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Communiques

The latest compliance news from SEC3 and CCO3.

Overlooked Benefits of E&O/D&O

December 13, 2017

While asset managers should always be aware of the protections provided by their E&O/ D&O coverage, there are more reasons than ever to think about it now.

  • The SEC continues to push forward stressing individual accountability by taking action against individuals. In its 2017 fiscal report, the SEC’s Enforcement Division cites individual accountability as one of its core enforcement principles. Since Clayton took the helm as SEC Chairman, we have seen that the SEC continues to name individuals in most cases.
  • Investors will continue to take action against firms when they suspect they can recoup losses.
  • Most insurance companies are now offering a premium credit or reimbursement to firms conducting mock audits so it’s not completely “out-of-pocket”.
  • You can request a free assessment of your current policy to identify gaps where you may need additional coverage AND where you may be able to add the coverage with little to no additional premium.

While compliance is of course our forte, we view insurance as just one necessary control to help mitigate your risks.

 

SEC3 Newsletter

February 27, 2017

Commentary: How Compliance Officers & Firms Can Help Limit CCO Personal Liability

This article originally appeared on the Thomson Reuters Regulatory Intelligence subscription service for compliance and risk professionals and is reprinted with the permission of Thomson Reuters.

How Compliance Officers & Firms Can Help Limit CCO Personal Liability


This January, Janaya Moscony, president of SEC3, was interviewed by Julie DiMauro - Thomson Reuters.

Reuters Video


CCO Liability (Part III): Managing Liability Webinar

In this webinar, panelists discuss indemnifications and insurance as potential remedies to address the direct financial risks to a CCO.

Listeners will learn:

  • What terms and conditions should Chief Compliance Officers be aware of with respect to insurance policies and riders?
  • Are CCOs still covered once they leave a firm?
  • What factors may a board wish to consider in connection with approving or renewing a D&O/E&O insurance policy?
  • What are the protections/defenses in place for fund directors? Are CCOs afforded the same protections? Also, is outside counsel ever subject to potential liability?
  • Are Fund Directors ever found personally liable or are they covered by fund assets and/or D&O/E&O insurance policies?
  • What is the biggest misconception about cyber insurance?

Webinar Video

 

Wishing One-and-All a Happy, Healthy and Prosperous New Year

December 29, 2016

We hope each of you found some peace and tranquility in the company of loved ones this holiday season and want to wish one-and-all a happy, healthy and prosperous New Year.

As the lights dim on 2016, we naturally want to prophesy 2017. However, with so much friction, division and uncertainty in our world, most predictions would be at best – a good guess. As such, we will leave such predictions to others, whether it be geopolitical, country-specific or related to the financial services industry, and will enjoy tracking other’s soothsaying. Instead, at this time, we believe it is best to be guided by a strong moral compass, focus on what we know, learn about what we don’t know, remain vigilant to our surroundings and adjust as necessary.

Read more: Wishing One-and-All a Happy, Healthy and Prosperous New Year

 

Understanding How to Mitigate Liability and Navigate Insurance Options (Part II)

October 17, 2016

In June, we shared our thoughts around common insurance gaps and insurance riders that CCOs as well as managers should understand. One of the gaps we shared related to pre-claim defense costs. In August, a court ruled on behalf of an insurer in that they were not required to cover the insured for costs related to investigations prior to the Issuance of a Wells notice.

Read more: Understanding How to Mitigate Liability and Navigate Insurance Options (Part II)

 

Cybersecurity - What have we learned and what have we done?

August 17, 2016

Regulatory Landscape

In April 2015, the Securities and Exchange Commission ("SEC's") Division of Investment Management issued a guidance update, identifying cybersecurity as a critical issue. Several regulators are in fact focusing on cybersecurity. The SEC guidance update clarified the Staff's view that the following measures need to be undertaken by investment advisers:

Read more: Cybersecurity - What have we learned and what have we done?

