On the heels of two high-profile enforcement cases in which the US Securities and Exchange Commission (SEC) charged chief compliance officers (CCOs), the SEC’s heads of enforcement and examination both tried to reassure the compliance community, saying the regulator is not targeting CCOs.
Speaking at the National Society of Compliance Professionals’ annual conference earlier this week, both Division of Enforcement director Andrew Ceresney and Office of Compliance Inspections and Examinations acting director Marc Wyatt attempted to quell the fears of CCOs, specifically those working for investment advisers.
In the keynote address, Ceresney noted that the majority of the cases brought against CCOs have involved those who engaged in affirmative misconduct or obstructed regulators, or who wore multiple hats. The commission has only charged a small number of CCOs with causing violations (i.e., where the CCOs failed to carry out responsibilities assigned to them.)
Despite the recent BlackRock conflict of interest case—in which the SEC held CCO Bartholomew Battista responsible for failing to implement compliance policies regarding the outside activities of one of the firm’s portfolio managers—and the SFX Financial Advisory case, in which a CCO was charged for failing to supervise a rogue employee, Ceresney said that there has not been any recent trend toward more enforcement activity involving CCOs in their compliance function.
Ceresney made it clear that the BlackRock and SFX cases were rare instances in which CCOs showed a blatant disregard for their responsibilities under Rule 206(4)-7.
“You have the commission’s full support,” said Ceresney. “I do not want you to be concerned that by engaging in good faith judgments, you will somehow be exposed to liability.”
Chief examiner Wyatt also made similar remarks at the conference, noting that the SEC is looking to empower chief compliance officers and is not trying to take “CCO scalps,” according to a report in HFMWeek.
Their speeches echoed sentiments expressed by SEC chair Mary Jo White in July, when she stated that the recent enforcement actions should not be seen as a threat by “conscientious and diligent compliance professionals.”