SEC Will Only Prosecute CCOs that Cross a “Clear Line”
SEC Chair White, speaking to compliance professionals, said that the SEC will assert liability against Chief Compliance Officers but does not specifically target compliance professionals. Ms. White said that the SEC will bring cases when CCO actions or inactions “cross a clear line that deserve sanctions.” She said that “[b]eing a CCO obviously does not provide immunity from liability,” and the SEC “must, of course, take enforcement action against compliance professionals if we see significant misconduct or failures by them.” However, Ms. White said, “To be clear, it is not our intention to use our enforcement program to target compliance professionals.”
OUR TAKE: Compliance professionals will remain skittish until the SEC publishes guidance on this “clear line” that CCOs cannot cross. We believe that the SEC should grant immunity to CCOs unless they personally benefit or give substantial assistance to furthering misconduct.