When faced with a Gordian knot, we all like to believe our ethics and values will determine our actions, and we will do the right thing. Few of us, however, have had our moral standards put to the test quite like Mike Wietecki ’06.

In August 2012, Wietecki was named chief compliance officer at Fort Rock Asset Management, LLC (previously Common Sense Investment Management, LLC), then a $3.5 billion independent investment company in Portland, Oregon, which had special- ized in hedge funds and commodities trading for 24 years.

A year later, the firm’s CEO was arrested in a prostitution sting. The timing couldn’t have been worse: the company’s fund investors were only able to withdraw funds at specific times – up to 25 percent of their investments quarterly and their entire investment once a year – and the arrest took place 20 days before the annual redemption window closed.

“We could have stayed quiet,” Wietecki said. “If investors learned what had happened too late, we could have managed their assets for at least another year.”

But Wietecki and the rest of the management team took a different approach. On the first workday after the arrest, they drafted a letter to their investors, explaining what had happened. If investors wanted to redeem, the opportunity was there.

The result? A huge number of immediate redemptions.

And it didn’t stop there. Management sent a second letter to investors who had not responded, offering another opportunity to redeem. “We didn’t want them to be investing with us because of a lack of knowledge,” Wietecki said.

Again, “the vast majority of our assets were redeemed,” Wietecki said.

Sometimes, doing the right thing can be costly.

Getting there

Wietecki became a lawyer because he wanted to learn more about how the world works. “We operate in society with a set of rules that are the basis of social interaction in government and business,” he said. “I wanted to understand the rules.”

He chose the University of St. Thomas School of Law because, “it’s not the typical, ‘Let’s just focus on research’ kind of place,” he said. “Its priority centers on educating ethical, well-rounded attorneys who will also be community contributors.” After visiting the school, “the difference was pretty clear.”

Some of that difference is connected to the School of Law’s mission. The mission states that the school is “dedicated to integrating faith and reason in the search for truth through a focus on morality and social justice.” The school also emphasizes a dedication to helping “each student attain personal and professional satisfaction by developing the qualities of excel- lence, social responsibility and ethical integrity.”

“When ethics and values are infused into so much of the education, it becomes more than lip service,” Wietecki said, “It becomes a part of you. It’s powerful.”

He began his studies planning to work in environmental law, and shortly after graduating he started working with a hedge fund as an analyst focused on green energy and clean tech.

But the company needed him to focus on compliance. “When it became clear that compliance was a much-needed priority, they tapped me to help build the program,” Wietecki said.

As chief compliance officer, there was a steep learning curve, with his first SEC exam occurring just a couple weeks into the job. “I came into compliance work by happenstance and was entrusted with a tremendous amount of responsibility early in my career,” he said. “At the time it felt like compliance was still being defined as a practice area.”

Now, he serves as a member of the advisory board for the School of Law’s master’s and LL.M. programs in organizational ethics and compliance.

Working in compliance

Wietecki wears many hats as Fort Rock’s general counsel and chief compliance officer. “With a seat at the table, I’m involved in early conversations about the direction of the business and how we can guide the business where it needs to go,” he said.

Regulatory compliance and legal issues are complex in the financial industry. The work is governed by an alphabet soup of regulators – the Securities and Exchange Commission, the Commodities Futures Trading Commission, the National Futures Association and the Department of Labor, the European Commission on Banking and Finance, and the list continues. “It’s a constant effort to stay on top of the changing regulations and rules,” he said.

One important current compliance topic is cybersecurity. “In financial services, we deal with data about individuals. The data needs to be secure,” he said. Wietecki hired an outside firm to put Fort Rock’s internal IT system in the cloud. The company regularly monitors and tests the system so Wietecki can be confident the system and data are secure.

Doing the right thing

So why did Wietecki and the rest of the management team decide to communicate proactively with Fort Rock’s investors in 2013? The answer is complicated.

“There’s the legally permitted thing to do, and then there’s the right thing to do,” Wietecki said. “We could have stayed quiet and acted under the terms of the contract, but we believed it was important to be open, transparent and ethical. This business is built on honesty. We knew there would be a lot of redemptions, and we were right.”

Wietecki and the team spent the following 18 months liquidating investors. Then the company had the opportunity to start anew. They are rebuilding the business with a new name and new strategies, coupled with the foundation that made the firm successful in the first place.

Read more from St. Thomas Lawyer.

Print Friendly