Skip to content

Compliance and Regulatory Services (“CARS”) Hot Topics for November 2015

Nov 11, 2015

For this month, we are highlighting two areas that we have been writing about; the importance of which is growing each day as they climb their way up the SEC’s list of hot areas of focus.   

We have mentioned that under the SEC’s compliance program rule a federally registered investment adviser is required to appoint a chief compliance officer (“CCO”) to be responsible for that program. The SEC, in numerous speeches and other pronouncements, has indicated that the CCO must be a seasoned compliance person with many years of industry and regulatory experience. Now Andrew Donohue, the SEC’s Chief of Staff, has outlined in a speech 8 attributes that a qualified CCO should have. To mention just a few, those areas include: i) first-hand knowledge of the various laws and regulations that apply to their firm and its activities, as well as any particular conditions or requirements of exemption orders and other compliance requirements; ii) a “deep understanding” of the firm, its structure, and internal operations (knowledge of the supervisory structure would also be helpful); iii) a clear understanding of how the firm identifies conflicts that might exist, how frequently the conflicts are reviewed and how they are resolved and by whom; iv) detailed understanding of clients and products and services being provided, as well as reviewing advertising materials. (You can read the balance of Donohue’s remarks here.) He also mentioned the importance of a firm having the right culture with sufficient resources at the disposal of the CCO or having the firm empower the CCO to provide the structure to compliance and its mission. Further comments were made regarding how the SEC has brought, and will continue to bring, enforcement actions against compliance officers when appropriate.

The investment advisory community has long known that the SEC does not have enough staff to examine all registered advisers, so they tend to run thin on compliance resources as the risk of a routine inspection has been low. However, that may be changing soon. David Grimm, SEC Director of the Division of Investment Management, in his testimony on the “Oversight of the SEC’s Division of Investment Management,” recently said that the use of third parties to conduct regulatory exams is being considered. In fact, his department is working with the Office of Compliance Inspections and Examination to develop a recommendation as a means of improving compliance.    

Our Take: When one considers Donohue’s comments and recent SEC developments, it appears as though the focus on CCOs as the gatekeeper to the compliance program and other pressures constantly being exerted on the CCO are not going to go away anytime soon. The bar has been raised for CCOs to be more than a ‘CCO in name only.’ This, combined with the SEC’s efforts to closing the examination period gap, will have a material impact on registered investment advisers who are not up-to-speed.

SEC News

Oct. 30, 2015  SEC Adopts Rules to Permit Crowdfunding 
Oct. 28, 2015  SEC Bars Brokers Who Played Favorites to Double Their Commissions 
Oct. 27, 2015  Developer, Former Top Execs Charged for Improper Accounting of Real Estate Assets During Financial Crisis 
Oct. 26, 2015  SEC Charges Credit Rating Agency With Misrepresenting Surveillance Methodology 
Oct. 22, 2015  SEC Announces Enforcement Results For FY 2015 
Oct. 21, 2015  SEC to Hold Annual Government-Business Forum on Small Business Capital Formation on November 19 
Oct. 20, 2015  Wenchi Hu, Christian Sabella Named Associate Directors in the Division of Trading and Markets 
Oct. 19, 2015  Former Head of Coastal Investment Advisors Settles Charges, Admits He Stole Money From Investors 
Oct. 19, 2015  Two UBS Advisory Firms Settle Charges Arising From Failure to Disclose Change in Investment Strategy 
Oct. 16, 2015  SEC Staff Publishes Private Funds Statistics Report 
Oct. 14, 2015  SEC Charges Six Firms for Short Selling Violations in Advance of Stock Offerings 
Oct. 13, 2015  UBS to Pay $19.5 Million Settlement Involving Notes Linked to Currency Index 
Oct. 8, 2015  Wolverine Affiliates Charged With Failing to Maintain Policies to Prevent Misuse of Material Nonpublic Information 
Oct. 8, 2015  SEC Charges Firm and Owner With Manipulative Trading 
Oct. 7, 2015  Blackstone Charged With Disclosure Failures 
Oct. 6, 2015  SEC Charges Former Executives With Accounting Fraud and Other Accounting Failures 
Oct. 5, 2015  Michael Liftik Named SEC Deputy Chief of Staff 
Oct. 5, 2015  SEC Deputy Chief of Staff Erica Williams to Leave Agency 
Oct. 5, 2015  SEC Charges Florida Investment Adviser and His Company With Defrauding Investors 
Oct. 5, 2015  SEC Charges Home Loan Servicing Solutions for Misstatements and Inadequate Internal Controls 
Oct. 5, 2015  SEC Charges Bristol-Myers Squibb With FCPA Violations 
Oct. 2, 2015  Chyhe Becker Named as Associate Director in the Division of Economic and Risk Analysis 
Oct. 1, 2015  SEC Halts $32 Million Scheme That Promised Riches From Amber Mining 
Oct. 1, 2015  SEC Charges New Jersey Fund Manager With Securities Fraud 
Oct. 1, 2015  SEC Charges Two Grant Thornton Firms With Violating Auditor Independence Rules 


