way where everybody wins, where you have the right balance of compliance, but you can still kind of do your day to day business and still kind of get objectives and products and services out to your investors. Absolutely. And, you know, one of the things I I think about just to wrap this little section up is, you know, there's so many firms, yours, of course, but that have this wonderful website where it's the ethos of the firm and how you serve your clients and how you serve your communities and how you protect their investments. And so if you're if you're thinking about how do I bring that internally, that duty you have to your clients should be the other side of the same coin for your staff. And so if you're sitting here as a CCO or you may be new to the firm and you're trying to kind of figure out the blueprint of what that looks internally, go over to marketing, go over to business development, go over to the people who are shaping that message for the firm, your colleagues and your peers, and bring them into the fold of, like, well, what does this... These same principles? What does the same ethos apply internally? And then it really becomes this very aligned approach to our fiduciary duty to our clients and also the duty that we have internally to be the best firm, the most ethical firm, the firm that is helping growth things. So often I hear, you know, when marketing review comes up, oh, well, you know, we we don't even need to really do marketing because we're so well respected in our communities that we just bring in referrals, which is fantastic, but it's also, like, there's a risk level there too if you're just kind of ignoring the marketing rule. And so I think we could go on and on about this for, like, ten hours. So I'm gonna jump to the next slide, and we're gonna start to get into managing compliance in a deregulated environment. So, you know, the start of 2025, we saw a lot of changes, a lot of rule withdrawals. I think it was 14 plus AML for our IAs is withdrawn, and we continue to see some interesting developments from the SEC, which is interesting to me. But the first thing that... Or not first thing, but the most recent thing that we've seen come out, you know, is previous, you know, regulatory leadership has issued a million risk alerts. Right? And in the past two years, there's been very few. So it's almost like we've drilled down deeper into to understand the meaning behind this. And so I think you and I both kind of had a, like, little head turn moment when it was like the SEC is issuing a risk alert about annual review. Like, that's such a, a foundational part of the compliance program and then a requirement in and of itself. So it's interesting to me that they're saying, like, please don't please don't forget about this. This is really important. So I want to unpack that a little bit with you. Yeah. No. I think that's a great point. And... Yeah. I I mean, it's amazing how much has changed just in the last couple years. Our chair Gensler, I think everybody was running around frantically trying to implement all of these proposed rules and trying to figure out how it was going to impact our firm. And and now we have a new, a new chair, Atkins. And all... To your point, all those proposals kinda went out the window. And so there was a huge sigh of relief in many regards even from compliance professionals because it was a... It was overwhelming. I mean, whether you agree with the proposals or not, it was just a lot of work. And it was really taking away from the fact that, you know, businesses are trying to focus on their product and do all of these things, and they're not trying to be be malicious. But trying to implement all of these rules and all of these changes all at once was overwhelming for everybody. So that being said, I mean, I was a little bit of a sigh of relief for a year or so. And then in the last year, we've seen, you know, four risk alerts come out, which has been great, this being one of them. And I think, you know, hopefully, we're we're starting to kinda see some pickup where there's some value in some of the proposed rules and compliance can start finding some confidence. But to that point, like, the the annual compliance review has always been very key to your compliance program, and it... It's a good kind of test and litmus test, so to speak, of just making sure that you have everything in order. So this was a great risk alert to really remind compliance that the SEC is still paying attention. A lot of these issues are, you know, kind of recurring issues that have happened over the course of my career. You know, they're nothing unfamiliar. But it's really just making sure, like, we understand, you know, going back to the basics of some of the foundational elements that we talked about previously, is just making sure we're doing our annual review at the same time every year. You know, you can't go to years and say, oh, sorry. We got, you know, we got delayed and we got... We're behind and something else kind of caught our eye. It doesn't matter what size firm you you are. The SEC wants to know that you're doing it every year, and you're doing it roughly at the same same time every year. And it's also the time. Right? The scope and the time period that you're doing it at. So this risk alert kind of talks about how, you know, making sure that if you said you reviewed this period of time that you really truly stuck within those boundaries during your review period and that that's what you're addressing. It really... It... I I find this, risk alert very helpful too because it just, again, reminds, compliance and just businesses and firms because a lot of this is applicable to your business functions too. Like, you can use a lot of this this concept into your operational functions. It's just making sure, like, again, your policies are this. Is that what you're actually doing? And if there's a... And, typically, if you're... Especially if you're in a larger firm, you want your business units to be involved in how the policies and procedures are written because compliance has no idea all the little details of what a business unit or a firm is doing day in and day out because compliance is focused on, you know, all of this reporting and functionality from a compliance standpoint. We need to make sure that the business units are engaged and they can speak to their policies. So