As Chief Compliance Officer, Could You Be the Target of an Enforcement Action?
With the Securities and Exchange Commission’s increasing focus on individual accountability for the federal securities laws, there is a growing risk that chief compliance officers (‘‘CCO’’) of brokerdealers and investment advisers will find themselves in the Enforcement Division’s cross-hairs. As Commissioner Kara M. Stein noted recently, ‘‘[W]e need to be bringing the tough cases against those who could have prevented misconduct. Chief Compliance Officers [among others] who help individuals or firms violate the law need to be sanctioned. . . . We need to send a strong message of instilling personal responsibility and accountability.’’ Unsurprisingly, the SEC and other regulators have been pursuing aggressive theories of personal liability against CCOs and expanding their potential exposure for violations of the securities laws by their firms. And the increasingly frequent collaboration between examiners from the SEC’s Office of Compliance Inspections and Examinations and attorneys from the Enforcement Division is likely to intensify scrutiny of CCOs.
Reproduced with permission from Securities Regulation & Law Report, 46 SRLR 977, 05/19/2014. Copyright 2014 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com