S1:E10 | Thoughts on CCO Liability from Commissioner Peirce

Welcome back to The Securities Compliance Podcast. In today’s special episode, we welcome in SEC Commissioner Hester M. Peirce for an in-depth conversation focusing on the controversial topic of Chief Compliance Officer (CCO) liability. In addition, we discuss the role of outsourced CCOs, the new Marketing Rule, and broker-dealer custody of digital asset securities and cryptocurrencies. She also spoke about the new presidential administration, which will bring in a new SEC Chair and Head of Enforcement, and whether she anticipates a slowdown in dialogue that’s taken place between the regulators and the industry.

Interview

Discussing the motivation to help move the conversation on CCO liability forward
Biggest takeaway from the NSCP CCO Liability survey
Concerns over whether personal liability will be imposed in cases of simple negligence
Thoughts on outsourced Chief Compliance Officers
Discussing the impact of a new Administration, SEC Chair, and Head of Enforcement
Thoughts on the new SEC Marketing Rule including key takeaways
Review the SEC request allowing limited purpose BDs to custody “digital asset securities”
Focus areas for Commissioner Peirce in 2021
Career advice for new compliance professionals

Quotes:

“And I think the compliance people at a firm play a really important role in being a bridge and saying to the operational people at the firm, the people who are providing the advice, or doing the day-to-day interfacing with clients, they need to hear from compliance people about how to do that in a way that's compliant with our many rules. And so it's a partnership of sorts. And if you have a liability regime that doesn't work, then you're going to scare good people away from taking those jobs and the whole thing will bring it down.”

“But I think it was interesting to see the percentage of people who were worried about the liability uncertainty question and and so seeing that people are trying to grapple with that it was quite enlightening. I think a couple of other things that really struck me.”

“And so how can we put ourselves in the shoes of the compliance officer and say okay this is someone who was really dealing with quite a few issues and was trying to do a good job on those issues. Something fell through the cracks, obviously. That's a very different situation than you when you have someone who has the title of compliance officer and doesn't do anything in the job. Those are the cases where I think the line is sometimes hard to draw and that's the line I really need help drawing.”

Resources:

Compliance in Context