they should be part of that review process. And that's where you get hung up. If you don't have the business units part of that, then, you know, your policies may not match what your actual practices are. And that's what the FCC is finding. And so all of this really relevant. Books and records, I mean, kind of going back to everything we talked about previously, like, I feel like my entire career that's been ingrained in my brain is just making sure everything's documented. So even those conversations sometimes that are in the hallway where it's a very informal, you know, oh, this happened x y z. Like, I recently said this even to some of the people internally in my firm. You're okay with that? Can you just shoot me a quick email and let me know so that I can document that and have that all set up? Yeah. Because the FCC is gonna come in, and they're gonna say, well, where's your proof that that happened? And I'm like, well, I promise you he told me. Yeah. We got lunch and we talked about it. And so, you know, I was just like, hey. Pretty please send me an email. But it is like you're... That's so important. You know? And one of the things that when I read... Read through this and when I was discussing it with you, like, if you're testing your policies, if you're confident about your policies, if you're keeping in line with the trade monitoring and and making sure conflicts of interest in in disclosures are accurate and doing all these things, then... And I've never been a CCO, and I have never been a regulator, but I know a lot of them internally here at Comply and have had the opportunity to meet you. I'm not saying that this is an easy thing to do. But if you are doing it throughout the year, it should not be this humongous burden to spend a week kind of putting all of this together because you're doing these things throughout the year. And so, you know, I've been in a lot of different conferences. I think it, you know, FINRA and a few others recently, and the lack of information is not a good thing. Right? So when when they're when they're saying, oh, why can't you do that? It's like red flag, red flag, red flag. Like, you you should be able to put this bare bones thing together. And so I think that's where a lot of firms get tripped up, is just the... It's not a sprint. It's a marathon throughout the year, and having those checkpoints in your compliance program as defined by your policy that are really vital. And it's small firm, big firm. Right? You could be a 120 in AUM or a 120,000,000,000,000 in AUM, and you're still going to have to do these things, granted you have more resources than a team, but it's so critical. The next topic I wanna talk through is the proposal to eliminate the pay for play rule. So this one caught me a little bit off guard, but, I... And I know that you and I have talked about it a lot with regards to this, and I wanna get your insights on kind of what firms do and what CCOs do when such a core rule is up in the air. Is it... Let's stop and see. Is it... Let's continue on. You know, there's also the SEC look back period. So if and when the pendulum swings maybe in a different way and there's a new chairman in a different type of agenda, is there a risk for firms if they just start to not necessarily abandon, but deprioritize things that the current regulatory agenda is not that... All that focused on. Yeah. This is a really... I will say this this rule and, the possible, elimination or reason of this rule surprised me. But We're having an interesting time right now in our political environment and just, you know, with, everything that's going on. So in some ways, I guess, we shouldn't be surprised. But I I think I find this an interesting... There's so many layers to this. Right? I think I've... My initial thought was this is sort of outlandish, just because the rule's been in place for so long, and I think there is a need to kind of mitigate any kind of political influence from a financial standpoint. And I know that, chair Atkins kind of, through the writing, has indicated, well, you know, that's not really for us to police the political environment. And I think that's a fair statement, but I I actually think that the pay to play role is what is keeping us separate from kind of that political influence. And so I think it would be nice from my perspective if maybe they went about this in modifying the rule and not necessarily eliminating it. I think the current thresholds, maybe they're low for what, you know, could really truly influence any kind of political party, state, local, etcetera. But I also think, you know, the look back period is a challenge. I've been at firms where we literally could not hire employees because two years... Within the past two years, there was a significant political contribution. There's no way that that employer knew that the employee knew that they were coming to this firm. There's no way the firm was, like, out hunting this employee, but it has had significant impact. So I do think that there is some, legitimate concern about how it's currently applied and maybe that there should be some, review of it. But the way that the FCC is currently going about it, they're saying, oh, well, we already have anti fraud laws in place and, you know, you... It... Compliance should consider putting this in their policies and procedures already. And I think that's a little, it's a little naive considering you already have a rule. We already know it's an issue or there wouldn't be a rule in the first place in my mind. Right? So why not just look at the rule and make it make sense for the industry as opposed to say, we're gonna take away the rule, and then we're gonna let you guys figure out how to apply it. I think you go from one one extreme to another, which is really what we are seeing in the last couple years anyway. And that's just concerning to me because compliance relies on the SCC to make sure and help us kind of put some of these guardrails in place. And if you're taking it away and saying, oh, well, we're just gonna let businesses and, you know, and compliance kind of enforce it, it it feels like it's the opposite effect of what we're trying to achieve. I mean, it just goes back to the spirit of when we were deciding what to create this webinar topic. Name of this is the gray zone. Right? So it's you're going from this, you know, highly regulated to, oh, no. It's