As a chief compliance officer (CCO) or compliance professional serving in the financial advisory market, do you feel your liability is increasing? If you answered yes, you aren’t alone. In fact, during our recent webinar “Top takeaways from ComplySci’s 2022 CCO Playbook” a whopping 84% of survey respondents reported a perceived increase in chief compliance officer liability.
Since the release of Financial Industry Regulatory Authority’s (FINRA) scope of liability reminder under FINRA rule 3110, the topic has become a mainstay within the industry, leaving compliance professionals to wonder how they can work to mitigate risk and thus liability.
According to FINRA, “Chief compliance officers play an important role in facilitating compliance by promoting strong practices that protect investors and market integrity. That does not automatically make them supervisors, subject to FINRA’s supervisory requirements,” said Jessica Hopper, Executive Vice President, Enforcement. “This Notice helps to clarify when a CCO is—and is not—subject to potential liability under FINRA’s Supervision rule.”
Why technology is the answer to the perceived increase in CCO liability in accordance with FINRA rule 3110
As a compliance professional, you serve as the safeguard for your financial advisory firm, mitigating potential risk factors and alerting the appropriate members when a compliance protocol is breached.
The liability of CCOs and other compliance professionals varies tremendously based on the situation, the due diligence involved and a multitude of other factors. However, there are definitive steps compliance professionals can take to help mitigate risk and reduce occurrences that would result in personal liability. One of which? Investing in a reliable, accurate compliance technology.
You might be asking, how exactly does a technology help alleviate some of my liability? Simple, technology makes tracking and reporting on your due diligence efforts that much simpler. In other words, should a worst-case scenario occur and the Securities and Exchange Committee (SEC) or FINRA come knocking on your door, you can prove that your compliance team and the financial firm at large performed the appropriate due diligence to the best of your ability.
The ComplySci® Platform enables your compliance team to manage risk and liability, tracking and reporting the entire scope of your employee trade monitoring compliance process. Specifically, ComplySci allows you and your team to:
- Track and assess preclearance requests to block activity that could result in potential misconduct.
- Gain a full view of employee accounts through an unparalleled number of direct feeds with brokerage firms and an innovative statement tracker.
- Automatically monitor questions to flag unexpected responses and set up conditional questions to make informed compliance decisions.
- Export visual analytics, dashboards and ad-hoc reports to quickly share pertinent compliance information.
- Document a full audit trail of employee activity and compliance communications to comply with books and records requirements.
Chief compliance officer liability isn’t likely to decrease any time soon. But armed with the right technology and tools, you can be sure your due diligence is never questioned.
Schedule a call today to speak with a compliance professional about your liability and whether the ComplySci® platform is right for you.