A Look at the NSCP’s Firm and CCO Liability Framework

In the last few years, the SEC has increasingly gone after CCOs for securities violations – or at least that is how it feels to the CCO community. In fact, in December 2020, the National Society for Compliance Professionals (NSCP) surveyed its members on the topic of CCO liability. Nearly all respondents were either very or somewhat concerned that regulators may have expanded the role of CCOs and the scope of their duties by imposing personal liability on them. Similarly, most respondents were very or somewhat concerned that personal liability would be imposed without recognition that a CCO is acting in good faith in a high-volume, high-pressure environment. In response to those concerns, the NSCP recently released a Firm and CCO Liability Framework (NSCP Framework). This article explains how the NSCP Framework was created, presents the core of the NSCP Framework, discusses its goals and compares it to the New York City Bar Association’s CCO liability framework, with commentary from Genna N. Garver, partner at Troutman Pepper and member of the NSCP’s Regulatory Advisory Committee. See our two-part series “Why Fund Managers Must Adequately Support CCOs and Compliance Programs”: Recent Failures Lead to SEC Enforcement Actions (Jul. 30, 2019); and Six Valuable Lessons From Recent Enforcement Actions (Aug. 13, 2019).

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