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

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.


This does not mean we should sit still and wait; on the contrary, we should expect change even if we do not know what form it will take. Pertinent to CCOs, change may come in the form of regulations, business initiatives, available resources, changed workflows, systems, and potentially new firm personnel. For a CCO, the one constant that always accompanies change is the need to assess the corresponding change to the firm’s risk profile. As we transition to the new year, every CCO should ensure they have robust risk assessment procedures that can identify and quantify, on a timely basis, changes to their risk profile and adjust compliance programs accordingly.

Is the industry headed for significant deregulation? On November 8, 2016, Donald Trump won the presidency in an extraordinary election that will not soon be forgotten. Throughout his campaign, Mr. Trump spoke to many issues, and several were directed at the financial services industry. His campaign promises included repealing portions of Dodd Frank as well as the overall rolling back of federal regulations.

Some administrative fallout began on November 14, 2016, when Securities and Exchange Commission Chairperson, Mary Jo White, declared that she would resign from her post, effective January 1, 2017. While it is not clear who Mr. Trump would nominate to fill the vacant post, many believe it is likely to be an individual more in line with his agenda of more deregulation.

Still, Dodd-Frank appears unlikely to be overturned in its entirety. For now, Senate rules, in effect, would require 60 votes to bring any legislation overhauling Dodd-Frank to a vote, and Republicans currently stand to control 52 seats in the coming Senate.

As Mary Jo White said at a recent Investment Advisor Committee, “It is inevitable and entirely appropriate that these reforms be reviewed, incrementally improved, and made more efficient as we learn from their operation in the market. But, in my view, it would be a grave mistake to weaken, let alone dismantle, these core post crisis reforms.”

In 2016, it seemed like more of our clients had SEC exams than in recent memory and the direction remains unchanged at this point. A fairly common topic in our discussions with examiners is always risk. Those registrants that had a process and could articulate how changes to their risk profile resulted in corresponding changes to their policies and procedures had an easier time presenting their compliance programs. Do not wait until your annual review (or your next exam) to address risks.

There have been so many changes in our lives and the world around us, we can only imagine what 2017 will bring. With the unknown looming future, we continue to assess what this means for CCOs. As compliance consultants, we are always sensitive to the liability incurred by CCOs.

In 2016, we ran a series of whitepapers addressing the issue of CCO liability, which were published in NSCP’s newsletter, Currents. The final edition in the series discussed CCO indemnity and insurance options, and raised certain questions that all directors and officers should be asking, and provided answers from several experts in the insurance, legal and cybersecurity sectors. Reviewing and updating your insurance portfolio is something we believe every CCO should do in early 2017.

Thanks for your continued support.