Transcribed

The Cost of Noncompliance

5'6" THE COST OF 5' NONCOMPLIANCE 4'6" FOLLOWING THE FALLOUT OF THE 2081873 GREAT RECESSION DISTRICT OF COLUMBIA POLICE DEPARTMENT Though sanctions surrounding the behavior contributing to The Great Recession may not have materialized as quickly as some consumers would have hoped, a number of these fines are taking a genuine toll on the business profile of offenders. GOLDMAN SACHS $550,000,000 SETTLEMENT 90000000000000S 999909000990009 O00000000000000 S00000000090000 Monthly avg. share volume dropped 15% following initial charges -23% Current value still 23% below pre-Recession peak. SEC charges of misinforming investors of risks surrounding a financial product tied to subprime mortgages. CITIGROUP $285,000,000 SETTLEMENT -89% Share value dropped 89% from its pre-Recession Repayment to investors harmed by peak in 2007. the housing market fallout. UBS $50,000,000 SETTLEMENT -68% Share value fell 68% from pre-Recession peak in 2007 to today. Charges of illegal security structuring and marketing. BROADER LESSONS Steep regulatory consequences are not reserved solely for Wall Street leaders; nearly 1/3 of all midsized companies in the U.S. incurred noncompliance fines in 2013. 81% Global compliance practitioners who anticipate an increase in the volume of information published by regulators in the next 12 months. 67% Practitioners who expect an increase in team budget, however, opening the door for new investments in efficiency solutions. finance yahoo.com/q/tp?s-GS finance yahoo.com/q/hp?s-C finance yahoo.com/q/tp?s=UBS secgow/spotight/enf-actions-k.shtml accelusthomsonreuters.com/sites/default/files/GRCO0186.pdf adp.com/media/press-releases/2013-pressreleases/midsized- companies-incurred-fines-for-noncompliance.aspx RESOLVER Experience GRC

The Cost of Noncompliance

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The Cost of Noncompliance Ever since the economic recession, which many experts believe was caused by the lack of strong risk management and compliance programs, regulatory agencies have applied mor... e pressure to major companies and financial institutions. New regulations have been passed that are designed to keep organizations compliant and avoid fiascoes similar to what happened with the recession. Agencies such as the Securities and Exchange Commission have applied more regulatory pressure to big businesses, and the result can be considerable fines that hinder companies' ability to achieve objectives and goals. For example, Goldman Sachs had to pay a $550 million fine for misinforming investors of risks surrounding a financial product to subprime mortgages, while Citigroup paid a $285 million settlement to investors harmed by the housing market fallout. What’s more, corporations don’t anticipate regulatory burdens being lifted any time soon. One study conducted by BDO suggested that as many as 96 percent of companies believe federal, state and local regulations will be a top risk moving forward. Many businesses are investing more into risk management, but much of that increased management is being diverted to simply help organizations remain compliant with new laws and regulations. It’s crucial that businesses invest in the right tools that will help them remain compliant. Being investigated by a regulatory agency such as the SEC can be a major detriment to a company. Not only can it result in fines and major penalties, it may also signal to investors and shareholders that companies aren’t doing everything in their power to create value, which may stymie subsequent investments and make people question management. In an era where noncompliance is a top business priority, it’s critical that companies make the right choices to help stay on track.

The Cost of Noncompliance

The Cost of Noncompliance

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