Although many investment adviser firms desire to outsource the chief compliance officer role to an unaffiliated third-party independent contractor (“Outsourced CCO”), such an arrangement will be scrutinized and could be challenged by the securities regulator as a violation Rule 206(4)-7 or equivalent rule of the state securities regulator depending upon the facts and circumstances.
Category Archives: Outsourced CCO
The Chief Compliance Officer serves an important role in an investment adviser firm’s business. A role that requires expertise, independent judgment, and dedication, an increasing number of investment adviser firms are choosing to outsource the Chief Compliance Officer position to third party compliance professionals. Despite the potential cost-savings, outsourcing this vital role is generally not a wise business strategy and will likely increase the firm’s risk of exam by the U.S. Securities and Exchange Commission (“SEC”) or affect the depth of inquiry an investment adviser firm is subject to once an exam has begun.
