SEC: CCOs need to enhance their skillsets

Chief compliance officers will need to expand their skillset if they are to keep up with the demands of the role in the future, Securities and Exchange Commission chief of staff Andrew Donohue told delegates at National Society of Compliance Professionals 2016 National Conference last week.

“In the future, I envision that the necessary expertise for compliance will consist of a far broader set of subjects, including expertise in technology, operations, market, risk, and auditing, to name a few.” said Donohue. “Even now, compliance personnel need to have a solid understanding of these areas, but I envision the role becoming even more demanding such that a CCO will truly need to be a jack of all trades with access to a wide array of skillsets.”

The SEC’s focus on the private funds industry in recent years has placed growing pressure on firms to introduce stronger compliance programs.

“Today, there is an expectation in private equity that CCOs have a seat at the table and that they are effective in their job. CCOs should be involved in the governance of their organizations and part of a firm’s decision-making process, including its core committees,” said Bruce Karpati, KKR’s global chief compliance officer in pfm September’s Deloitte special magazine.

To keep up with increasing demands, Donohue advised compliance officers to make it a priority to develop the necessary technical expertise, keep up with changing market dynamics, fully appreciate all of the firm’s businesses and follow regulatory developments and their impact on the firm and its operations.

During his speech, Donohue also raised concerns about the ever-changing and highly competitive business and economic environment faced by broker-dealers, investment advisers, investment companies and other regulated entities.

“Many of these businesses have seen dramatic changes to the composition of their products, changes to their traditional business models, and migration of clients and business to less lucrative areas,” he said.

In particular, Donohue mentioned the declining top-line growth in the asset management industry, which he believes could compromise the ability of CCOs to obtain the funding necessary for technological and other resources that are essential to the compliance program.

Donohue also highlighted the growing trend for firm’s to use technology to prevent practices that could violate regulatory requirements or firm policies and procedures. He warned businesses not to view this as an opportunity to abdicate their responsibility and said that it is critical that businesses remain accountable and not view compliance as being responsible for any and all violations.

“Compliance should continue to be viewed as a partner – not a scapegoat or cost center – in the quest for developing a conscientious and compliant business,” he said.