In a speech delivered to the New York City Bar Association, Gurbir S. Grewal, the Director of the Division of Enforcement for the U.S. Securities and Exchange Commission (SEC), discussed declining public trust in institutions and how it affects the financial sector.
"It undermines the investor confidence needed for the fair, efficient, and orderly operation of our markets and for capital formation," he said. Grewal highlighted the SEC's role in enhancing trust and pointed to its 2023 fiscal year-end results, which indicated a productive year for the Enforcement Division in protecting investors.
Grewal stressed, however, that reversing the trust deficit requires collaborative efforts, emphasizing the need to build a "culture of proactive compliance." Compliance professionals, consultants, attorneys, and others are the first line of defense against misconduct, he argued.
According to Grewal, there are three key components of a culture of proactive compliance: education, engagement, and execution. He also stressed the importance of continuous efforts as businesses evolve, enforcement priorities change, and new regulations emerge. Additionally, he encouraged cooperation and self-reporting when securities law violations are detected, which can result in substantially reduced penalties.