At the recent SEC meeting for compliance officers, SEC Chair Mary Jo White re-iterated the Commission’s acceptance of outsourcing as a viable structure to implement effective compliance programs. Ms. White said that compliance officers play a “critical role” whether the compliance functions are in-house or firms “rely on contractors, consultants, or other third party vendors.” Ms. White noted that firms that use an outsourced compliance solution do not outsource the ultimate responsibility for adopting and implementing an adequate compliance program.
OUR TAKE: Ms. White’s statement is consistent with the SEC’s November Alert on outsourcing, which described how firms could successfully outsource the CCO role. (See http://blog2.cipperman.com/2015/11/sec-offers-guide-to-outsourcing-compliance/). It appears that the only people opposed to the outsourcing model are those small compliance consultants that do not have the resources to satisfy the SEC’s due diligence, documentation, and on-site testing requirements.