Friendly ‘Tips’ From the SEC
Now that the SEC knows who all the CCOs are, they want to do something with that information. At last week’s NSCP conference, OCIE associate director Gene Gohlke said he’s been "brainstorming" with director Lori Richards about "how we can use the fact now that all the ‘40 Act firms have a CCO . . . and how can we stay in touch with the CCOs."
To keep CCOs "up to speed as to what we’re finding [or] with what the Commission might be thinking in the area of compliance," OCIE has been considering creating "a periodic newsletter" or sending out an e-mail blast to "thousands of people" saying: "Here are some compliance tips, here are some best practices."
He also said that the SEC will be looking for ways to get feedback from CCOs, both within examinations as well as outside of examinations. (In their remarks, both Richards and Gohlke emphasized that OCIE views CCOs as their allies in compliance).
Hmmm . . . would compliance officers welcome "tips" from their friendly federal ally?
"Most firms would probably think it’s a good thing," said Patrick Burns, a consultant with Beverly Hills Regulatory Consultants, but added that some might "construe it as mandatory." Burns pointed out that although most of what was in the compliance program adopting release was in the form of strong suggestions, most of the industry viewed the recommendations as mandatory. In the same vein, he said, most advisers would take a look at the SEC’s "tips" and say, "Oh, we need to be doing these things."
"I think it’s a great idea," said Tim Simons of Ashland Partners, a former SEC examiner. "Most of the information advisers get from the SEC is when the examination staff is there. Any information that they can get ahead of time has got to be to their benefit. If the SEC is taking a certain interpretation, that gives OCIE the opportunity to say ‘This is the rule, this is the way we see it being implemented,’ as opposed to advisers trying to guess what the SEC means." Many times, he said, regional staff can’t or won’t provide guidance on an issue "because it came from SEC headquarters."
But at least one compliance officer said he wouldn’t welcome e-mailed tips from the SEC:
"I wouldn’t want to get those," he said. "I’d just put them in my spam filter."