not really this. It's that blah blah blah blah blah. And you're just like, can someone be a little more prescriptive here? And so it's it's very challenging, but I think, you know, the spirit of the rule should still show up.... That's actually... If that... Yeah. Sorry. That's what Atkins says is he doesn't want it to be prescriptive. And I think there's there's a fine line of being too prescriptive, but then just completely eliminated and just assuming that everyone's gonna act on their best judgment. I think those are those are two extremes, and we have to find the happy medium. Forgive me if I'm... If my, connection's cutting out. It's about to start storming where I am. So, I'm gonna keep keep going through here. Okay. So this... I think everyone in this session, both right now and watching it, after the fact, prediction markets. Suddenly, the two worlds are colliding. Right? Culture, your everyday life, and then your responsibility in financial services as a compliance officer. So, you know, watching a football game right now, left side of the screen is talking about polymarketing, couchy betting, or DraftKings, or whatever it may be, and now this line is very blurry. And we've seen in in these news articles hit the headlines. Right? One of the biggest examples I saw that was interesting to me was the Google employee who made a contract trade on search volume, but he knew... Or they knew. I don't I don't remember who the individual was. It doesn't matter. The the data, I... They work at Google, so that's not fair. But there's no, again, gray area there, and so ended up getting in some hot water and a lot of headlines. And so, you know, I've talked to a lot of different CCOs and firms, and, again, it's like policy... It's written up in the the code of ethics and policies and procedures of, like, this is this is... Is or isn't allowed, is under these circumstances. But I've heard from most people I've talked to that they're leaning more towards banning altogether until there's more structure and regulation around these prediction markets or at least the ability to capture the contract trades that matter to the firm. Right? So betting on when the groundhog is going to come out and it'll be winter for another six weeks or summer or spring or whatever it is, doesn't probably need to cross your desk. Right, Bridget? But when it comes to financial, you know, companies and financial institutions and geopolitical events, that's where it gets really gray and muddy. So let's talk through kind of prediction markets and your your thoughts around it and what you've heard from your peers. Yeah. I... This is a tough one, and I think everyone's just sort of watching it and trying to see how it should be applied to their individual firm. I... Definitely, I was at conferences last year where this, you know, all of this started kind of coming up in the conversations, and how do you apply it and and what are you supposed to do. And I think you're right in everything you've said. Some firms are completely restricting it altogether. And then how do you enforce that? How do you make sure nobody's doing it? Because even if it's sports related, you're not supposed to do any of it. You know, I've had people tell me, well, if if somehow they're no longer allowed to, like, bet on sports or things like that, then they're gonna leave the industry. And it's kind of... There... It's understandable. Right? Like, I don't wanna be in the business where I'm overseeing somebody, you know, watching sports and making sure that they're not on Cal sheet, like, betting on them. Like, that has no relevance to what I'm doing or what I've ever done. And I... Right. So I find that, you know, valid. But I think there is... Like, criminals are gonna look for any way possible to try to do insider trading or try to get ahead. And there is a valid point that they're using these prediction markets on corporate securities, on, you know, political elections and the outcome of them. And it kinda goes back to the pay to play. If we start eliminating any kind of structure on how we're monitoring that, it makes it really challenging for a compliance professional to go in there and start applying policies and procedures and then enforcing it. And then, you know, on top of it, then we have the SCC coming to us in... As per... Compliance and saying, well, why aren't you enforcing it? So it's this sort of circular conversation where, there is no answer on the prediction markets because it's sort of still such a new space. But I do think that as compliance professionals, we have to keep our eyes open. And, you know, we're always in environments where we're listening to people talking about what's going on kind of in their day to day or, you know, they're having that water water cooler conversation. So you have to pay attention to what's happening, and then, you know, you have to have these meaningful conversations with management to really figure out, like, is there a direct impact to our firm? Do we need to start worrying or applying some of this and just maybe putting a a draft policy in place that would start indicating, okay, when it comes to these prediction markets, like, you are not allowed to do x y z on publics... Publicly traded securities or on, you know, political things that could impact our firm. Yeah. And I think some of this reminds me a little bit of off channel communications. I know it's a little bit triggering. Yeah. But but it's like... Okay. So there's a a zillion different ways for me to get in touch with you, Britney. Right? Or in the... You know, if I'm an adviser, my client. But the firm needs to ensure that you're not doing that. So banning me sending you a text or messaging you on a social media app is definitely a great idea. But how do you know that I'm not doing it if you're not monitoring it? And so that's where things get really dicey because, yes, you're protecting the firm, and you've got the policy and have that I'm not gonna do it. And so, you know, I know in your Comply client and, you know, for the Comply platform, we're gonna be starting to pull in that CalChi information, which is really important even if you're, you know, a firm still trying to figure that out, which is... It's completely fine and completely normal, just being able to have access to see that come through or requesting those statements at the end of, you