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The CCO Playbook

2022 Edition

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“The past year has been a master class in expecting the unexpected. Heightened regulations, new sanctions and continued shifts in the very nature of work aggregating to create an environment that necessitates agility in every aspect of your compliance program. In such a complex environment, knowledge really is power. In the 2022 edition of our CCO Playbook, we aim to provide that knowledge. ”

– ComplySci CEO Amy Kadomatsu

Ready to take the next step in your compliance journey? Let’s talk about the trends and trajectory of your compliance program and how we can help you scale to meet today’s regulatory environment.

Section #1

Regulatory Activity in 2021

Faced with emerging financial trends and the ongoing effects of COVID-19, fiscal year 2021 was a turning point for the Securities and Exchange Commission (SEC), with regulatory changes and enforcement actions reshaping the compliance ecosystem.

AREAS OF NOTE:
  • “Undeterred by the challenges of the pandemic, the dedicated public servants in the Enforcement Division have continued to overcome obstacles to bring these cases [forward for prosecution] that protect investors and promote market integrity.” – Director of the SEC’s Division of Enforcement Gurbir S. Grewal.
  • In 2021, the SEC brought forward 697 total enforcement actions, 434 of which were new.
  • The Commission also saw groundbreaking success during 2021 with their whistleblower program, granting $564 million to 108 whistleblowers.
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Section #2

Compliance vs. Apathy

Solving for the numerous and substantial challenges within the compliance ecosystem require the ultimate trifecta – people, culture and technology.

FACTORS TO CONSIDER:
  • Apathetic compliance can lead to SEC sanctions or fines, loss of customers and credibility, and both monetary and reputational damages.
  • Compliance done right requires synergy between every department and employee. A consistent effort put forth across the entire organization is especially important given today’s heightened risk and regulations.
  • To achieve your end goal, you’ll need support from leadership, enterprise alignment, consistent onboarding and training, ongoing support and incentives and scalable processes.
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Section #3

Industry Leaders Share Strategies

It can often seem in the world of compliance that every new day brings a new challenge. Between the heightened SEC regulations, sanctions upending business functionalities and cybersecurity risk, compliance teams must always remain at their most vigilant.

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ADVICE INCLUDES:
  • “First, get to know your company — its mandate, purpose and people. Once you understand the business, you can then appreciate the risks that are relevant and applicable to your firm.” – CCO of General Atlantic Kelly Pettit
  • “This area of business isn’t one with a ton of wiggle room, and as the CCO you are the ultimate embodiment of compliance for your firm, so you need to be able to represent that. You have to make sure people are following through with what they should be doing, ensuring the organizational goals are aligned from the top down.” – CCO of K1 Investment Matt Jones
  • “The way I look at compliance is quite simple. Compliance is all about doing the right thing. This involves not just asking can I do this, but should I do this and how.” – General Counsel and CCO of Argand Partners, LP Catherine Clancy Mandell
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Section #4

Automating Your Compliance Program

70 percent of compliance professionals state regulatory changes are causing their teams to consider increasing automation in the next 12 months.

FACTORS TO CONSIDER:
  • As Gensler noted, we are facing a time of rapid innovation. With new capabilities, however, come new challenges and new risks, which broaden the gap between advisers and firms who keep up with technological advancements and those who don’t.
  • “Forcing someone to draw the short straw internally or rely on Excel just isn’t enough. Technology and automation have become the keystone for successful programs.” – President of ComplySci Will Bressman
  • While technology itself comes with its own set of hindrances and required resources, the core benefits far outweigh the costs. Benefits include automation, integration and elevation.
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Section #5

2022 Regulatory Priorities

The priorities of these regulators will not impact all firms in the same way. Take an in-depth look at the full text of the SEC and Financial Industry Regulatory Authority (FINRA) priorities to see specifically where and how you need to make alterations to your compliance systems and strategies.

KEY PRIORITIES:
  • SEC 2022 Exam Priorities include cybersecurity, cryptocurrency and other digital assets, standards of conduct and more.
  • While not a SEC priority, firms face increasing pay-to-play risk. As regulations continue to move local, firms must remain vigilant of increased employee contribution risk.
  • While the listed priorities are intended to help compliance programs identify and mitigate potential risk factors, they in no way represent a holistic view of compliance risk in today’s financial landscape.
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2022 CCO Playbook

Download the 2022 edition of the CCO Playbook to get the latest insight and intel on all things regulatory compliance for the coming year.

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