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Stratton Oakmont

Where were the compliance officers?

I went to see “The Wolf of Wall Street” last week. I went without knowing any of the controversy about the movie or even that it was based on a true story. We have a new Bow Tie movie theater in town and so I’ve been going to more movies. The time was convenient and the story interesting. At the last minute, my mother and 20-year old daughter ended up coming too and that was particularly uncomfortable. I have never seen a movie with so much nudity, drugs, and swearing with either of them. But personal discomfort aside, I found the movie thought provoking even though I found it boring in the repetitiveness of the scenes of excess.

Many of my thoughts, both as I was sitting there in the very crowded theater (several people got up and left) and since, have been about the role compliance might have played. Now, I don’t know whether there was a compliance officer at Stratton Oakmont (Jordan Belfort’s firm). None was depicted in the film. Also not visible in the movie was any single person speaking up saying that something was not right.

A compliance officer would not have had an easy time at Stratton Oakmont. Someone who really is comfortable in the skin of compliance would have had to say no to many things in many different ways and would have had a very hard time being heard among all the howling wolves. What would have been the result?

Of course, I can’t know what might have been (or really what was, because all I know about this is what I saw in the movie). But a compliance presence could have allowed Belfort and his employees to still make a lot of money and avoid the legal problems that brought them down. Either that or perhaps it would have become clear that the business model was so flawed that the ultimate demise was inevitable.

While I have never experienced anything like Stratton Oakmont ‘s culture among our clients, we do deal with firms and companies that have varying degrees of interest in listening to compliance. We also see compliance personnel who are more comfortable in their jobs and their roles than others. We also see that firms less interested in hearing the voice of compliance may tend to hire individuals who are less likely to speak up strongly themselves when issues arise.

In an extreme case, “The Wolf of Wall Street” is the outcome. Ideally, those in leadership positions who have a “sales at any cost” perspective, similar to that of Jordan Belfort in the movie, recognize the risks associated with that perspective and put a strong compliance counter voice in place to protect them. But many do not. It goes counter, perhaps, to human nature. We all want to surround ourselves with people who agree – people who say “yes.” It may be more pleasant – until it isn’t. Until the regulators come to the door and start hauling out files. Until the police are right behind them with arrest warrants.

Compliance makes the difference and can be the salvation for places like Stratton Oakmont and people like Jordan Belfort. Compliance is not easy in many offices, but often the more difficult it is, the more important it is.

If you go see “The Wolf on Wall Street” you will see what it looks like when there’s no voice from within – no compliance officer or department saying “No, this is wrong and it is illegal. We cannot do this.” What a difference that might have made!