know, every month or quarter or whatever it may be to prove that you're not doing it or are doing it are things that you've gotta really start to consider here because, you know, again, previous regulatory environment, it was, like, the infamous, you know, off channel communication sweep. And so I wouldn't I wouldn't just cross your fingers and your toes and hope that in any other future regulatory environment, especially what we saw with kind of... This is following, you know, and this is my personal opinion, the same kind of hype cycle as crypto. And, you know, good things came out of that and very bad things came out of that. Right? And so wanting to make sure that that you're keeping your finger on the pulse of what's going on with these prediction markets and how you're gonna be able to... Or if you're gonna be able to monitor these things for the future of of where this is gonna go because, you know, insider trading of, you know, I've got some stock trip tips can kind of be a little bit more isolated versus, you know, everything. Like, I have a good friend that works for the Baltimore Ravens. So I could go and say, I know there's drama over there and place the... I would never do this. Like, I'm gonna get arrested for saying that, but it's true. You have your personal connections, and you can make a little money on the side if you want. Is that applicable to help? We're about to find out. When you think about law firms and things like that, they're constantly doing contracts and they're exposed to this confidential insider trading information. And so as much as kind of generally when you start, like, the initial reaction as prediction markets, really, we've gotta start looking at that. There... It's like when you start digging deeper, you're like, oh, there is a connection. And so it is important. And I think, like, firms like Comply where you guys are starting to just give compliance professionals access to how can we monitor that, it's really important because we have enough on our plate, and we're trying to oversee and monitor so many things that it's really important and helpful when tools come along that say, alright. Well, this is out there. You're still kinda get... Trying to get your head around it. So let us kinda give you a tool that you can start kinda playing around with and see if it works for your firm. And then there's a way you can maybe implement a policy and some kind of oversight without it being overburdensome or unrealistic of really what you're capable of doing. That's such a great point. Like, let's say you you ban it for now, but then you start piping in that data and classifying it. Right? We don't need the the pop culture pieces that we need these certain categories of things. And then starting to see the employee activity or met... Not... I I... You'd have to figure it all out, but it's important to explore it before Absolutely. Just abandoning it or whatever it may be. Alright. So now we're getting right into, ethical decision making. And I think that this topic is so important because I've always viewed compliance officers and compliance teams as almost like a judge. Right? So, like, looking at all sides, looking at all facts, understanding the situation, understanding the person, circumstances, things like that, not jumping to conclusions. It's why you've... A big reason in talking to the community of why people choose a career in compliance. And so I wanna talk through kind of why things... An innocent thing or maybe not that big of a deal thing ends up becoming a pretty big failure with regards to, insider trading or, you know, bad actor activity. Yeah. Yeah. I mean, I think these are good points to talk about. Right? So, from a compliance standpoint, I think we're effective in our job when we're kind of calm under pressure. And that's kind of funny to say because in so many, you know, scenarios, especially at work, there's always these, like, fires that we're putting out. Whether it's the business side, compliance side, an issue arises. Every day, there's something that pops up. There was something that popped up, you know, a couple minutes before this webinar. And I was like, alright. We're gonna have to figure that out. Give me a minute. Yeah. But it... It's like the pressure. Right? So I think, understanding where the pressure is coming from, is it valid pressure, is it healthy pressure, like, you know, making sure that, we're making good judgment it under pressure and we're, you know, not just throwing away all of our ethical decision making and just saying, okay. Fine. I'll do it, is really important, to making sure that we're adhering to our compliance program and and doing what's best for the business and our fiduciary duty for our investors. And then, you know, we have the opportunity and the rationalization. So if you're if you're staying level headed through all of that, then you are able to kind of explore the opportunity. What are we looking at? Okay. I know this is a time sensitive issue. Let's talk about it. There's no way, you know, we should be making decision just, you know, by the face of it. We need a little bit more detail. And I think, especially for compliance, I mean, I see this all the time, is, you know, when a business person or someone outside of compliance is coming to you and saying, like, listen. I have this problem, and they're stressed and they're frustrated. They just want you to answer, and they want you to give you... Most of the time, just give you the answer that they're looking for. And it's hard sometimes to push back and say, well, let's just... Let's pause. Let me let me just ask you a couple questions. And this is really where kind of going back to that culture or making sure that you're approachable, making sure you have kind of a good foundational relationship with your business peers, with all the departments and, you know, whoever's coming to you, that you're approachable. Because they're gonna understand that Bridget or Allison, we're not just going to make a judgment call in the moment, that we need to have a little bit of rationalization. Right? So we understand the opportunity. We know that this is time sensitive. Now we have to rationalize, does that make sense for our business? And do we really understand kind of the full gravity of, you know, what could happen if we go the path that you wanna go, the path that I'm suggesting, the... Somewhere