CONSEQUENCES OF NON-COMPLIANCE COMPANIES CAN FACE HEFTY FINES AND PENALTIES

Careful consideration of legal consequences for failure to meet regulatory guidelines is a wise time investment. Penalties for non-compliance will vary depending upon the issue, but they are almost always significant. Other associated costs could be related to direct damages resulting from the non-compliance issue, such as customer liability or confidentiality infractions.

Monetary penalties alone prove that regulatory compliance should be taken seriously. In a recent case, five Wall Street investment firms agreed to pay $1.65 million each to settle charges resulting from failure to properly retain email correspondence. Also, as part of the settlement, the companies agreed to review their document management procedures to ensure future compliance.

In addition to large fines, courts can require that a corporation develop and implement an effective compliance program. In another recent case, managers of a U.S.-based security company pleaded guilty to felony crimes relating to employee background checks. Personnel files were found to be incomplete when requested by government regulators. Fines totaling over $1.5 million and a three-year probation were imposed, as well as a directive to develop a compliance program to ensure that records and information are properly managed.

The benefits of bringing processes and procedures into compliance are clearly worth the effort. The positive results of improved document management practices and a reduction in legal liability will put a company in a much healthier position with minimal exposure.