By Amy Leisinger, J.D.
Along with other industry groups, the New York City Bar Association has determined that investors, regulators, and all stakeholders would benefit from the adoption of a framework to evaluate potential issues that could arise with regard to chief compliance officers. According to the group, the proposal is aimed at determinations by regulators to bring charges against CCOs for conduct relating to their duties under the federal securities laws. There is concern, the report notes, that increased enforcement actions discourages individuals from becoming or remaining compliance officers and performing vital functions.
Ongoing concerns. The proposal argues that the creation of a framework explaining how they evaluate cases is crucial to provide enforcement clarity CCOs seek.
"[A] framework of nonbinding factors will provide the compliance community with the guidance it needs balanced against regulators’ need for ultimate discretion." said Patrick Campbell, head of the organization’s compliance committee.
The report responds to a concern that increased enforcement actions from the SEC could discourage individuals from becoming or remaining CCOs and performing important functions. Several SEC commissioners and staff leaders have publicly acknowledged these concerns in recent years, but clarity is crucial, the report explains. Any adopted framework must provide the compliance community with necessary guidance balanced with regulators’ need for ultimate discretion, the group explains.
The report also asks questions regarding resource challenges that could hinder CCO performance and good faith and how mitigating factors and increased detail in filings could affect enforcement actions.
Instituting a framework is an important and necessary step that would benefit all stakeholders given the unique place that the compliance profession has in the securities regulation, regime, the group concluded.