New SEC Rules Increase Scrutiny of Outside Compliance Chiefs


The new SEC rules underscore the importance of selecting a qualified chief compliance officer.

By Carlos Guillen

With the Securities and Exchange Commission announcing adoption of Form ADV amendments proposed last year, regulated entities must now report if they outsource their chief compliance officer, and specify the name and tax identification for that individual.

The goal, according to the agency, is to enhance monitoring and regulation of the asset management industry, and improve the agency’s ability to assess potential risk. Firms must file newly amended Form ADVs under the requirement with the first amendment filed after October 1, 2017.

Explaining the rule, the commission noted its staff “has observed a wide spectrum of both quality and effectiveness of outsourced chief compliance officers and firms.” Advisors are already required to report on their Form ADV the names and addresses of independent public accountants that perform audits, surprise examinations and internal control reviews. The broadened amendment underscores the importance to regulators of ensuring the quality of a firm’s third party service providers.

Read the entire article published originally on Wealth Management .com at ]


Carlos Guillen is the president, CEO and founder of BasisCode Compliance.