BD CCO Charged with Failure to Supervise
The Chief Compliance Officer of a broker-dealer was barred from acting in a supervisory capacity for failing to reasonably supervise trading activity. According to the SEC, pursuant to the firm’s written supervisory procedures, the respondent, as CCO, was responsible for supervising customer account activity and reviewing correspondence. The SEC charges that the respondent would have uncovered and prevented the underlying fraud perpetrated by the firm’s principal officer had he properly carried out his responsibilities.
OUR TAKE: CCOs should avoid assuming direct supervisory responsibilities. The CCO should be tasked with making sure that supervisors and operations personnel do their jobs under the WSPs.