“We expect good companies to step up and own up to misconduct. Voluntary self-disclosure is an indicator of a working compliance program and a healthy corporate culture.”
— General Lisa O. Monaco, Deputy Attorney, United States Department of Justice
Explore how a new audit trail alternative replaces the “WORM” format in the SEC’s updated broker-dealer recordkeeping requirements. Learn about the agreement in which Google must improve its compliance program due to a settlement with the U.S. Justice Department. Consider the DOJ’s new guidance for corporate enforcement policies to prioritize and prosecute corporate crime better.
SEC Revamps Broker-Dealer Recordkeeping Requirements; “Audit Trail” Alternative Replaces “WORM” Format
The SEC recently adopted new recordkeeping requirements for broker-dealers and “SBS entities” (security-based swap dealers and major security-based swap participants). Most notably, the SEC will no longer require broker-dealers to maintain records in “write once, read many” or “WORM” format. Instead, broker-dealers can utilize a new “audit trail” alternative for their electronic recordkeeping systems. Firms using the new audit trail alternative will need to retain records that permit the re-creation of an original record and interim iterations if the original record is altered, overwritten, or erased—and they may utilize cloud service providers to satisfy these recordkeeping requirements.
Google Agrees to Compliance Reforms in DOJ Settlement
Google will improve its compliance program in a settlement with the U.S. Justice Department. This agreement comes from losing data that federal investigators sought concerning a probe into a cryptocurrency exchange. The DOJ said Google failed to turn over data held abroad that U.S. investigators wanted in connection with an investigation into BTC-e, a cryptocurrency exchange that was indicted for alleged money laundering. Google will be required to reform and upgrade the compliance program that handles responses to legal demands such as subpoenas and search warrants. Google estimates it has already spent more than $90 million on systems and staffing to improve the program, and prosecutors have agreed a penalty isn’t warranted.
Corporate Crime At The Forefront Of The DOJ
Last month, the U.S. Department of Justice announced new guidance for the DOJ’s corporate enforcement policies. The new corporate crime guidance focuses on individual accountability, companies with a history of misconduct, a new policy on voluntary self-disclosures, compliance monitors, and promoting compliance and avoiding improperly risky behavior. How corporate crime is scrutinized, how prosecutors are empowered, and how companies do the right thing is a top priority for the DOJ. Companies must reinforce and update all compliance efforts, policies, and procedures. Employee training, continuing education, and data analytics are essential efforts to mitigate risks. Learn more about the changes the DOJ is implementing to further strengthen the prioritization and prosecution of corporate crime.