Oct. 28, 2015  Keynote Address at the 47th Annual Securities Regulation Institute: "Building a Dynamic Framework for Offering Reform"  Chair Mary Jo White
Oct. 23, 2015  Remarks Before the UCI Audit Committee Summit  James Schnurr, Chief Accountant
Oct. 22, 2015  Economic Analysis: Providing Insight to Advance the Missions of the SEC and the PCAOB  Mark J. Flannery, Chief Economist and Director, Division of Economic and Risk Analysis
Oct. 20, 2015  Keynote Address at the Evolving Structure of the U.S. Treasury Market Conference, Federal Reserve Bank of New York: "Taking Stock of Treasury Market Regulation"  Chair Mary Jo White
Oct. 20, 2015  Keynote Remarks at the 2015 Women in Policing Conference: “Women in the NYPD: Hear Them Roar”  Chair Mary Jo White
Oct. 16, 2015  Keynote Address at the Managed Fund Association: “Five Years On: Regulation of Private Fund Advisers After Dodd-Frank”  Chair Mary Jo White
Oct. 14, 2015  Remarks at NRS 30th Annual Fall Investment Adviser and Broker-Dealer Compliance Conference  Andrew J. Donohue, Chief of Staff
Oct. 14, 2015  The Important Work of Boards of Directors  Commissioner Luis A. Aguilar
Oct. 2, 2015  Introductory Remarks at the National Faith Leaders Conference “Protecting Investors Protects You”  Chair Mary Jo White


Oct. 30, 2015   2015  FINRA Chairman and CEO Rick Ketchum to Retire in 2016
Oct. 27, 2015   FINRA Orders an Additional Five Firms to Pay $18 Million in Restitution to Charities and Retirement Accounts Overcharged for Mutual Funds
Oct. 26, 2015   FINRA Issues Investor Alert—Binary Options: These All-Or-Nothing Options Are All-Too-Often Fraudulent
Oct. 20, 2015   FINRA Sanctions 12 Firms a Total of $6.7 Million for Failing to Apply Sales Charge Discounts to Customers' Purchases of UITs
Oct. 19, 2015   FINRA Issues Investor Alert—Sorry, This One's Not a Winner: Don't Get Fooled by a Lottery Scam
Oct. 15, 2015   FINRA Solicits Comment on Proposed Rules Addressing Financial Exploitation of Seniors
Oct. 13, 2015   FINRA Sanctions Santander Securities LLC $6.4 Million for Supervisory Failures Related to Sales of Puerto Rican Bonds
Oct. 8, 2015   Statement Regarding New Rule to Enhance OTC Equities Transparency
Oct. 7, 2015   FINRA Expels Halcyon Cabot Partners and Bars CEO and CCO for Fraud, Sales Practice Abuses, and Widespread Supervisory and AML Failures

(Complete Listing:

FINRA Rule Filings List:
(Complete Listing:

Contact EisnerAmper

If you have any questions, we'd like to hear from you.

Receive the latest business insights, analysis, and perspectives from EisnerAmper professionals.