Speech by SEC Chairman:
Opening Message before the CCOutreach National Seminar
Chairman Christopher Cox
U.S. Securities and Exchange Commission
November 8, 2005
Good morning and welcome to the inaugural CCOutreach National Seminar. This is a marvelous opportunity for me to show my support for the important work that each of you performs as chief compliance officers. This National Seminar is an unprecedented gathering of both CCOs and SEC staff . It is a chance for us to discuss the compliance issues you face on a daily basis.
Each of the Seminar's panels is going to feature senior-level SEC staff, as well as CCOs from both large and small firms. It is my hope that the Seminar's panels will stimulate a thoughtful dialogue. We will all benefit from a healthy exchange of ideas, and I am sure we would all like to hear answers to one another's questions. And I hope these discussions will reinforce your strong commitment to serve investors through your important role as chief compliance officers.
The SEC's desire to host this seminar underscores the respect and admiration we have for the critical compliance functions that CCOs perform. You are the cornerstone of the investment management compliance framework. America's investors need the passion, expertise, and determination that you bring to your jobs.
As perhaps your seating arrangements are making obvious, we have registered a maximum capacity crowd of CCOs to attend this National Seminar. That does not count the hundreds -- if not thousands -- of CCOs listening over the Web. The positive response to this program has been overwhelming, and it is a testament to the diligence with which you do your work.
It is also impressive to see the diversity of funds and investment advisory firms represented here today. Some of you represent large fund firms that are well known on both Wall Street and Main Street. Others of you represent smaller advisory firms whose names may not be so well known -- but whose personal service is invaluable to your clients.
From a geographic perspective, some of you came from as nearby as Washington, D.C.-a mere Metro ride away-while others of you have traveled across the country, from as far away as Seattle, and even from outside the continental United States. Having commuted between Southern California and Washington during my 17 years in Congress, I appreciate your efforts in getting here for today's Seminar. As a matter of fact, we've received inquiries about this Seminar from CCOs as far away as Brazil, Switzerland, Greece and the U.K. I have no doubt that a number of our U.S. registered advisory firms located overseas are taking advantage of either the live, or archived, webcast of today's Seminar.
All of this diversity highlights the fact that "one size fits all" is not going to work when it comes to compliance. No two advisory firms are exactly alike. You all have different client bases, different advisory services, different areas of investment expertise and different organizational structures. In fact, that is why we need on-the-ground compliance professionals in the first place. Because you are on the spot. You are in the best position to make your compliance programs work by tailoring them to the specific characteristics of your firms. You are the ones with a first-hand view of the potential vulnerabilities in your compliance systems. You are the ones who are best equipped to craft and administer meaningful compliance regimes to protect investors - as well as your firms' reputations. As regulators, our job--and the goal of this Seminar--is to help to succeed.
Compliance, as we are all aware, is a core function of any firm that serves investors. It is a primary responsibility of every securities professional. But as you well know, sometimes getting your firms to focus on compliance is easier said than done. The press of work, the demands of clients, and the sense that competitors are cutting corners can often combine to divert energy away from compliance responsibilities. That can be a dangerous trend for an investment management firm. It is up to you -- as CCOs -- to arrest that trend when you see it occurring, and get things going right.
As the senior compliance professional at your firm, you need to have the fortitude to stand up to those of your colleagues who do not appreciate the gravity of their compliance obligations. By your words and example, you have got to reinforce the idea that respect for a firm's compliance responsibilities, and recognition of the primacy of the clients' interests, are essential. These are significant responsibilities, but I expect that none of you took it lightly when you agreed to serve as CCO in the first place. And I know that you have approached your duties with a sense of determination - otherwise you would not be here.
For those of you who have been serving as CCO for over a year, my challenge to you is not to let down your guard. Just because compliance policies and procedures are now in place, it is hardly the case that they can be trusted to "run themselves." In order to be effective, compliance programs require active oversight. There will always be a need for monitoring, testing, and fine-tuning.
One reason for this is that your funds and advisory firms are themselves constantly changing. All businesses evolve. But the very innovations and advancements that we count on to benefit America's investors bring with them new compliance challenges. It is the CCO's job to stay one step ahead of these business innovations, in order to maintain a high level of investor protection.
So I wish you good luck as you embark on this Seminar. Most of all I want to thank you for being part of this inaugural event. On behalf of all of us here at the SEC, I thank you for your commitment to serving America's investors as CCOs.