in between? So I think the the failure really comes in. It's... It is that time sensitivity, that pressure of just saying, well, why can't you do it? I like you a lot. Right? Like, sometimes our feelings get hurt. And, and I think all of that, especially in business, like, the emotional intelligence aspect that, you know, has been really prevalent in the in the industry for the last five to ten years, it's more critical now than ever to really apply some of that because I think, generally, everybody has good logic, and they try to apply what they know. But it's that emotional piece that sometimes gets the best of us, and you have to apply that and say, you know what? Let's just pause and make sure. And I know you're not gonna like my answer, but this is what I'm thinking. And you tell me what your feedback is, but let's go from there. Yeah. You know, one of my favorite phrases is pause and process, which could take ten minutes or it could take ten days. But I I love that you say that because it's like, let's just take a beat and think about this and look at it at all angles to make sure that we... We're working on the most relevant recent concrete information here. And that's so important. I think, you know, the the emotional IQ is so critical, and I think, like, compliance officers especially are just very known to be reasonable and have good judgment and have good relationships and things like that. But I could also see the other side of the same coin with an employee being like, oh gosh. Like, the last place I wanna be is in, you know, compliance's office or HR's office or IT's office, and I, you know, clicked to that phishing email. Like, there's a self preservation that exists within human beings. Right? And it's like, I didn't mean to do that or oops. I got caught doing that. And that reaction can sometimes really start to unravel when we're talking through kind of, like, a violation that might occur or an incident or something like that. I just wanna touch real quick on a point you made, Allison, which I think is so valid because compliance in general has evolved so much. Since I heard... You know, I've been in the industry twenty five plus years now. And compliance, when it first started, were, you know, compliance individuals, they were really smart, but they weren't necessarily the most social, you know, interactable type individual. I know that's not really word interactable, but, you know, go away. I I know what you mean. But, you know, like, you would basically say, okay. Well, the regulators came out with policy and procedures, you know, and those people, like, it's it's like The Office, Office movie where you basically, like, put them in a closet and say, okay. Go write us policy and procedures, and then, like, we're gonna comply with the law. It's really evolved where compliance is so critical, and you need people in compliance that really understand and understanding of, okay. Well, I'm deal... Gonna deal with a bunch of different people and a dump... Bunch of different personalities, and I can't just give in to whatever they're saying or asking for. So it's really important that you understand, like, all of these aspects of the business type. You have to... Like, you're touching every part of the business and as a compliance professional, which is, to your point, one of the reasons why I love it. But you're also, in a role where it's really important that you can articulate and respond back in a way that is meaningful to whoever you're talking to, that they really understand and get what... Why it's important, you know, the whole gist of it, and that they understand that you understand what the problem is. You know, two things that are bubbling up. So, I loved The Office reference because, from that TV show, it was... There there was a moment where Toby, who runs HR, and Michael, Michael Scott wanted to, like, terminate someone. And Toby's like, Michael, you can't do that. You need to have cause. And he's like, I have cause. And he's like, what is it? And he's like, because. You know? Like, it's kind of like, no. That's not how that works. But the other side of it, I... Oh, I think I lost my train of thought with it. But, but the other side of it is really... I have never met a very boring compliance professional. I think that that's such a silly stigma or whatever it may be because to your point, very smart, very sharp. Like, no one's trusting the firm's integrity and risk with someone who's not paying attention and being boring. So if you're someone on this call or webinar rather that's like, oh, we always get that reputation, just know that, like, I don't think that's true, and a lot of people should start to reconsider that because it is a very important job to keep the market fair and equitable and and uphold that fiduciary duty. And it's not easy, and it gets into, like, our next thing why... And this is... Exists compliance or noncompliance. You know? Bad behavior, low performers, like, unethical things that are happening. If you're... If you've decided to give these people a hall pass and put other people under pressure, it's not a good culture at your firm, and it's not a good culture for compliance. And so kind of wanna talk through how some of these, like... I think we talked about, like, death by a thousand paper cuts. Right? Just little things over time, and all of a sudden, you're, like, you know, not well. Right? Because all of these things have turned into this big monster and to go look back and say, like, what was it that caused this? It's like these micro, you know, excuses or or free passes or so and so is like, oh, don't worry about him. He's not doing anything wrong. He's always late on his attestations. You know? Right. But, like, you just do... Your job is to do it. Right? So just do it on time. You know? Yeah. So let's talk through that. No. I mean, that's... It's so... I mean, we all have a story. So We all know, I mean, even outside of compliance. Right? The person that's coming in late, the person that... We we don't know why they're there because they're not doing their job. There's no way none of us have worked with somebody that we can Right. Say that say that about. But I do... I... It is. It's so important, to sort of regulate that toleration of that because it really just builds on what is... Why am I here? If if it doesn't matter if I do the right