In episode Matt Kelly and I take a deep dive into a recent SEC enforcement action involving Susan Diamond, a CCO at a financial advisory firm. She made representations on forms submitted to the SEC regarding the firm’s status, audits and reporting that were material miss-statements. She was severely sanctioned with a $15,000 penalty and a nine-month suspension from working with any investment adviser or financial firm. And after that, she will be barred permanently from working as a compliance officer at broker-dealers and investment advisory firms.
Matt and I explore the question of whether this portends potential more or greater liability and we conclude that it does not for a variety of factors including: (1) the egregiousness of the facts, (2) the prior liability of Diamond and her company, (3) the high regulatory scrutiny afforded to financial advisors, and (4) her outright material miss-statements. We also discuss the recent arrest of a VW compliance officer and detail how the criminal charges against him do not portend additional CCO liability. Finally we conclude with a discussion about the departure of the CCO from VW and what it says about the company’s commitment to an ethical culture.
For more on the Diamond enforcement action, see Matt’s post Ack! CCO Liability is Back Again on Radical Compliance.
Is there a real risk of personal liability for a CCO? Listen to Compliance into the Weeds to find out.Click to tweet