Repost from Cipperman Compliance Services LLC
SEC Chief of Staff Andrew Donohue said that a competent Chief Compliance Officer must develop in-depth knowledge in 9 categories. Mr. Donohue said that a CCO must (i) have “first-hand knowledge” of applicable laws and regulations including relevant exemptive orders; (ii) develop a “deep understanding” of the firm and its operations and structure; (iii) identify conflicts of interest and how they are reported and resolved; and (iv) understand the firm’s clients and products including their profitability. Mr. Donohue also said that a CCO should (i) understand the firms’ compliance and technology platforms; (ii) have a “detailed knowledge” of the firms’ policies and procedures and how they are applied and monitored; (iii) gain an understanding of the markets in which the firm operates; and (iv) create an environment that puts the customer’s interest ahead of the firm’s interest such that the firm does what it should, not what it can. Finally, Mr. Donohue implores CCOs to gain an appreciation for what s/he does not know and how to fill those subject matter and competency gaps.
OUR [Cipperman Compliance Services LLC] TAKE: The CCO position is not an entry-level position that allows for on-the-job training. Mr. Donohue’s CCO job description makes the case that firms should only hire an experienced regulatory professional to serve as CCO rather than give the job to an inexperienced neophyte or a current employee without direct regulatory experience.