Observations on CCO Liability

Concerns and confusion regarding CCO liability still abound. Here are a few words on the topic…

CCOs Worry About Liability Even Amidst SEC Assurances
I think it is telling that CCOs are worried about CCO liability, even with clear messaging from the SEC that the agency views CCOs as important “partners.”  Our recent ComplianceCast polling revealed 89% of the CCOs attending said they are worried about liability, with a mere 11% saying they were not. Interestingly, 100% do not currently have CCO liability insurance.

Concerns Voiced about Outsourced CCOs apply Equally to “In-house” CCOs
OCIE talks about the growing trend in outsourced CCOs in its November Risk Alert, offering observations of what works and what doesn’t. And of the highlighted observations, seems to me one can apply the same considerations whether the CCO is an employee, outsourced contractor or consultant. They still must be empowered and knowledgeable, with the authority to be effective. And what about wearing multiple hats? Former Commissioner Luis Aguilar said, “The vast majority of these Enforcement cases [against CCOs]  involved CCOs who “wore more than one hat…”  “In fact, since the adoption of Rule 206(4)7, enforcement actions against individuals with CCO only titles and job functions have been rare. For example, over the last 11 years, the Commission brought only eight cases against such CCOs.”

Lessons Learned from CCO Enforcement Cases
It’s been said the SEC Enforcement cases against CCOs revolve around whether the CCO had responsibility to manage a specific issue and failed to perform his/her responsibilities in good faith—such as having had knowledge, and either failed to adopt policies and procedures to address them or failed to carry them out. Another case, where the CCO was not named, involved  the CCO asking for additional resources. All these cases deliver a strong message to CCOs and contribute to new or continued worries about liability.


Subscribe to CSS Blog

CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

Loading form...

Latest Content

Compliance Lessons Learned in 2019

Now that we are in mid-January, a few things are evident. We have likely broken one or more New Year’s resolutions, the effect of any rest over the holidays has worn off and we need to complete our annual compliance reviews for 2019 and firm up our 2020 plans. While I don’t have solid advice … Continued

CSS Launches First Form CRS Software Tool In Market

Global RegTech provider Compliance Solutions Strategies (CSS) today announces its release of Form CRS Automator, the market’s first comprehensive and fully customizable software solution designed to help firms meet the upcoming requirements of Form CRS which has been introduced by the Securities and Exchange Commission (SEC). CSS’s proprietary and Web-based tool gives regulated firms the ability … Continued