In a speech to the National Society of Compliance Professionals, Carlo di Florio, Director of the SEC's Office of Compliance Inspections and Examinations, said that OCIE considers a firm's ethical culture during exams and requires firms to consider ethics in "staying true to both the spirit and letter of the law."  Mr. di Florio said that OCIE's perception of a firm's "culture of compliance and ethics informs our view of the risks posed."  Mr. di Florio continued: "If we believe that a firm tolerates a nonchalant attitude toward compliance, ethics and risk management, we will factor that into our analysis of which registrants to examine, what issues to focus on, and how deep to go in executing our examinations."  Saying that he is not the "Director of the Office of Legal Philosophy," Mr. di Florio stressed the importance of following the spirit and not just the letter of the law.

OUR TAKE: Is Mr. di Florio saying that OCIE would cite a firm or refer it to Enforcement for poor ethics even if OCIE does not identify a specific violation of laws or SEC rules?   Is he also saying that OCIE will be tougher on a firm that may not seem that ethical but complies with the securities laws?