SOURCE: Red Oak Compliance Solutions LLC

Red Oak Compliance Solutions

October 28, 2015 09:00 ET

What Does the SEC Think the Chief Compliance Officer Job Requirements Should Be?

This Is #1 in a Series of FAQs From Investment Adviser Clients of Red Oak Compliance Solutions

AUSTIN, TX--(Marketwired - October 28, 2015) - As compliance consultants, we are asked many of the same questions every day by different investment advisers. We decided it might be helpful if we published answers to some of the most common questions we hear periodically, to help other investment advisers.

This week our kick-off question is "Who can be the CCO?" At a recent industry conference, the SEC Chief of Staff Andrew Donohue said that if he were a Chief Compliance Officer, he would look at his role in terms of the following nine categories:

  1. The CCO must have "first-hand knowledge" of the applicable laws and regulations including relevant exemptive orders and how these apply to the firm;
  2. The CCO must have a "deep understanding" of the firm and its operations and structure and how all the areas relate to each other;
  3. The CCO must identify conflicts of interest and how they are reported and resolved and who performs the various functions that are involved;
  4. The CCO must understand the firm's clients, products and services including their profitability;
  5. The CCO must understand the firm's compliance and technology platforms;
  6. The CCO must have a "detailed knowledge" of the firm's policies and procedures, how they are applied and monitored and what goal they are trying to achieve;
  7. The CCO must gain an understanding of the markets in which the firm operates and their business practices;
  8. The CCO must create an environment that puts the customer's interest ahead of the firm's interest such that the firm does what it should, not what it can, and senior management must give the CCO the power to do this;
  9. Finally, CCOs must understand what they do not know, and how to fill those subject matter expert and competency gaps.

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This message clearly indicates that the SEC expects the CCO to be qualified to perform the duties of the position, just like the rules require. This means there is a real risk to the firm in using someone who is inexperienced to be the CCO. Does your CCO need some additional training or support? Do you feel the need to explore what you don't know yet? Let Red Oak help you fulfill this regulatory responsibility and provide seasoned and experienced compliance professionals to augment your compliance program.

For more information, you can find Red Oak Compliance Solutions on Facebook, Twitter and LinkedIn.

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