thing, then because so and so is not doing it. You know? Why why do I have to do it? And that's so relevant, that one, if an issue is identified, that it's it's remediated. It's, you know, if it's an employee specific issue, that it's followed through. And there's even communication about it in some cases. Like, we had, I I was at a firm years ago where the situation was, I was in a legal department, and there was an attorney that was just missing for weeks. And it was just... Everybody was like, anybody know where this person is? And we kind of all had our suspicions because, you know, you pay attention to the people you work with. You're in the office every day, and you see things happening. You're like, his behavior's off. He's falling asleep in meetings. No one's saying anything. His boss isn't saying anything. What is going on? And I think sometimes, you know, we try to say, oh, well, that's an HR issue and let HR handle that. But you've gotta realize you... Like, everyone else is paying attention to that. And so, you know, in that particular case, that that person was missing for a couple weeks. Management went and showed up at his apartment, and there were some unforeseen circumstances. He's fine, but there was some drugs involved and a lot of other things. It really gives a bad perception to the people that are doing their job every day. They're coming in. They're just trying to provide for their family. They're just trying to do the right thing. And so when we start letting that behavior go... And that that gentleman was never released from his position. And so it just really puts a bad taste in your mouth as to, like, how are we, like, are we running this company the right way? And Yeah. Most basic employee, you know, you don't have to be at management level to be like, it... So this doesn't really have the right smell test. Right. Well, it's like... It goes back to the, like... I think in a lot of HR training, and it might be relevant in your training as well. It's like, this is green behavior, yellow behavior, red behavior, whatever it may be. But it's like, if you see something that's wrong, like, you're... You've gotta figure out as an individual within the company if it's worth bringing to people's attention. Like, if you're an individual contributor and you're seeing a peer or someone else that's, you know, literally not showing up to work or, like, doing all these things or getting away with whatever, like... And say something. Because what ends up happening is that those individual contributors are all gossiping about that. But then at the manager level, it's it's like... It it just becomes something that if you're not addressing head on in that moment, then it's gonna get worse. Right? So, like, telling the truth once, confronting once is so much better than lying and lying and lying because that's gonna turn out to be just a really big impact on your culture. And it gets to the point where it's like, the rules don't apply to so and so, but why do they apply to me? And then you're gonna start to see that productivity go down. Right? So when you're having this culture of, like, you know, laissez faire treatment of different individuals, and then you're sitting there wondering why your high performer is not high performing, it's because so and so or this group with this function's getting away with it, and I'm slammed, and I'm just gonna, you know, take a longer lunch now. Yeah. So it is pretty interesting here. But let's get into, you know, how we how we really think through ethical decision making at its core. And this is gonna be different from every... For everyone. So these aren't, like, the five mandatory rules of ethical decision making. But, again, back to that gray area of reasonably designed program, like, what are the the the core principles that people can kind of walk away with today? Yeah. I I mean, I think this is at least a good basic road map. Right? And some of these steps, like, just identifying the issues. So someone brings something to your attention from a compliance standpoint. They come to me and they say, hey. We have this problem. And so on face value, it might look like it's x y z. But then you start gathering facts. You start talking to people. You're like, okay. Well, maybe it's that problem or maybe there's another issue going on or maybe there's multiple issues going on. And one person's only flying one particular issue. But, really, what you you really need to kind of do, your due diligence and your research to really make sure you understand what the actual issue is. So I think that's really important because sometimes what's brought to you may not be the actual problem that you need to address because maybe it's just a symptom of a problem. Right? So I think understanding kind of having, again, that kind of emotional understanding when you first brought a problem and being calm in that situation. But then really doing the the right research and making sure, okay, do I need to talk to people about this so that I... Do I have all the facts first from this person, or do I need more information? And being able to do that discreetly, I think sometimes that's hard on a compliance level, because, you know, in businesses, just like we talked about, you know, the gossip mill can run rapid. And so it's really important to be very professional in all of these instances and making sure that you're really, keeping things confidential until you have a better understanding of what the issue is. So you gather all the facts. You might need to go back and say, okay. This might not be the actual issue and kind of reidentify what the issue is. You start evaluating your options. And in any of these steps, you might go back to the beginning. So I think it's just kind of important depending on the depth of the problem, whether it's a simple problem where somebody just missed... You know, maybe they missed their code of ethics, certification, and they missed it by a couple days. That's pretty simple. Right? You identify the issue. You say, listen. You reach out to that person. You say, you missed your certification. What was the issue? Even if they have an excuse, I mean, unfortunately, especially when it comes to code of ethics, that's not usually an excuse because you have lead time up until the deadline. It's still a hard work. The emails. Every email. Like, everyone gets a notification. Exactly. And