We at PFM are not the type to point fingers, you understand. But if we were asked to pick out which members of staff the chief compliance officer ought to be keeping the beadiest of eyes on, we’d probably go for that junior dealmaker who snored through the recent seminar on insider trading. Or maybe that investor relations director who’s always mumbling something about “top quartile performance” and “open to interpretation”.
But the last person who’d leap to mind is the chief financial officer. Assuming their two roles are actually split, the CFO and CCO tend to work hand-in-hand to make sure the shop is running smoothly (and on the right side of the law). Given how much overlap there is between their respective positions, they tend to be brothers-in-arms when it comes to compliance matters.
It appears, however, that inspectors from the Securities and Exchange Commission (SEC) don’t necessarily see it that way. One compliance officer told us that he’d recently been scolded by the SEC for not spending enough time reviewing the CFO’s work. Apparently, inspectors saw this as a risk. “I don’t think the SEC trusts anybody but the CCO,” he whispered.
We appreciate that the commission wants the compliance team to cover all bases. But we can’t help but think this may be a step too far. For one thing, how might this oversight work in practice? If the CCO starts trying to turn the pair’s friendly Friday night (non-expensed) pub drink into a fact-finding mission, that could make things a bit awkward…