Jina Choi spoke to Board IQ about a recent Securities and Exchange Commission (SEC) administrative proceeding that held a chief compliance officer (CCO) personally liable for certain failures prompting fund boards to check in with their CCOs about resources, regulatory scrutiny, and whether the pressures of the job are causing them to consider new lines of work.
"As it stands now, the SEC has no published framework, which gives regulators significant leeway in how and when they hold CCOs personally liable," Jina said.
Even though the SEC hasn't adopted the NYC Bar Association's framework for CCO liability, Jina suggested that boards can still use it to discuss the compliance program with the CCO, which could be especially useful ahead of and during an examination.
Jina also noted that officials are continuing to focus on what they call "gatekeeper" cases. "In addition to overseeing CCOs and setting their compensation, one thing that may not be so clear is if CCOs feel they are being targeted," she said. "I can see having to replace or put people in that position. If you make things too hard for good, conscientious people, they are not going to apply for those positions."
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