 

Gatekeepers in SEC Crosshairs

August 04, 2016

Ever since the enforcement cases were announced as part of the SEC’s “Operation Broken Gate,” the SEC enforcement division has continued to ramp up scrutiny of gatekeepers including third-party service providers and directors who have been charged with the obligation to spot and prevent potential misconduct.

SEC Chairperson Mary Jo White addressed the importance of gatekeepers in her keynote address at the Mutual Fund Directors Forum 2016 Policy Conference, specifically highlighting the important role that fund directors serve.

Read more: Gatekeepers in SEC Crosshairs

 

Anna M. Bencrowsky, CRCP, CMFS Joins SEC3

July 11, 2016

We are pleased to announce that Anna M. Bencrowsky, CRCP, CMFS has joined SEC3 as a Senior Consultant.

Prior to joining SEC3, Anna held several executive compliance positions. Anna recently retired as Vice President and Chief Compliance Officer of Wilmington Funds Management Corporation (WFMC), Wilmington Trust Investment Management, LLC (WTIM), Wilmington Trust Investment Advisers, Inc. (WTIA), and as CCO and AML officer to the Wilmington Funds, a proprietary investment company consisting of numerous investment portfolios, advised by WFMC,WTIA, and numerous non-affiliated sub-advisers.

Read more: Anna M. Bencrowsky, CRCP, CMFS Joins SEC3

 

Understanding How to Mitigate Liability and Navigate Insurance Options

June 29, 2016

Despite all the proper steps you can take as Chief Compliance Officer (“CCO”) to avoid an enforcement action, insurance becomes a necessary step in self-risk mitigation. It is not only investment advisers and fund boards that can face liability, but CCOs themselves can come under the gun of the Securities and Exchange Commission (“SEC”) as well. CCOs should seek to understand the types of insurance products (eg. www.ccoprotect.com) and riders that can best protect them and the company. Not all policies have the same exact protections, so it is important to consult with your insurance broker, review your policies and ask the right questions.

Read more: Understanding How to Mitigate Liability and Navigate Insurance Options

 

Are you ready for your next SEC exam?

May 17, 2016

We know first-hand the stress involved when the SEC calls to inform you that they are coming onsite to conduct an exam.  Not only have many on our team been examiners, but we have also received the call as in house CCOs.  Obviously, the most important thing is to be certain that there is no fraudulent activity occurring at your firm.  Second to that, preparedness for an SEC exam makes all the difference in the direction an exam could take; especially with the risk based approach the SEC is taking to exams.

Read more: Are you ready for your next SEC exam?

 

New Year, Same Requirements

February 10, 2016

Individual liability is quickly rising to the forefront of the radar of the Securities and Exchange Commission. In fact, over the last five years, 80% of SEC enforcement cases have involved charges being brought against individuals. In a recent speech, Andrew Ceresney explained this increased focus stating "Holding individuals accountable for their wrongdoing is critical to effective deterrence and, therefore, the Division considers individual liability in every case". In a separate speech also highlighting individual liability, Mr. Ceresney noted that many of the recent enforcement cases brought against individuals make it clear that the SEC will "aggressively pursue business line personnel and firms who mislead or deceive".

Read more: New Year, Same Requirements

 

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Newsletter

Get the latest compliance news and insights - delivered weekly. The SEC3 Communique covers all compliance topics. CCO3 focuses on CCO topics.
tip: check both to keep informed!

Communiques

A Motivated Agency: The SEC Closing the Loop on the Edgar System Cyber Breach

You may recall after Clayton took the helm as Chairman at the SEC, the agency disclosed that it had its own cyber breach and the Edgar system was compromised. Today,... read more »

Examiners Take Reprieve with Gov’t Shut Down, But CCOs Must Carry On

These government shut downs don’t usually go on indefinitely. Before we blink an eye, examiners will be back on the beat. CCOs must stay vigilant. On December 20th the SEC’s Office... read more »

Pre-Dating & Back-Dating are Equally Risky

The SEC today suspended three accountants formerly of BDO USA LLP for improper professional conduct during its 2013 audit of AmTrust Financial Services Inc., an exchange-listed insurance company. According to the... read more »

