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Chief Compliance Officer (CCO)

Tanveen Kaur- C0880050

Financial Services Investigation and Compliance, Lambton College Toronto

FSI-3013 Regulatory Compliance Administration and Communication

Prof. Sukh Karan Deol

February 22,2022
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Table of Contents

Chief Compliance Officer (CCO).................................................................................................................................2

Role of Chief Compliance Officer................................................................................................................................3

Responsibilities of Chief Compliance Officer (CCO)..................................................................................................3

CCO’s Role in Small and Large Organization.............................................................................................................4

Small Organization....................................................................................................................................................4

Large Organization....................................................................................................................................................5

CCO facing monetary or administrative penalties for not meeting their obligations...................................................5

First Case...................................................................................................................................................................5

Second Case..............................................................................................................................................................7

Conclusion....................................................................................................................................................................8

References...................................................................................................................................................................10
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Chief Compliance Officer (CCO)

The chief compliance officer (CCO) is the executive handling compliance-related obligations for a

business. (Wikipedia contributors, 2022)

Role of Chief Compliance Officer

 They ensure that a company abides by all laws and business standards to prevent damages or additional

liabilities.

 Based on the kind of organization you run, they could be in charge of various jobs, from establishing

overseas operations to ensuring compliance requirements are completed.

 The officer may occasionally oversee an inner audit division, although they may not perform the auditing

work. They give it to someone whose primary responsibility is auditing instead.

 Searching for potential violations of company policy is an important aspect of managing risk.

 Creating the organization's codes of integrity and ethics, putting them into action, and making sure people

follow them.

 Assuring all workers that it is their responsibility to adhere to the law.

 Keeping an eye on or figuring out the security risks that come with data stored digitally to stop

unauthorized entry, usage, or transformation. It consists of determining how well the current security

precautions function, developing new ones, discovering possible exposures, and doing routine inspections,

assessments, and testing using computational models.

 Preparing information for all stakeholders to inform them about the dangers and what to do to avoid them.

 Maintaining records of compliance requirements, such as evidence that an entity is permitted to conduct

business in a specific jurisdiction. (The Product Company, n.d.)

Responsibilities of Chief Compliance Officer (CCO)

 The Chief Compliance Officer (CCO) must establish and communicate a company's compliance

requirements to higher management. They create and revise the organization's annual compliance plan with
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the general counsel. The plan is periodically evaluated as new pieces from regulating bodies and agencies

become available.

 There are two critical responsibilities for the Chief Compliance Officer (CCO). They plan and run training

with the help of the business's legal department, human resources, and other compliance experts.

 Besides reporting compliance matters involving individuals, the CCO must update higher management on

possible interested-party disputes or adverse business outcomes resulting from a new or modified

compliance plan. The CCO must explain how this compromise in corporate governance would help the

company avoid noncompliance in the long term if a modification to the compliance plan is required to

satisfy regulatory authorities but would have a detrimental impact on company profits.

 To evaluate whether the company's policies adhere to or depart from applicable legislation, the Chief

Compliance Officer (CCO) examines information and inner audits. When problems arise, they collaborate

with the rest of the risk control team and the department's chief. (MasterClass,2022)

CCO’s Role in Small and Large Organization

Small Organization

The CCO's primary responsibility is overseeing or managing critical supervision aspects. Considerations

include:

 Approval of brand-new customer accounts after a thorough review of KYC data and confirmation that

suggestions are appropriate for the customer's financial position and match the client's investment goals, as

articulated in a statement of investment strategy.

 Each deal must be checked for errors, timely payment, unexpected behaviour in the trade market, and client

investing instructions daily.

 Training programs for employees to keep them abreast of the latest developments at the firm and in

securities law.

 Keeping an eye on how the company's reps are conducting themselves in sales and promoting themselves

through mediums like print and digital media.

 Personal trading policies to avoid conflicts of interest and front-running and to prioritize clients over trades.

 Customer complaints are looked at, addressed, and investigated promptly.

