By Diana LaMorie • August 06, 2018•Writers in Residence
Back in January, I shared my own professional journey in compliance for financial services. Anecdotally, I’ve witnessed at least a 50% growth of compliance officer positions being filled by lawyers over the past 5 years. Given the growth of JDs joining the field, I’ve sought out a fellow industry colleague to add an additional perspective. Alexander Rakitin is Chief Compliance Officer of Perceptive Advisors, an investment adviser focusing on life sciences investments.
One of the biggest professional insults one can hurl at a talented compliance professional is that they are a bureaucrat. If you are plugged into the business and adopt a solutions-oriented mindset, you should be able to propose a workable process that satisfies the law, the business and the efficient and effective administration of your compliance program. For more on this sentiment, I advise you to read Alex’s keen observations below.
Tell us about your professional journey. How did you end up in your current gig and what drew you to this career path?
Funny story: After college I worked for a small bank and was thinking of going to law school. My only hesitation was that I did not have a clear vision for what I would do with a law degree. And then one day I was dealing with a situation where the bank's compliance department required additional documents from a client in order to keep the account opened. That client supplied a trove of documents that in my opinion should have satisfied compliance, but he didn't have the one document they kept asking for and they wouldn't let it go. In response to my question, "What does the law require us to obtain from the client?", he vaguely alluded to "AML this... and KYC that…" and it became clear that he didn't actually know. Escalating to his manager resulted in more of the same, until I reached the head of the department who was intimately familiar with The Bank Secrecy Act. He instantly confirmed that the client’s secondary documents were indeed sufficient and the matter was resolved. This was a 'Eureka' moment for me. I saw how a poorly designed procedure caused the business to be bogged down and how a solid understanding of the rules empowered everyone to cut through the red tape and enable the business to move forward. After that there was law school and several professional roles, but that was the moment where my career pivoted towards compliance.
Would you categorize Compliance as a “JD Preferred” career path? If yes, how so?
In my first compliance role after law school I was given responsibility for overseeing policies within the firm's Code of Ethics. My manager had no law degree and yet I relied on her to teach me everything I needed to know since she had years of experience with these policies. I loved the job, but had a sinking feeling that I had just wasted years on law school. But nothing stands still - our business was growing and the industry was experiencing an unprecedented volume of regulatory action. Soon we had to develop new policies and procedures in response to these changes. That is where I first noticed the "JD Advantage". I had the confidence to read the newly issued rules - together with adopting and interpretive releases - and condense them into concise and practical policies that were completely bespoke to our business. I do not want to give an impression that I think that compliance officers with a JD are universally better than those without - that is not the case. But the broader the scope of responsibilities of a compliance officer, and the more that he is tasked with the design rather than the execution of the compliance program, the more likely you are to find the requisite skills among compliance officers that have undergone legal training.
Walk us through a typical workday of someone occupying your role.
My day is split between three roughly equal functions: 1.) Continuous development and improvement of the existing program, 2.) Testing and verification, and 3.) Advising and training.
I signed up for SEC's RSS feed and automatically get alerts on all of its enforcement actions. I analyze all enforcement against registered investment advisers to verify that my compliance program has no analogous gaps. A good part of the day is spent on testing and verifying that business processes adhere to established policies and procedures. This is where good use of technology can really save you time. For example, Compliance is tasked with reviewing trading history to look for suspicious patterns. Leveraging the right technology enables you to zero in on exactly what you are looking for rather than trying to spot it through random selection, which would be equivalent to looking for a needle in a haystack. Lastly, a good portion of my day is spent on answering questions from investment professionals in the firm. I don't view it as a distraction, but rather as investing my time in preventing compliance issues before they ever occur. I do not stay in my office for too long and like to get out and sit on the trading floor. This way I am in the center of the action, plugged into the heartbeat of the firm and also right there on the front lines to address any questions or issues as they arise.
What value does having a JD confer on a Compliance Officer? What skills do you use that you picked up in law school?
All of the SEC rules issued under the Investment Advisers Act of 1940 are administrative law and as you know administrative law is a 1 credit elective in most law schools. There is no knowledge or skill that one picks up in law school that is readily deployable on your first day of your first compliance role. And yet I feel in the long run, legal training is very useful. Much of what is useful about it centers on understanding what is 'reasonable' which is an ever moving target, constantly changing depending on the specifics of each business and the industry. The Advisers Act requires investment advisers to have written policies and procedures reasonably designed to prevent violations. Compliance programs throughout the industry keep evolving and often responding to industry developments rather than changes in the rules. This is because what is reasonable policy and procedure at one time may no longer be reasonable for the entire industry after certain events occurred. I find myself leaning on my legal training each time I modify the compliance program in order to keep it ahead of the curve.
What do you like the most about your job? The least?
The most exciting aspect of the role is that you are at the heart of all the major decisions the firm makes. What is most exciting can also be fairly stressful. You can be pulled into an impromptu meeting first thing in the morning where everyone in the room turns to you looking for an answer and you'll think to yourself, "Hmmm - I didn't even have my coffee yet."
What would you be doing if not your current role?
I love what I do and it is difficult to imagine doing something else. One of the aspects of my job that I like the most is that I can see and feel a direct impact of my work on the business. I feel that only trial lawyers get to experience all the gravity and impact of their work on their clients and would have probably gravitated towards the high-stakes and high-adrenaline world of trial lawyers if not for compliance.
What advice do you have for fellow JD holders who might want to pursue a similar path?
Get good at everything you are assigned. When you get good at that, identify your boss's biggest headache that isn't assigned to anyone and start working on it. When you establish yourself as a problem solver, you will notice that your most boring work will get assigned to someone else and you will work on the highest priority issues. Good work is always rewarded with more work and more work is always rewarded with growth.
Thank you Alex for sharing your refreshing outlook on working in compliance!