In praise of professionalism

There is so much to unpack from Sam Bankman Fried’s compelling – and shocking – video interview with Andrew Ross Sorkin at the NYT/Deal Book Summit. For starters, though, some basics about Compliance.

When asked to comment on what appears to have been an unsupervised, out of control environment (“like a bunch of kids on Adderall having a sleepover party’), Bankman Fried starts by talking about having spent an ‘enormous amount’ on compliance. He goes on to explain what he saw as ‘an excessive effort’ to obtain licenses and then moves off the topic of compliance to discuss risk management. I’ll come back to this in a moment…

I lost count of the number of times in this interview Bankman Fried sounded less like a CEO and more like an intern. The “I don’t know for sure..”‘s and the “I wasn’t involved..”s repeat thick and fast throughout. He talks about how he was ‘not running’ Alameda (the research and trading business he owned) as if it was a completely separate party despite the reported comingling of staff, location and living quarters, to say nothing of the apparently porous wall through which funds passed between them. It’s almost as though, as CEO, Bankman Fried is trying to tell us that he was above the fray. Which brings us back to Compliance, and what it can do for you…

Perhaps a professional Compliance function would have helped Bankman Fried understand the purpose and benefit of a compliance culture. If you think Compliance as merely something you need to obtain an operating license, then it won’t do you much good at all. If, instead, you embrace the idea that compliance culture is worth investing in, then perhaps you will find that it helps you to operate with confidence. A compliance culture provides some assurance that your organization operates within its business purpose and will send signals when limits are breached. In other words, it gives you advice and feedback on all those boring things like the operating mechanics. Then, perhaps, a CEO has earned the right to be not quite so involved in all the details

But you don’t get there without first creating a compliance culture and you need a compliance professional to help you do that.

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