Firms openly flout the prohibitions regarding audit partner compensation tied to business development and still struggle mightily with enforcement of legalandregulatorycompliance activities such as independence and rules against insider trading.
Basic legalandregulatorycompliance issues start the minute you buy or rent a building, hire your first employee, borrow money from a bank, manufacture a product or deliver a service, and seek to deliver a return to investors.
While the legal, regulatoryandcompliance aspects of the soft dollar business have assumed greater prominence in recent years and the penalties for non-compliance by money managers can be severe, most soft dollar firms are not owned or managed by individuals with significantly-relevant legal, regulatory or compliance backgrounds.
To curtail illicit flows he suggests the government should: (i) ensure that the rule of law is applied fairly and swiftly, (ii) strengthen regulatoryandlegal institutions (iii) adopt policy measures to improve both public and corporate governance such as improving tax complianceand collection.