NSCP Featured for NSCP Firm and CCO Liability Framework
Law360 -SEC Urged to Look At Big Picture Before Holding CCOs Liable, January 10, 2022
"The NSCP hopes to alleviate the uncertainty faced by compliance officers and provide a framework that more directly aligns with statements made by SEC and FINRA," according to the report.’
“The survey shows that compliance officers are increasingly concerned about potential liability, which could ultimately cause "good people to run away" from the profession, said Brian Rubin, an Eversheds Sutherland partner and head of its litigation, SEC and other regulatory practices.”
Radical Compliance – Another CCO Liability Proposal, January 10, 2022
“While securities regulators have expressed support for CCO empowerment and the enhancement of compliance resources, NSCP surveys demonstrate that significant practical concerns still exist,” the group said in its framework. To address the issue of CCO liability more effectively, the NSCP went on to say, “it is necessary to focus on the larger context of the compliance function within firms and to do so earlier in regulatory reviews, whether during examinations or enforcement investigations.”
“The framework comes amid growing concerns among compliance professionals about individual liability over the last decade and as regulators, such as the U.S. Securities and Exchange Commission, look to clarify the role of compliance officers when determining their personal responsibility in a firm’s potential compliance failures, the group said in the report.”
“NSCP’s framework asks regulators to consider nine questions in cases where a compliance failure may have occurred, and proposes that a “yes” answer to any of the questions should reduce a compliance chief’s personal liability.”
“NSCP’s Mr. Rubin said his group hopes the framework also can be a reference tool for chief compliance officers and company management when considering the structure of a business’s compliance function.”
“The National Society of Compliance Professionals has drafted a framework that urges regulators to consider chief compliance officer liability more holistically, in the context of the compliance culture within a CCO’s firm.”
“The results of the two surveys are not necessarily consistent with each other, noted Crossley. “Although there was improvement in the empowerment CCOs have at their firms and more monies allocated to compliance resources, CCOs remain concerned about their liability,” she observed. Another way to put that, she said, is that more than half of the respondent firms support CCOs by empowering them and budgeting for compliance resources – with the exception that technology resources seem most under-resourced – but the SEC has not reviewed Rule 204(4)‑7 to provide clarity on the standard of liability CCOs are subject to, thereby leaving compliance professionals concerned for their own professional liability.”
“The National Society of Compliance Professionals (NSCP) has released a framework that it hopes chief compliance officers (CCOs), financial services firms and regulators can use to address the long-standing issue of CCO liability.”
“The NSCP framework is a response to concerns common among compliance professionals that they may find themselves held personally liable in circumstances they regard as unreasonable or unfair – such as when they have not been involved in misconduct or obstruction.”
Compliance Group Releases CCO Liability Framework, January 19, 2022
“Lisa Crossley, NSCP’s Executive Director and CEO, stated that “SEC Commissioner Hester Peirce’s November 2020 keynote address at NSCP’s National Conference prompted the framework.”
“Peirce “addressed the increasing responsibilities of compliance officers and quested the ‘parameters of personal liability for compliance officers.’”
“Brian Rubin stated that “because of the importance of these issues, we surveyed our members who confirmed that they are concerned about whether they have targets on their backs and whether they have sufficient resources at their firms.”
Regulatory Compliance Watch – New Framework aims at CCO liability guidance, January 20, 2022
“A new framework released by the National Society of Compliance Professionals squarely aims at attempting to alleviate the uncertainty faced by compliance officers when it comes to personal liability. The ultimate goal of the two-page “Firm and CCO Liability Framework” is to guide investment adviser, investment company and broker-dealer chief compliance officers, regulators, and firms regarding “perceived or actual” CCO liability.”
