IPO Docs Instruct Compliance Officers

Richard Cassin, writing in the FCPA Blog, explains why the section of an S-1 registration statement called Risk Factors is must reading for compliance professionals. Compliance is all about risk, he explains, and “like great poetry or a child’s prayers,” the Risk Factors statement is honest, and it exposes the company and its problems — both actual and potential — to the eyes of the world. Risk Factors are instructive about the task of a compliance officer. Overcoming risk is what makes a company successful, and valuable. Reading them gives a sense of the challenges compliance officers face, and whether those factors actually manifest themselves as negative events or not, compliance professionals must prepare as if they will. That is the essence of risk management, and a company’s program should be based on the profile they reveal. They also make good reading for third parties, according to Cassin, but he admits that it’s an acquired taste. A baseball fan, he says they reveal why the compliance role can be so utterly satisfying and fulfilling. “Doing the job well is a great accomplishment — harder than hitting a curveball.”