It is common practice that some small and medium-sized Firms will have a CCO that also has additional job titles/responsibilities (e.g., President, CEO, CFO, COO, General Counsel, etc.).
Known as a “Dual-Hatted CCO”, if it is managed without the appropriate infrastructure or resources there can be an increased risk.
For Firms finding themselves in this situation, there are eight (8) important considerations to consider as it becomes increasingly difficult to keep up with the SEC’s aggressive agenda.
- Train your employees to:
- Have a strong awareness of company policy.
- Be aware of their role in fostering compliance.
- Understand the consequences of non-compliance.
- Create a proactive compliance culture
- Encourage senior leadership to commit to compliance success in all areas of the firm.
- Empower employees to see compliance as a prerequisite to financial success.
- Be prepared for interactions with regulators
- Ensure that interactions with regulators are positive and cooperative if they occur.
- Employ a competent third party to provide a Mock SEC Exam, so you are prepared for questions and requests from SEC examiners.
- Ensure your compliance team is properly sized
- Dual-Hatted CCOs can be tempted to put important compliance tasks on hold if they do not have the proper resources or staffing.
- Consider partnering with a reputable Compliance Firm to provide cost-effective and experienced support to your CCO.
- Frequently audit your firm’s compliance
- Document routine internal reviews of Firm policies and procedures that demonstrate active supervision is occurring.
- Assess your Firm’s compliance risk
- Ensure that your compliance policies and procedures are adequately tailored to your business activity.
- Utilize compliance experts that can identify areas of weakness in your policies and procedures and recommend ways to limit the risk of potential regulatory burden.
- Properly assign the CCO task
- Assign the CCO role, and all the responsibility/decision making power required to complete the task, to one person (instead of having multiple leaders share the tasks).
- For small Firms that are not ready to hire a dedicated CCO, consider outsourcing the CCO role to a trusted compliance partner.
- Ensure that your firm is up to date on regulatory changes
- Stay current on SEC alerts, charges, and regulatory changes.
- Create a reliable network with professionals that are dedicated specifically to compliance.
As the number of regulatory changes increase, it is vital that Dual-Hatted CCOs take all the necessary steps to ensure heavy regulatory burdens do not interfere with their business success. These steps can help create the proper mindset for compliance officers to analyze the compliance risks and solutions relevant to their Firm.
As the need for resources rapidly increases, please reach out to Vigilant for any support your team may require.