Agency, Authority, and Compliance

20 Pages Posted: 11 Oct 2019 Last revised: 15 May 2020

See all articles by Sean J. Griffith

Sean J. Griffith

Fordham University School of Law; European Corporate Governance Institute (ECGI)

Date Written: December 15, 2019

Abstract

Compliance can and often does serve as a conduit through which regulators and enforcement authorities enlarge their authority beyond statutory bounds. The potential to do so is a function of the symbiotic relationship between compliance officers and regulatory authorities. Compliance officers owe their professional existence and their organizational authority to the interventions of regulators and enforcement agents. This creates a unique incentive structure and renders compliance officers especially receptive to regulators’ extra-legal pronouncements. As a result, the separation of compliance from legal and the elevation of the compliance function as the co-equal of the legal department, a structure often insisted upon by regulators and enforcement authorities, effectively enlarges the compliance conduit through which the government may abuse the rule of law. Rather than separating compliance from legal, compliance should be subordinated to legal so that an officer accountable exclusively to the best interests of the firm is charged with interpreting the law and advising the firm on what the law requires. Only after this determination has been made should compliance officers be charged with the task of executing on these decisions. A necessary condition to realigning organizational responsibilities in this way, however, is for the government to stop insisting on the alternative. More broadly, the government should not involve itself in the organizational details of compliance, but rather should limit itself to making and enforcing the law.

Keywords: compliance, corporate governance, enforcement, regulation, ethics, legal, general counsel, chief compliance officer, rule of law, ethics officer, administrative procedure act, prosecutor

JEL Classification: K22, K23, K14

Suggested Citation

Griffith, Sean J., Agency, Authority, and Compliance (December 15, 2019). Cambridge Handbook on Compliance, Sokol & van Rooij, eds., Forthcoming, Fordham Law Legal Studies Research Paper No. 3462638, European Corporate Governance Institute - Law Working Paper No. 516/2020, Available at SSRN: https://ssrn.com/abstract=3462638 or http://dx.doi.org/10.2139/ssrn.3462638

Sean J. Griffith (Contact Author)

Fordham University School of Law ( email )

150 West 62nd Street
New York, NY 10023
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
162
Abstract Views
902
rank
204,494
PlumX Metrics