The SEC Office of Compliance Inspections and Examinations issued a risk alert regarding investment advisers and investment companies that outsource their Chief Compliance Officer (CCO) duties to unaffiliated third-parties. The SEC noted that the mandated role of CCO is increasingly being outsourced and, while the OCIE found many strong third-party CCO practices, it also identified potential risks and several practices that should be strengthened. As such, CCOs are advised to ensure a proactive compliance policy that meets their obligations under Rule 206(4)-7 of the Investment Advisers Act of 1940 and Rule 38a-1 of the Investment Company Act of 1940.
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