Securities and Exchange Commission Enforcement Division Director Andrew Ceresney said Tuesday that his unit red flags firms that don't make legal and compliance professionals top executives.

“I have found that you can predict a lot about the likelihood of an enforcement action by asking a few simple questions about the role of the company’s legal and compliance departments in the firm,” the SEC executive told a Compliance Week conference in Washington, DC in prepared remarks.

Those questions are:

•    Are legal and compliance personnel included in critical meetings?

•    Are their views typically sought and followed?

•    Do legal and compliance officers report to the CEO and have significant visibility with the board?

•    Are the legal and compliance departments viewed as an important partner in the business and not simply as support functions or cost centers?

“Far too often, the answer to these questions is no, and the absence of real legal and compliance involvement in company deliberations can lead to compliance lapses, which, in turn, result in enforcement issues,” Ceresney said.

He added when legal and compliance are not equal partners in the business, and aren’t consulted as a matter of course, problems are inevitable.

During the speech, Ceresney noted the Enforcement Division recently started a Broker-Dealer Task Force.

He said the first initiatives of the section have been focused on anti-money laundering regulations and recidivist brokerage firms that shelter rogue brokers and engage in abusive activities.