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Outsourced CCO Services

Dr. Nick Oberheiden
Attorney Nick Oberheiden
Outsourced CCO Services Team Lead
envelope iconContact Nick

It is more and more difficult for brokerage firms in the U.S. to achieve compliance with U.S. securities law. The legal obligations that they have to satisfy seem to increase every year, and many of them change frequently. However, particularly for small brokerage houses, hiring or maintaining a dedicated chief compliance officer (CCO) is unfeasible or extremely costly.

Outsourcing CCO duties to an external company has become increasingly common in the securities field.

There are many benefits to outsourcing CCO duties. Finding the right firm to handle them, though, can be difficult. After all, the liability that follows a failure to comply with the applicable laws will typically still rest with your business; not with the company that you outsource your compliance needs to.

Choosing the right CCO services firm can be a more difficult decision to make than the decision to outsource. The securities compliance professionals and securities litigation defense attorneys at Oberheiden P.C. have the experience and institutional knowledge necessary to handle all of your CCO needs.

CCO Duties Can Be Overwhelming

Compliance in the securities industry is complex, opaque, and ever-changing. The U.S. Securities and Exchange Commission (SEC) promulgates rules that regulate nearly every aspect of the securities business, from registering securities to transacting them to keeping records to marketing the brokerage firm to potential clients. Those rules are authorized by numerous federal statutes, each of which can cover different aspects of the securities field and which frequently overlap one another with multiple layers of legal obligations to satisfy. Just a few of the most important statutes are the:

  • Securities Act of 1933, which requires securities to be registered with the SEC or have a valid exemption to the registration requirement
  • Securities Exchange Act of 1934, which regulates the sale of securities on the secondary market
  • Investment Act and the Investment Company Act, both of 1940, which regulate mutual and hedge funds as well as exchange traded funds, or ETFs
  • Investment Advisers Act of 1940, which regulates investment advisers and how they can do business
  • Foreign Account Tax Compliance Act of 2010, which requires U.S. citizens to report any foreign accounts that they have to the Financial Crimes Enforcement Network (FinCEN) at the U.S. Department of the Treasury, and also requires foreign banks to help the Internal Revenue Service (IRS) track foreign accounts of U.S. citizens
  • Dodd-Frank Wall Street Reform Act of 2010, which imposes strict regulations on large financial institutions

Each of these laws carry significant compliance obligations. Furthermore, the SEC is authorized to create additional rules and regulations in order to enforce these laws. In many cases, those rules and regulations from the SEC go well beyond the obligations imposed by the laws that authorize them.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd
Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester
Brian J. Kuester

Former U.S. Attorney

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara
Linda Julin McNamara

Federal Appeals Attorney

Aaron L. Wiley
Aaron L. Wiley

Former DOJ attorney

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (DOJ)

Chris Quick
Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow
Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

There are Numerous Benefits to Outsourcing Your CCO Obligations

While each brokerage firm is unique, there are numerous benefits that they are likely to share by outsourcing their CCO obligations to an outside firm that has the requisite experience to tackle them effectively. Just a few of those benefits are:

  • Maximizing your firm’s manpower by removing onerous compliance obligations from in-house employees
  • Ensuring that your compliance measures are up-to-date
  • Removing the job of constantly monitoring securities law for changes that might make your compliance protocol obsolete or ineffective
  • Potentially getting an even more experienced chief compliance officer for your firm
  • Getting an experienced, independent review of your compliance measures
  • Potential legal protections for egregious errors by the outsourced CCO
  • Quickly satisfying the SEC’s demands for proper compliance programs
  • Saving firm money by not having to hire a full-time CCO in-house
  • Avoiding cost-intensive upgrades to technology that might be necessary to remain in compliance
  • Taking a hands-off approach inside the firm that allows you and your regulated securities professionals to focus on helping clients, while still resting assured that experienced professionals are working in the background to ensure that your firm is complying with U.S. securities law

Most of these benefits stem from the fundamental concept behind outsourcing your brokerage firm’s CCO duties: You contract with an exceptionally experienced compliance professional to handle the CCO obligations for your firm. The outsourced CCO that you will get will have generally done lots of compliance work for other, similar brokerage firms in the past, giving them invaluable experience that your in-house compliance team will not have access to. Because the CCO that you outsource to will have helped other firms, they will have seen far more compliance measures and will have a far better idea of how to handle your needs in the most efficient way possible.