even if it's something simple, like, okay. I missed the certification deadline. There is still a reasonableness where you can say, I totally understand something, you know, surprising happened. It was unexpected. Unfortunately, it's still technical violation. We need to document it. Here's the repercussions. If it's, you know, a little bit more laissez faire where they didn't... Doesn't seem like they have any kind of ownership or accountability, then, you know, there might be additional conversations with their management, with, you know, HR, whoever needs to be involved to say, you're not taking this seriously, and you're putting our firm at risk. Yeah. But you... Yeah. Sorry. And then just in making sure if it's a larger issue, it might be something that you need to escalate to management. You need to have conversations with management, the head of business. Just making sure that if it's a larger problem, that compliance isn't kind of keeping it in a bubble and keeping in a vacuum, that they're sharing that with the appropriate parties so that it can be addressed and shared holistically so that it can be remediated. And, you know, the intent is to be prevented in the future. So making sure that compliance isn't the only decision maker is sometimes really important too in larger problems to make sure that there's buy in and that there's a way forward so that everyone understands what the problem is so that it doesn't continue to happen or there's not another scenario like that. Yeah. And I think I like what you said where it's like you kinda come back to it. It's almost like this is this is a road map, but it's a circular road. Right? So you're doing a big circumference of, like, reflecting on the outcome. You might notice that someone's violation actually unexposed a risk area or a policy that was defined in plain English that they misunderstood and have to go back around the horn and think, okay. Sometimes a small violation can turn out to be a really helpful thing for the compliance team when you're reevaluating and testing and seeing things because because, you know, it's it's it's... Humans are humans and, like, life is, you know, progress, not perfection. Like, let's keep making it better and better and better and exposing those risks and things like that. So I wanna be mindful of time because I know that we only have a few more minutes, and this is just breathing by. But CCO liability is such an interesting topic. Right? So who's on the hook? Right? And no one no one wants to be on the hook. I'm just kidding. But I think it's really important especially for, you know, anyone that's, you know, right climbing the ranks in compliance that might be on this webinar or CCOs themselves that are maybe not as familiar with what the liability looks like on them personally versus the firm itself. From, you know, twenty five years of experience that you've had. We'd love to hear your insights as as we wrap this up on... And what people should know and consider and how to navigate all of this. Yeah. I I think this is definitely, an area that a lot of CCOs, in particular, obviously, are sort of fearful of. We're held accountable for things that are out of our control. That's a huge... From a compliance standpoint, you know, you come into a role, you come into your job, and you're trying to do the best you can. But there's always, extenuating circumstances that sometimes you just can't possibly imagine are gonna happen, or there's no way you would have been able to oversee that. So I think it's good these three categories is really what the SCCs come out. I think it was back in 2015 and said these are the areas that we would really hold a CCO accountable for. So I think it's important to really look at this and say, listen. If you're just you're just... It's clear you're... You have misconduct, you're gonna be held accountable. And I think that's any employee. Right? So the CCO also should not be treated as some special entity where they're not under any kind of regulation and different than anyone else, just like management would be held accountable. So, but it's really in these three limited categories because compliance has such a huge task, and our role is not to, you know, police everybody in the firm. Our role is to really educate, to put these structures and these rules and these policies in place. And then, you know, everyone's got free will, and they're going to make their own judgment calls. So I can't run around the firm and say, hey. Are you making sure you're doing this and make sure you don't do that? I mean, I joke around when I leave the office every day, and I I call someone's name, and I'll say, hey. Stay out of trouble. And that's just my my cute little way of saying goodbye to everyone, but it's not really my job to go around and make sure that they're making ethical decisions, you know, every aspect of their life. So I think it's important that the SCC came out and said, you know, if if the CCO themselves are obstructing evidence, if they are actually failing to perform their responsibilities, or if they are, you know, intentionally, conducting this conduct, then, yes, you're gonna be held accountable. But I think it's also important to know from a CCO perspective, if you're putting a strong compliance program in place, which we kinda talked about right from the beginning, You started that foundation and then you build off of that. Then chances are you're not gonna run into the scenario where the SCC is gonna turn around and come back and say, your firm is not only in violation, but you as the CCO is in violation because you put a strong program in place. Place. Yeah. I love that you leave the office saying that because I think it makes it approachable. You know? It's like those tiny little moments where you're like, oh, don't do anything I wouldn't do. I'm going on vacation for a couple of days where they they laugh, but they also believe in the integrity of it. Right? I'm sure that... I don't think that when the cat's away, the mice are gonna play. Because one, you have technology in place to make sure that things are moving, and I'm sure you have teams and and coverage there. But it's it's like like, we can... Compliance doesn't have to be this very serious thing. Like, you're not coming into the standards committee and, like, getting in trouble and getting your hand slapped with