“Chief compliance officers play an important role in facilitating compliance by promoting strong practices that protect investors and market integrity,” said Jessica Hopper, executive vice president, enforcement, in a statement. “That does not automatically make them supervisors, subject to FINRA’s supervisory requirements. This Notice helps to clarify when a CCO is — and is not — subject to potential liability under FINRA’s Supervision rule.”
For instance, FINRA will bring an action against a CCO under Rule 3110 for failure to supervise “only when the firm confers on the CCO supervisory responsibilities and the CCO fails to discharge those responsibilities in a reasonable manner,” the notice states.
“In those instances, FINRA also will consider whether charging the CCO is the appropriate regulatory response to address the violation after weighing aggravating and mitigating factors.”