Final answer:
The SEC's Compliance Program Rule emphasizes the need for policies and procedures that are designed to prevent violations. Firms should focus on proactive measures rather than just detecting or mimicking the policies of esteemed firms, ensuring the adoption of custom measures tailored to their specific operations. The correct option is a. prevent violations from occurring.
Step-by-step explanation:
Under the SEC's Compliance Program Rule, policies and procedures should be designed primarily to prevent violations from occurring, a clear nod to the proactive nature of regulatory compliance.
The emphasis is not on detection or correction of every single violation post-factum, but on setting up a system that minimizes the chance of violations occurring in the first place.
This underscores a shift towards a more preventive stance in regulatory oversight, mirroring changes in other sectors of governance and compliance enforcement, such as the banking regulations from the 1990s that mandated prompt, transparent action by bank supervisors upon identifying issues.
While it is necessary for policies to be able to detect violations and correct them when they occur, the primary objective is mitigation and risk management, including constructing an environment where non-compliance is less likely to happen.
Furthermore, while it may be tempting to emulate the policies and procedures of highly regarded firms, the SEC's rule requires that each firm constructs its own policies and procedures tailored to its specific operation, suggesting that a one-size-fits-all approach is not the goal. Instead, firms should focus on creating robust, customized systems that reflect their unique risk profiles, business models, and operational complexities.
The correct option is a. prevent violations from occurring.