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Billions, Episode 1: Compliance Makes Tough Calls for the Good of the Firm

00155340.JPGIt's back! Billions kicked off Season 3, Episode 1 with the intellectual prowess that we've all come to expect.

Hedge fund king Bobby "Axe" Axelrod continues to be on the defense for potential violations of federal securities laws. Axe and his firm Axe Capital may be viewed as thought leaders in the hedge fund industry, but they receive no special treatment. We see that Axe is turning to his legal team and the firm's compliance officer for guidance on what he should be thinking about and do.

The compliance officer at Axe Capital is not portrayed as the typical or ordinary professional. Generally, compliance professionals are tasked with understanding federal securities laws, and applying them to the firm and its internal controls. This is the backbone of the role, and the compliance professionals at any firm are bound to be faced with complex situations in the course of performing their job duties. Compliance has a fiduciary duty to the firm, as well as investors, and the compliance team is expected to be the ballast keeping firms on the appropriate course of compliance.

Due to this, often the role of the compliance officer is to advise senior management of the laws that govern the business. They also will make recommendations or take proactive steps to develop internal controls (in the form of policies and procedures, disclosures to clients, etc.) to help mitigate risks and act in the best interest of the firm's clients.

In this episode of Billions, we saw compliance providing that guidance for Axe. Compliance recommended that Axe cease all trading himself on behalf of the hedge fund. This goes against every fiber of his being, but would allow the government to unfreeze Axe Capital's assets so that the firm could continue trading on behalf of its investors.

Axe doesn't like this one bit - but as in real life, it's essential that he take the advice of the knowledgeable compliance professional he hired for that express purpose.

While Axe Capital may be a fictional story, it represents what all financial advisers should be doing: thinking about an investor's interests first. This is why it's essential that when a firm is under regulatory scrutiny, the firm uses knowledgeable regulatory compliance professionals to discuss and review all available options. This way, the firm can take the necessary actions to both act in the best interest of investors, as well as mitigate against risk to the firm.

Deciding what actions to take to mitigate risks is no small feat. It is imperative to have knowledgeable legal professionals at your side during these times.

For more information about Jacko Law Group and how our attorneys assist firms during regulatory examinations and investigations, please contact us at 619.298.2880 or at [email protected].

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