Compliance systems are key to reputational risk, says Sullivan & Cromwell's Cohen

Regulators look to the strength of a firm's compliance system when deciding how aggressively to pursue it for rule violations, according to Rodgin Cohen, chairman of law firm Sullivan & Cromwell.

Cohen, a well-known legal expert in bank acquisitions, regulation and securities matters, said investment in compliance systems – especially personnel – is the key to minimizing a firm’s reputational risk.

Regulators, he said, ask: “Did this violation occur despite a strong compliance function or because of the absence of a strong compliance function?” If the latter, they are likely to be more severe in their approach, he said. Cohen, speaking in Philadelphia yesterday at the sixth annual