Large Organization

The Chief Compliance Officer of a major company should have a structure in place whereby regular

written reports are submitted by division managers or business units (CCO). These reports would shed light on any

significant problems in particular areas. In specific settings, such as the trading business, peculiarity reports might

be the best method to keep tabs on specific actions, such as failed or incomplete trades.

The CCO should also consider the following additional executive-level duties:

 Reviewing and editing the company's guidelines and operations manual. The manual should not be a static

document examined once a year but a live record that is reviewed and updated as needed.

 Staff education and training on compliance strategies and policies; Reiteration of the most critical controls

and processes.

 Doing a thorough assessment of all current agreements and documents, such as customer Know Your

Customer (KYC) records, and ensuring they are accurate and up-to-date.

 Giving clients the most recent disclosures and other data, particularly concerning possible clashes of

welfare and influence, at the time of sale.

 Keeping an eye on clients' stock portfolios to ensure compliance with KYC and KYP regulations.

 Defining what employees may and may not do, such as what business activities are allowed and what types

of customer gifts are approved.

 Investigating the Bare Minimum Need for Working Capital

 Methods of risk management are under scrutiny.

 Implementation of the plan for tragedy rescue and continuation of business operations, including any

necessary changes. (The Role of the Chief Compliance Officer, n.d.)

CCO facing monetary or administrative penalties for not meeting their obligations.

First Case

“Jennifer Campbell is accused of misappropriating more than $480,000 from seven clients of a Buffalo, N.Y.”

The SEC has accused a New York lady of fraud. She allegedly stole more than “$483,000” in client

money while serving as the “chief compliance officer at a Buffalo RIA”. She tried to hide the theft using a

complicated plan, including fake documents and voice-changing software. To conceal the reality, they further

claim that she feigned to have a different voice.

“Jennifer Campbell” is accused of using her registered investment advisory firm's client interface to solicit

money remitted to the company's location. The regulating body makes these assertions. After falsifying the account

trustees' signatures on checks she made from the accounts to her brokerage account, she used the company's check

scanner to move the stolen money into her performances. She is accused of forging cheques to get funds from the

sale of securities stored in other people's customer accounts.

A 93-year-old widow whose late husband had established an account for her before he passed away was

one of the scam's seven victims. Moreover, this individual was responsible for maintaining the financial records for

two companies that had leased out pieces of land to other parties. She is suspected of faking rent checks with a

customer's signature and depositing the money in her brokerage account. She is said to have been involved after

faking the client's signature.

Before anybody realized what was happening, this con had been going on for over two years. “In April

2021”, staff members at the broker-dealer the RIA utilized spotted a few exceptional deals. On the other hand, She

had done a few things to divert the attention of the police and get them off her track. She convinced her coworkers

that she needed to solve technical issues to get access to their computers. She modified the account settings so that

future emails from the broker-dealer would be sent to her inbox instead of his.

To learn more about the odd transactions, the broker-dealer attempted calling the RIA's management, but

they did not pick up. Once again, she was able to interpret these communications. She allegedly used voice-
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changing software to claim to be the RIA's principal while acting as a company representative when he phoned a

broker dealer's anti-money laundering officer on “May 4”.

When the AML officer questioned her about the deposits made into her account, she feigned to be the RIA

principal and told a fib about being the niece of one of the account inheritors. She sent a phony letter purporting to

be from the beneficiary stating that the deposits were lawful, coupled with bogus tax paperwork to support the

deception when the officer asked for evidence using the principal's email account. All services were terminated that

day, and the broker-dealer abruptly ceased dealing with the RIA.

A few days later, the RIA located the broker-letter dealer's termination notice, and they became aware of

her actions. She was subsequently sacked from her position on “May 20, 2021”, after she acknowledged acting up.

She was appointed office manager in “March 2017” and promoted to chief compliance officer in “September

2018”.

Her history was not fully disclosed by the SEC. However, she seemed to have prior experience with Pratt

Collard Buck Consulting Group. The company's registration as an investment adviser was revoked in “December

2021” for an unknown cause. The SEC wants her to pay back all the money she received unlawfully, along with

any interest or penalties that may be assessed, and to have her permanently barred from breaking any other

securities laws.

