Ep. 103: 2022 SEC Compliance Outreach Program Overview

On Episode 103 of the CCO Buzz podcast, Sr. Compliance Consultant Janice Powell provides an overview of the 2022 SEC Compliance Outreach Program Seminar.

(GUITAR INTRO)

CCO Buzz: Hello and welcome back to CCO Buzz! Happy New Year and we hope your start to 2023 began with an eagerness to hit the ground running toward success and growth in the new year. For us here at Core Compliance, we enjoyed the time away for a bit, but we missed our clients, our listeners and some of us were just chomping at the bit to get back to the podcast, specifically for today’s episode.

Why? Because today we’re joined by Sr. Compliance Consultant Janice Powell. She’s here to discuss her recent Risk Management Update covering the SEC’s Compliance Outreach Program’s 2022 Seminar, which was held on November 15, 2022.

With tons to cover, let’s begin…

Janice, to provide our listeners some color and insight, could you give us a brief background on the program and its purpose?

Janice Powell: Of course, a handful of years ago the SEC created the CCOutreach program, which is now actually called the Compliance Outreach Program. It was originally designed to promote an open forum for communications among various industry entities, such as mutual funds, investment advisers and broker-dealers – on compliance issues. The hope was to foster a collaborative environment and discussion on effective compliance practices, while also providing a platform for [regulator] input.

Originally, the Program was intended to collaborate with CCOs, but it’s been expanded to all senior officers in an effort to place an emphasis throughout a firm’s business operations.  The Program features regional and national events in locations around the country as well as a national seminar held in Washington, DC.

CCO Buzz: Interesting, how “coming of age” of the Program. Now that we understand it’s history and it’s purpose, lets discuss the progress and pivotal discussions that happened at the November seminar. I understand that some of the topics discussed included last year’s examination priorities, enforcement actions, Form CRS, Reg BI, cybersecurity and the new marketing rule- to name a few. But what do you think the main takeaway or theme of the entire seminar was?

Janice Powell: Well typically events similar to the seminar have a very large overarching theme. What I found interesting and noteworthy about the seminar was in the opening remarks by Chair Gensler. Throughout his speech he often referenced great thought-leaders and works of historic past, such as Shakespeare and Hammurabi’s Code – discerning that CCOs are “good counselors,” or in other words – gatekeepers of the laws, rules, and regulations necessary to protect clients and investors.

In my opinion, the main takeaway or overarching theme may have been to inspire and reiterate the purpose of a CCO and the compliance to the industry.  This further reiterates the SEC’s continued focus on fiduciary duty, conflicts of interest, [and] investor protection, the cornerstones of the Advisers Act and the Investment Company Act.

CCO Buzz: Understanding the opening remarks laid the foundation for the discussions and panels at the seminar, do you mind sharing some of key concepts with the listeners?

Janice Powell: Sure, let me share a few, but if listeners want more information about the seminar, they’ll have to check out the latest Risk Management Update, which is available on our website.

Let’s start with an issue or topic that is always in the back of a firm’s mind… enforcement. In 2022, enforcement set another record, by collecting over $2.6 billion dollars more than was collected in 2021, with over 700 enforcement actions of the year.  It was stressed throughout the seminar that engagement, education and execution are pivotal pieces to mitigating issues – keen eyes and focus on any regulatory developments and guidance will be paramount to a compliance program’s success. Issuing Risk Alerts are expected, but how one educates their team, holds their firm accountable, and ensures execution to the changes helps firms meet their fiduciary duty.

Another topic was Examination Priorities. As the industry awaits the release of this year’s examination priorities, the November seminar spent time focusing on key factors of 2022’s priorities. Noted within the sessions was the continued focus on ESG investing, private funds, and standards of conduct.  I’d like to note that the private fund space is of particular interest given the amount of assets currently invested in private funds.

In the last 5 years, advisers to private funds have increased more than 70%, now comprising about 35% of all RIAs.  Focus in this area will include reviewing advisers’ fiduciary duty, compliance programs, fees and expenses, along with compliance with other rules such as custody, fund audits, and valuation.

Another thing to note is that the number of remote examinations are decreasing, as the industry approaches a  post-pandemic environment. We should all anticipate more opportunities for in-person and onsite examinations moving forward.

Other seminar topics I cover in my article include Rulemaking, Form CRS, the New Marketing Rule, ESG, and more.

CCO Buzz: Yes, if you cover more, we all will have to check out that article. Thank you so much for joining us today, Janice! But before we sign off, is there anything else you’d like to add?

Janice Powell: Of course! The Compliance Outreach Program is a great opportunity to understand what is on the minds of the SEC staff.  If you haven’t yet already, we encourage you to listen to the most recent seminar online.  If you need assistance assessing any of the topics discussed in the seminar or more information about our services, please contact us at (619) 278- 0020 or visit us at www.corecls.com.

CCO Buzz: Well that’s it for this week’s episode. If you’d like additional information, please check out our website at www.corecls.com. You can also follow us on Facebook, LinkedIn, or Twitter @CoreCls. Thank you, and we hope you tune-in to next week’s episode of the CCO Buzz.

 

(GUITAR  OUTRO)

Leave a Reply

Your email address will not be published. Required fields are marked *