Responsibilities of a CCO for financial advisory firms:

Broker dealer compliance is a serious business, especially considering how aggressively SEC and FINRA regulate these firms. Without a well-established compliance program, financial/capital firms won’t survive a day under the strict policies of FINRA and SEC. All financial advisory firms are required by law, to assign a CCO (chief compliance officer), who is responsible for keeping operations of the firm compliant with the FINRA and SEC regulations.

Duties of a CCO:

Huge financial advisory firms aka wirehouses have their own highly experienced, skilled, and vigilant CCOs that are responsible for:

• Fostering integrity in the firm.
• Making sure that their firms comply with the rules and regulations applying to their operations.
• Design and Implement policies/procedures regarding compliance.
• Maintenance of the firm’s books and records,
• Retaining all the electronic data, including emails
• Design written policies/procedures for both inside operations and outside business activities.
• Conduct annual reviews
• Prevent violations from occurring altogether.
• Help protect investors and integrity of capital markets
• Report any conflict of interest to FINRA and SEC

A CCO coordinates directly with the CEO of the firm. As prestigious as it may sound, being a CCO is very challenging. CCOs are highly paid personnel because of the tough nature of their job. Small to medium-sized firms cannot afford a permanent CCO so they usually outsource CCO for broker-dealer compliance.

A recent example of CCO Bennet explains how important compliance is and how tough the job of a CCO is.

The CCO, Jamie Bennett, was fine $5000 and suspended for 30 days for failing to retain and review emails and for conducting the firm’s business over a third-party email account instead of the official account. FINRA places great emphasis on retaining and reviewing business emails. It is part of a CCOs job to keep an eye on such infractions.

Broker-dealer compliance is a shared corporate responsibility and a CCO alone can’t be held responsible for the vast majority of compliance violations or infractions that happen. However, the critical role of CCO’s responsibilities can’t be underestimated especially when their negligence can cost reputational harm to a business and to careers associated with it.

Solution?

To establish seamless compliance, firms must provide their CCOs with sufficient resources to perform compliance duties. If they fail to do so, they should be doing it at their own risk.

An effective compliance program must be established and CCO should implement 8it strictly.

If you’re a medium to small broker-dealer and can’t afford to hire CCO as part of your regular staff, consider outsourcing.

Conclusion:

Many firms provide excellent CCO services to broker-dealers. These companies are well versed in compliance regulations of FINRA and SEC and help you carry out operations on a budget. BD Consulting Associates is a highly dependable firm that provides excellent broker dealer compliance services.

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