something. But, you know, I do love that this SEC kind of laid this out, and I think it's a really good blueprint for, you know, anyone who's moving into that CCO role or considering compliance as a career to really understand, like, the the firm's also... The firm isn't responsible. You're responsible. But all of these things of a well designed compliance program, right, the the clear policies and procedures, the attestations, the trade monitoring, the off channel communications, the communications monitoring in general, making sure books and records are are accurately capped and stored for however long it is that they need to be stored. You know, those certain things, like, that's gonna deescalate the risk of you as the CCO. And so I think that brings us into our final slide here, which is trust but verify, which is, I think, a lot of people in in the wild business world, one of their favorite things to do is, like, I trust that these things are happening, but I do need to verify them. Right? Because we work with a lot of very brilliant people, a lot of very smart people, and wanting to make sure that things are happening in practice and that we're not cutting corners or getting a little laissez faire or lax on things. Yeah. I mean, I definitely think it's important. We give everybody the benefit of the doubt. If you go and are assuming somebody's... Whoever you're talking to did something wrong, that completely comes off, and it's the first thing the other person's gonna feel. So you absolutely wanna, like, give them a benefit of doubt, be approachable, make sure that they understand that you're not there to just, oh my gosh, you had a problem and here's, like, I can't believe you're putting our firm in this kind of situation. But, yeah, you've gotta you've gotta, you know, kind of understand and see what the situation is, but then it's kind of what we talked about before. Do the research, make sure you understand, talk to other people. Is this normal behavior? You know, I can't tell you how many times I've talked, and I always feel horrible the first time someone gets a violation. And it's... You know, they missed a deadline or they forgot to report an account. And, I mean, it's completely innocent. And they come in and they're beat red and they're shaking, and I was like, let's just start by relaxing. We can breathe. Breathe. And then, again, it's the education part. Because I I say this so much. If we just pause and sort of educate or whether it's ourselves or tell someone else, like, what what... Why that's important or what we need to achieve, that comes... That just goes so far in how we resolve the problem rather than just saying, this is what you did. This is what the rule is, and this is now what the problem is. If you go in that harsh way, it's just not... It's not conducive for the firm. It's not conducive for your employees, and nobody wants to talk to compliance in that manner. It's so funny you say that. So Caroline is in the chat, and she's probably gonna roll her eyes at this, but she came from a massive asset manager. And so that that, that firm bans texting, and they issue their own devices to employees. And so she, you know, fresh out of college, puts her out of office out. She's traveling, and she's like, text me if you need anything. And she came back, and she was in... Had... Her boss had to talk to her in compliance, sent her a little note. And she... You know? And Caroline's probably, like, in the chat right now being like, it wasn't that big of a deal. But it is... It's that moment where you're like, my intention was to just be available if people needed me, and she works in marketing. So it's not like an advise... She's an advisor in the... You know? It's like, oh, text me now. Like, we'll get away with it. It just was, like, a completely innocent, actually good sign of an employee. Like, hey. I'm I'm traveling right now, but, like, let me know if you need something. Like, you can just send me a text. Like, I'll be back tomorrow. And what I told her is that you take your time off when you have time off. But, you know, that's what it is. So it's like that... Like, imagine, you know, that that... Like, people who are coming in and being like, oh my god. I'm in trouble because I did this thing. And you're probably like, okay. Here's a one minute YouTube video on how to breathe deeply before you come into my office because there's certain things that are not the end of the world. But at the end, they need to be documented because you're gonna give that person the benefit of a doubt that there still needs to be that layer of what if there is a problem there? At least we've addressed it in that moment so that when it comes to the future, it won't happen again. And I can guarantee you she's never put text me. Even any sort of communications since then. You just touched on a whole another webinar where you can just talk about how communications occur between younger generations and older generations. Younger generations texting social media is so intuitive, and so no one would even think twice, you know, if you were younger that why is this an issue. And so, you know, we've just changed in how we interact in the environment where everybody is available all the time. And so to your point, they are... They wanna be readily available. They wanna do a good job. And, you know, it's all through that training and awareness of, you know, making sure we're going through the right communication channels. It's just it's a lot to compliance. It's a lot for all of us to figure out. We have to give each other some grace as we're going through. Alright. Well, I just wanna thank you so much. This has just been one of the most lovely conversations, and, you know, I know that the pool questions are probably super interesting. Can't wait to dig into those, and I can't wait to read through the the chat. But please connect with Bridget on LinkedIn and share your information. And if you're... Wanna share your own LinkedIn information, like, we love community building here at Comply. Like, Bridget's one of our clients. Like, it's just so important to us. And if you have questions, you can leave, a note for Caroline to address, and we will see you in the next webinar. And, Bridget, it has been lovely, so thank you so much. Thank you so much, Allison. It's been so great having this conversation. Alright. Take care. Take care.