Compliance officers: The ones calling the shots at major US banks like JPMorgan, Charles Schwab

By Anthony Effinger

To hear Jamie Dimon tell it, regulation and the cost of compliance are becoming a threat to the American dream. "In the old days, you dealt with one regulator when you had an issue, maybe two," the JPMorgan Chase CEO said on a call with investors in January. "Now, it's five or six. It makes it very difficult and very complicated. You all should ask the question about how American that is."
"Several tax brackets down from Dimon, Justin "the Compliance Guru" Hall is betting that Dimon's scourge will, by contrast, ensure his own upward mobility. Hall is a compliance officer at Charles Schwab's retail bank. He and thousands of others like him, at every company in finance, are charged with keeping their revenue-obsessed colleagues on the right side of the rules. Compliance, not banking, has been the real growth business since 2008, when freemarket liberties turned to liabilities and markets collapsed.

Hall, who uses the self-awarded "guru" designation on his LinkedIn profile, couldn't be happier with his choice of career. "There's definitely no shortage of opportunity," he says. "You're usually involved with all the big dogs in the company. Your visibility is huge."

Sections of a letter Dimon wrote to shareholders in April sound like they were penned by Ayn Rand's ghost. He complains about wasting face time with investors discussing regulation. "Very little time is spent talking about the ac tual business, like client transactions, market share gains, or other business drivers," he writes.

The rivalry between "actual business", as Dimon calls it, and compliance may have started when Leviticus warned against using dishonest weights and scales and withholding a worker's wages overnight. It most definitely intensified in the early 1900s when President Teddy Roosevelt pressed Congress to regulate food, finance, and the rails. Compliance with money-laundering statutes became top of mind for Western governments after 911, when the aim became stopping terrorists, not just drug dealers.

Business and regulators fight constantly over compliance, and some of the bloodiest trenches in this war are inside companies, where salespeople see themselves as elephant hunters and tag compliance employees as "internal control freaks" or the "sales prevention team".

"Sales is all about getting a yes," says Darrell Coleman, chief compliance officer at DynCorp International. "My job is to say no."

DynCorp, controlled by buyout firm Cerberus Capital Management, is like a temp agency for the hardest jobs in the world. It has trained police forces in Afghanistan and fixed military aircraft in Iraq. It is Coleman's job to make sure no one bribes a defense ministry official to get a contract in, say, Saudi Arabia. "The world runs on baksheesh," he says.

On Wall Street, the task is to stop insider trading, collusion, and money laundering, among other things. And there's been plenty of each. JPMorgan alone has paid a total of $36 billion in settlements and fines since 2008.

Compliance types point to these big numbers as proof that hiring a few of their ilk really pays off. JPMorgan has hired 8,000 compliance and control people since the crisis. Employees completed 800,000 hours of compliance training in the bank's mortgage business alone in 2014. If you work in compliance, those figures add up to job security.

Better yet, regulators are now enticing compliance people with big sums for snitching. In April, the US Securities and Exchange Commission announced a whistle-blower award of at least $1.4 million to a corporate compliance officer, only the second one ever. The compliance person reported malfeasance, but management didn't do anything to stop it, so the SEC rewarded the tip. No details, not even the company's name, are public, to protect the whistle-blower.

In another era, someone like Justin Hall might have gone into plastics, or semiconductors, to make his fortune. Growing up in Chandler, Arizona, Hall spent half his time living in a trailer park with one of his divorced parents. He sold phone books and magazines door-to-door, then switched to selling phone service for WorldCom, where his charm helped him pull down $98,000 the year he turned 17.

He got into financial services in 2005 at age 18, right out of high school, through a neighbour who worked at Bank of America and told him about a job there as a credit risk analyst. After a promotion, Hall ended up on a BofA team examining Coun trywide Financial and its assets before the bank took a $2 billion stake in the troubled lender in 2007. That got him into compliance. He joined Schwab's in-house bank, based in Phoenix, in October 2014, working on an oversight programme for ensuring that thirdparty vendors comply with banks' risk regulations.

"These people are in great demand," says Maurice Gilbert, founder of Conselium, a headhunting firm in Dallas. Gilbert used to do executive searches for all sorts of positions. "Then, about eight or nine years ago, we got a compliance search," he says. "And then we got another one. And we said, `Is this the tip of the iceberg?'" It was. Now, compliance is all Gilbert does.