By Glen Barrentine ( November 14, 2018, 12:33 PM EST) -- In a review of a Financial Industry Regulatory Authority disciplinary proceeding, the U.S. Securities and Exchange Commission recently issued an opinion that provides important guidance on liability standards relating to chief compliance officers. Significantly, the opinion also goes out of its way to state that CEOs of brokerage firms have a duty of "follow-up and review" with respect to the fulfillment by CCOs of their responsibilities and to advance the position that brokerage firms should be held responsible for regulatory failures by employees and other firm representatives in the absence of "effective staffing, sufficient resources and a system of follow-up and review."[1] While the opinion is focused on activity involving the CCO of a brokerage firm, the opinion's liability analysis would seem equally applicable to registered investment advisers and municipal advisers and their CCOs and, possibly, their CEOs....
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