Creating chief compliance officer positions only on paper—what we will call “ghost CCOs”—can cause firms to overlook security law violations and draw harsher penalties if the Securities and Exchange Commission (SEC) establishes wrongdoing.
In three enforcement actions taken by the SEC in recent months, owners of small investment firms who took on the responsibilities of a CCO were cited for violating securities laws. Often, these small investment shop owners held multiple titles. Two of the offending owners had four titles, including CCO; another had five.
