The Office of Compliance Inspections and Examinations (“OCIE”) recently published a risk alert on the growing trend of investment advisers outsourcing the role of the Chief Compliance Officer (“CCOs”) in their firms. Briefly, of the 20 examinations completed the staff found that a lack of communication left the CCO without a good understanding of the registrant’s businesses, operations and risks. CCO’s that serve for numerous affiliated firms did not have sufficient resources to perform their compliance duties; and, CCO’s who relied on the records selectively provided by the registrant may have affected the accuracy of the CCO’s annual review on behalf of the registrant. If you are considering outsourcing this position, I encourage you to review this risk alert in its entirety.
