The Securities and Exchange Commission (the “SEC“) has expressed significant concern with respect to the practice of some registered investment advisers and investment companies (“registrants“) to outsource compliance functions. On November 9, 2015, the staff of the Office of Compliance Inspections and Examinations (the “Staff“) of the SEC released a risk alert arising from the “Outsourced CCO Initiative” examination of registrants which outsource their chief compliance officers (“CCOs“) functions to unaffiliated third parties (“outsourced CCOs“). The Staff observed “certain compliance weaknesses” associated with registrants that utilized outsourced CCOs.
In light of the Staff’s alert, each registrant should carefully consider whether the use of an outsourced CCO is appropriate given the registrant’s business and associated risks.
The original article can be found at mondaq.com