Oberheiden P.C. is More Than Capable of Providing the Outsourced CCO Services That You Need

While the benefits of outsourcing your firm’s CCO duties are wide-reaching and significant, many company stakeholders still balk at the idea or hesitate the pull the trigger on it. In many cases, they doubt that the CCO they use will end up having the experience necessary, or the familiarity with their brokerage firm, or the resources to do the job right.

The securities litigation and compliance professionals at Oberheiden P.C. have the types of background that puts these concerns to rest. Our experience in the securities field is extensive, as many of our lawyers, investigators, and compliance professionals only came to Oberheiden P.C. after long and successful careers within federal law enforcement and investigation agencies, including the SEC, the U.S. Department of Justice (DOJ), the IRS, and the Federal Bureau of Investigation (FBI).

Furthermore, by outsourcing CCO duties to Oberheiden P.C., the CCO that you would have on call would have access to a strong team of experienced compliance and defense lawyers that would enhance the outsourced CCO services that you would receive for your brokerage firm.

Frequently Asked Questions About Outsourced CCO Services and Oberheiden P.C.

Will My Brokerage Firm Be Liable if My Outsourced CCO Makes an Error?

Generally, outsourcing compliance obligations to an outside CCO will not protect a securities or brokerage firm from liability for failing to comply with SEC rules or regulations. In the end, it is up to the brokerage firm to reach a state of compliance, and if the outsourced CCO fails to attain it and that leads to a legal violation, it is still the firm that would be held liable.

However, many brokerage firms and outsourced CCO service providers create agreements that cover what would happen if the outsourced CCO fails to deliver an adequately high standard of service. In many of these agreements, deliberate, reckless, or grossly negligent errors or oversights by the CCO may entitle the brokerage firm to a claim.

With that said, though, the risks that an outsourced CCO presents to a brokerage firm are still present even when the brokerage firm handles CCO duties in-house. If you use an internal employee or executive as CCO, their mistakes or oversights will also expose the firm to legal liability.

Does the SEC Let Securities Firms Outsource Their CCO?

Yes, there is nothing in the rules and regulations that the SEC enforces that prohibits brokerage firms from outsourcing their CCO to an independent compliance firm. In fact, as long as a minimal level of due diligence was performed in choosing where to outsource those services to, doing so is frequently seen as a sign that the brokerage firm took reasonable steps to bring their company into compliance: It means that you hired a professional to handle the compliance obligations on your behalf.

What Does Oberheiden P.C. Mean When It Calls Itself a National Law Firm?

Oberheiden P.C. is a national law and compliance firm. While our main offices are in Houston and Dallas, Texas, we have other locations across the U.S. No matter where your brokerage firm or securities practice is, there is a good chance that we have local attorneys, compliance professionals, and CCOs that can help you with your legal and compliance needs.

Why Doesn’t Oberheiden P.C. Call Itself the Best CCO Service Provider?

We do not like calling ourselves the best because we think it means way more when our prior clients say something similar about us. Many of them have, in the testimonials that they have left about the services that we provide.

Many of these successes come from the fact that Oberheiden P.C. only employs senior-level attorneys, investigators, and compliance professionals. This does not just mean that your advocate will have lots of prior experience handling cases that were similar to your own; it also means that your case will not be delegated to someone with less direct experience. Unlike most other firms, we cannot delegate legal matters to junior associates or inexperienced professionals because we do not have any on our staff.


Contact Oberheiden P.C. Today

Outsourcing CCO services is becoming an increasingly popular option for securities firms across the United States. Complying with the many legal obligations imposed by the SEC has become extremely difficult, especially for smaller firms. By outsourcing your CCO, you can tap into a more experienced professional while still protecting your firm’s bottom line.

Call the compliance professionals at Oberheiden P.C. today at (888) 680-1745 or contact them online.

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