HEDGE FUND LEGAL AND COMPLIANCE DIGEST: Best Practices to Avoid Regulatory Scrutiny
September 22, 2017, Hedge Fund Legal and Compliance Digest
The regulatory environment has changed for hedge fund managers, and there is an expectation from investors and regulators that managers have a tailored, robust and evolving compliance program in place. This is not, however, an inexpensive undertaking, and managers with limited resources, both financially and in personnel, may outsource some or all of their compliance obligations to third-party consulting firms.
Alaric Compliance Services chief executive officer Guy Talarico, who was quoted in the article in Hedge Fund Legal & Compliance Digest, said the SEC is particularly concerned about firms having “drive-by” CCO arrangements. “The SEC wants to know that the CCO, whether in-house or outsourced, is completely on the job and fully knowledgeable about the operational and compliance risks of the firm. The SEC wants to see that the outsourced CCO is part of the everyday activities of the firm, that they are respected by senior management and that they have the authority to carry out their duties. The regulators are looking at the level of expertise and support that an outsourced CCO provides.”
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