On August 10, 2015, SEC Commissioner Luis Aguilar released a public statement concerning “the critical importance of clarity in Commission Orders for enforcement actions.” Commissioner Aguilar stated that the Commission and its staff “should always be cognizant that there is a broad audience that carefully reads Commission Orders for guidance” as to what is, and what is not, acceptable behavior. More specifically, Commissioner Aguilar stated that when Commission Orders involve federal securities law violations by Chief Compliance Officers, “[t]he need for clear and transparent Orders is especially important.” Noting that “CCOs, after all, exist in large part to implement and enforce policies and procedures to prevent federal securities law violations,” Commissioner Aguilar emphasized that “the importance of clarity in Commission Orders, especially the ones involving CCOs, cannot be overstated.”

Along the same lines, SEC Commissioner Daniel Gallagher, in a speech delivered to the U.S. Chamber of Commerce on August 4, 2015 in connection with the fifth anniversary of the enactment of the DoddFrank Act, warned that “[r]ecent enforcement actions holding compliance officers to a standard of strict liability will only serve to chill talented professionals from playing this vital role.”

These comments come against a backdrop of other recent comments by SEC Commissioners regarding the appropriate treatment of CCOs in enforcement actions. For instance, on June 18, 2015, Commissioner Gallagher, in a public statement, commented on his vote against two settled SEC enforcement actions (In the Matter of Blackrock Advisors, LLC and In the Matter of SFX Financial Advisory Management Enterprises, Inc.) involving alleged violations by CCOs of Rule 206(4)-7 under the Advisers Act, which requires registered investment advisers to adopt and implement written policies and procedures reasonably designed to prevent violations of the Act. He stated that “[b]oth settlements illustrate a Commission trend toward strict liability for CCOs under Rule 206(4)-7,” suggesting that “[a]ctions like these are undoubtedly sending a troubling message that CCOs should not take ownership of the firm’s compliance policies and procedures, lest they be held accountable for conduct that, under Rule 206(4)-7, is the responsibility of the adviser itself.”

On June 29, 2015, in a public statement titled “The Role of Chief Compliance Officers Must be Supported,” Commissioner Aguilar expressed “concern that the recent public dialogue may have unnecessarily created an environment of unwarranted fear in the CCO community” and that “the dissent [of Commissioner Gallagher] and the resulting publicity, has left the impression that the SEC is taking too harsh of an enforcement stance against CCOs, and that CCOs are needlessly under siege from the SEC.” Commissioner Aguilar insisted that “the Commission does not bring enforcement actions against CCOs who take their jobs seriously and do their jobs competently, diligently, and in good faith to protect investors.” On July 15, 2015, Chair Mary Jo White also weighed in on the public debate in her opening remarks at the SEC’s Compliance Outreach Program for Broker-Dealers. She assured the audience that it is not the Commission’s intention to use its enforcement program to target compliance professionals, stating that “[w]e do not bring cases based on second guessing compliance officers’ good faith judgments, but rather when their actions or inactions cross a clear line that deserve sanction.”