Published on Nov 21st, 2020 |

OCIE’s Director Pete Driscoll, yesterday spoke at the SEC’s outreach program, sharing his views of the role of an Adviser’s CCO.

In addition, on November 19th, OCIE published a Risk Alert regarding the Compliance Rule and how it requires each adviser to designate a CCO to administer its compliance policies and procedures. The CCO should have a position of sufficient seniority and authority within the organization to compel others to adhere to the compliance policies and procedures and an adviser’s CCO should be competent and knowledgeable regarding the Advisers Act and should be empowered with full responsibility and authority to develop, implement, and enforce appropriate policies and procedures for the firm.

OCIE provided Key Practices that are great for CCOs below:

  • CCOs included in Business Planning, Strategy Discussions, and involved with early decision making
  • CCO access and integration with Senior Management is important
  • Demonstrable actions support the CCO and Compliance
  • Keeping up with regulatory expectations and new rules, CCOs can assist in positioning their firms not only to avoid costly compliance failures, but also provide pro-active compliance guidance on new or amended rules that may provide advisers with additional business options.

OCIE also provided statements regarding what they notice for CCOs below:

  • In exams when firms hire someone for the role to check the box but do not support or empower them
  • When a CCO holds one or more roles in a firm and is inattentive to their compliance responsibilities
  • When a firm positions a CCO too low in the organization to make meaningful change and have a substantive impact, such as a mid-level officer or placed under the CFO function
  • CCOs trotted out for an examination or sits silently in the corner in compliance discussions, overshadowed by firm senior officers.

Regarding the Compliance Rule Risk Alert, OCIE staff observed advisers that did not devote adequate resources, such as information technology, staff and training, to their compliance programs.  CCOs were also observed by OCIE that lacked sufficient authority within the adviser to develop and enforce appropriate policies and procedures for the adviser.

Below will be Examples of what OCIE observed in deficiencies or weaknesses establishing reasonably designed written policies and procedures:

  • Marketing
  • Disclosures
  • Business Continuity Plans
  • Portfolio Management and much more

Want to learn more about this SEC Release and the Role of the CCO?

Click HERE to learn more!