She has been accused of “23 felonies in the Western District of New York.” Among the various charges

against her are “wire fraud and aggravated identity theft”. And that's in addition to the SEC's allegations. Based on

the claims, possible punishments include a “$250,000 fine, at least two years in jail, and up to twenty years”. She

appeared before the court on “June 2” and was handed a list of conditions to satisfy before being released. (Foerch,

2022)

Second Case

“RPM, Chief Compliance Officer Settle SEC Claims of Accounting, Disclosure Violations.”
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The US Securities and Exchange Commission filed a complaint against “RPM International Inc. and

“Edward Moore, the company's general counsel and chief compliance officer”, alleging violations of several

accounting and exposure regulations. They reached an out-of-court settlement for almost “$2 million”.

“RPM” is a business that manufactures coatings, sealants, and other construction materials. The

Department of Justice investigated the company to see whether it had charged the government too much for any of

its contracts between “2011 and 2013”. According to the SEC, this prompted the agency to launch an inquiry into

the firm in question.

In filings with the SEC, “RPM” alleged that it had overpaid the government significantly on several

contracts during the “first and second quarters of the 2013 fiscal year”. The Justice Department and the firm were

expected to settle during the second quarter. The SEC claims “RPM” concealed its inquiry into the missing

accruals until the company's third fiscal quarter.

“The restatement had no impact on the audited results for the fiscal 2013 year,” an RPM spokeswoman

said. “We are pleased to have put this matter behind us.”

According to the SEC, the company's response coordinator, “Mr. Moore”, knew how the inquiry was

progressing but should have alerted the company's top executives, financial officers, audit committee, or other

relevant employees.

According to the oversight committee, neither “RPM nor Mr. Moore” provided any evidence for or

against the allegations. “In August 2014, the firm released its revised financial statements for the first three

quarters of the preceding fiscal year”. In the first quarter of the restatement, the company reportedly informed the

SEC that the Justice Department was pursuing an investigation, and the company recorded the costs in the

restatement's first, second, and third quarters, respectively. According to the oversight group, “RPM” alerted them

to a significant failure in functioning the company's inner management over monetary reporting during the first and

second quarters.
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“In line with the final judgement issued by the United States District Court for the District of Columbia,

RPM must pay $2 million within the next 30 days, and Mr. Moore must pay $22,500.” (Chin, 2020)

Conclusion

A company's ability to cultivate a trustworthy culture may be aided by having a competent integrity

officer and an efficient adherence to compliance principles staff. But for the culture to thrive, upper-level

management and the CEO must present the same sincere attitude. Upper management and the board of directors

will still be held responsible for any unethical conduct discovered, even if a specific ethics and compliance team

exists. Only with their senior officers' support can honest officers use their degree of power. The strength of a

company's environment is often correlated with the calibre of its top management since the leadership sets the tone.
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References

Chin, K. (2020, December 23). RPM, Chief Compliance Officer Settle SEC Claims of Accounting, Disclosure

Violations. WSJ. https://www.wsj.com/articles/rpm-chief-compliance-officer-settle-sec-claims-of-

accounting-disclosure-violations-11608763939?mod=hp_minor_pos11

Class, M. (n.d.). What is a CCO? 4 responsibilities of a chief compliance officer - 2023. MasterClass. Retrieved

February 19, 2023, from https://www.masterclass.com/articles/what-is-a-cco

Foerch, A. (2022, June 13). SEC charges CCO with stealing from clients, details elaborate coverup. RIA.

https://citywire.com/ria/news/sec-charges-cco-with-stealing-from-clients-details-elaborate-coverup/

a2389162

The Product Company. (n.d.). What Does a Chief Compliance Officer Do? | The Product Company.

https://theproductcompany.com/career/chief-compliance-officer/

The Role of the Chief Compliance Officer. (n.d.). BCSC.

https://www.bcsc.bc.ca/industry/registrant-regulation/compliance-toolkit/role-of-the-chief-compliance-

officer

Wikipedia contributors. (2022, September 10). Chief compliance officer. Wikipedia.

https://en.wikipedia.org/wiki/Chief_compliance_officer