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CCO Transparency in the SEC Spotlight
Every day compliance officers bear the brunt of the pressure to ensure risks are minimized, appropriate products are offered, and regulators are kept happy. Compliance officers meet the challenges of due diligence requirements, regulatory updates, and training and education. They build positive relationships with and field inquiries from regulators and legal entities, and justify budget and personnel decisions.
While many firms can afford to keep an in-house CCO, many smaller firms cannot. There is an alternative to hiring a full-time CCO, whether it is for an interim role to fill the position when one CCO leaves until a proper full-time replacement is found, or if it is for a full-time role; that alternative is outsourcing of the position. When choosing whether to outsource their CCO to a third party, many firms value the independence, immediate availability and budget-friendly aspects of outsourcing.
Last month the SEC issued proposals that would require advisors to disclose contact information for their CCOs and how they are compensated. With this information, both in-house and outsourced third-party CCOs will be identified to the regulators.
In the proposal, the SEC recognizes the fact that firms have a need for outsourced CCOs. By requiring this transparency the practice of hiring outsourced CCOs appears to be validated.
“The requirement for a CCO is and will always be knowledge, competency, and the ability to interact with senior management,” said Hank Sanchez, Oyster Managing Director. “Whether firms have an in-house or outsourced CCO, the knowledge of the role, the firm and its people and business is what will drive the firm’s success and determine the ability of the firm to remain compliant.”
Whether on an interim or permanent basis, Oyster Consulting has experienced consultants who have done these jobs in both large and small firms with various risk profiles and compliance challenges. Oyster takes a proactive approach to being a compliance officer, staying ahead of the regulatory curve and making sure your firm is up to date on all proposed and final regulations, filtering through the regulatory noise to find the news and updates that are relevant to you.
Whether you are looking to change from self-clearing to fully-disclosed (or vice-versa), exploring your clearing options or starting a broker-dealer, Oyster can assist with the assessment, analysis, vendor selection and conversion processes.Download