Fiduciary Duty

On Friday, September 28, 2018 the SEC charged LendingClub Asset Management (LCA) and its former president Renaud Laplanche with fraud for improperly using fund money to benefit LendingClub Corporation (LendingClub),... read more »

Exciting Summer Project -- Dig Into Some Sand or Dig Into Your Firm's Best Ex Pr…

The Office of Compliance Inspections and Examinations (OCIE) issued a risk alert July 11 targeting investment advisers’ most common deficiencies with regard to their best execution obligations under the Investment... read more »

SEC Adopts Fund Liquidity Reporting and Disclosure Changes

The final week of June was a busy one for SEC releases following the SEC’s June 28th open meeting. Among these was a revisit of Rule 22e-4 under the Investment... read more »

Events

Chief Compliance Officer Roundtable: Breakfast Briefing - November 8, 2018

When: November 8, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Dorsey PF 2018 Symposium

When: September 26, 2018 (8:30 am - 6 pm Where: Dorsey & Whitney LLP | 51 W. 52nd Street | New York, NY 10019 Directions > SEC3’s President, Janaya Moscony will join...

Chief Compliance Officer Roundtable: Breakfast Briefing - June 14, 2018

When: June 14, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Webinar: 2018 SEC Exam Priorities & Recent Exam Highlights

Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. Tobin S. Cochran, Managing Member/President of Focus 1 Associates, LLC and...

Chief Compliance Officer Roundtable: Breakfast Briefing - February 7, 2018

When: February 7, 2018 Where: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone: 212.885.5000 Schedule: 9:00-9:30am - Networking...

Upcoming Events - September & October 2017

Upcoming Events Don’t miss the opportunity to meet with us in person to discuss the topics that matter most to you. SEC3 is teaming up with industry experts in NYC to discuss...

May 23, 2017 - Webcast: WannaCry Ransomware: Were You Really Protected or Just L…

When: Tuesday, May 23rd, 2017 | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. We...

June 14, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Willkie Farr & Gallagher LLP | 600 Travis Street | Suite 2310 | Houston, TX Barry Barbash from Willkie Farr & Gallagher LLP,...

June 13, 2017 - Compliance Breakfast Briefing

8:30-9:00am - Networking and Continental Breakfast 9:00-10:30am - Program Location: Haynes and Boone, LLP | 2323 Victory Avenue | Suite 700 | Dallas, TX 75219 Validated parking is available in the garage attached...

May 31, 2017 - Chicago

9:00-9:30 a.m - Networking and Continental Breakfast 9:30-11:00 a.m - Program Location: Baker & McKenzie LLP | 300 East Randolph Drive | Suite 5000 | Chicago, IL 60601 Kristin Gonzalez and Jerome Tomas...

May 17, 2017 (NYC WIMF)

This event is by invitation only. Please email info@seccc.com to learn more.

May 15, 2017 (NYC Chief Compliance Officer Roundtable)

9:00-9:30am - Networking and Continental Breakfast 9:30-11:00am - Program Location: Blank Rome LLP | The Chrysler Building | 405 Lexington Avenue | New York, NY 10174 | 22nd Floor Boardroom | Phone:...

Webcast: The Most Insidious Cybersecurity Threat Is Also The Least Understood

When: Tuesday, April 25th | Schedule: 12pm - 1pm EST Who: Paul Caiazzo, CEO and Co-Founder, TruShield Security Solutions Michael Brice, Founder, BW Cyber Services John Lukan, Managing Director, SEC Compliance Consultants, Inc. Ransomware, the...

CCO Liability (Part III): Managing Liability Webinar

In this webinar, panelists discuss indemnifications and insurance as potential remedies to address the direct financial risks to a CCO. Attendees will learn: What terms and conditions should Chief Compliance Officers be...

Webinar: CCO Liability (Part III): Managing Liability: Navigating Indemnities an…

When: Tuesday, February 21, 2017 Schedule: 11:00am ET / 10:00am CT / 9:00am MT / 8:00am PT / 7:00am AT Description of Webinar: The National Society of Compliance Professionals is pleased to host...