One of the questions we are asked frequently is “Who can be our CCO?” So often, with so many people wearing so many hats, the desire to hand the compliance duties off to someone who is not very seasoned is very high.
So let’s look at what the SEC has said publically to answer this question. 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:
- The CCO must have “first-hand knowledge” of the applicable laws and regulations including relevant exemptive orders and how these apply to the firm;
- The CCO must have a “deep understanding” of the firm and its operations and structure and how all the areas relate to each other;
- The CCO must identify conflicts of interest and how they are reported and resolved and who performs the various functions that are involved;
- The CCO must understand the firm’s clients, products and services including their profitability;
- The CCO must understand the firm’s compliance and technology platforms;
- The CCO must have a “detailed knowledge” of the firms’ policies and procedures, how they are applied and monitored and what goal they are trying to achieve;
- The CCO must gain an understanding of the markets in which the firm operates and their business practices;
- 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;
- Finally, CCOs have to 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.
About Red Oak Compliance Solutions
Red Oak Compliance Solutions is the global advertising review software of choice in the financial services industry. It is a comprehensive suite of SEC 17A-4 compliant features that are 100% books and records compliant and provides clients with 35% faster approvals and 70% fewer touches or better. We also offer Smart Review(SM), which solves for the storage and maintenance of disclosures, helping firms reduce risk, decrease review times, and increase the speed of distribution of marketing materials. Smart Registration(SM) automates the licensing and registration management process to help reduce regulatory risk and time spent on manual processes. Overall, Red Oak allows firms to minimize risk, reduce costs, and increase compliance review process effectiveness and efficiencies.