Last week's Reuters Risk and Compliance USA event in New York centred on the rising amount of personal culpability for Chief Compliance Officers and how companies negotiate these expectations.
Several Chief Compliance Officers from U.S. financial institutions discussed the implications of legal and cultural shifts on the personal accountability of top management.
Noreen Fierro, Chief Compliance Officer of Principal Financial Group, emphasised that CCOs could no longer claim ignorance and that the new standard was "should you have known?"
Due to the risk of regulatory scrutiny in the future, she cautioned that CCOs must maintain a paper trail of all client choices and document any concerns.
The SEC stated that Sheinfeld traded Rite Aid shares for himself and two family members after discovering in confidence via his employment that the projected merger between Rite Aid and Walgreens Boots Alliance would not be consummated by the approaching deadline. According to the SEC, in response, Sheinfeld sold all of his exercisable Rite Aid employee stock options. In addition, the agency's lawsuit said that Sheinfeld sold Rite Aid shares belonging to his sister-in-law and adult daughter.
According to the SEC, the stock sales likely saved him and his family $155,000 in losses.
While performing compliance-related duties for the Integration Management Office, the SEC asserted Sheinfeld got substantial nonpublic information about the transaction (IMO). The IMO was founded in 2015 by Rite Aid and Walgreens workers with the purpose of preparing for the businesses' merger. All information generated by the IMO was considered confidential, and personnel who received it were instructed not to disclose it.
“Sheinfeld knew, or was reckless in not knowing, that he had a duty not to trade Rite Aid securities on the basis of confidential information about the planned merger, including information about [Federal Trade Commission] approval of the planned merger and the likely timing of the planned merger,” the SEC said in its complaint.
By fLEXI tEAM