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SEC imposes duties, certification requirement on Chief Compliance Officers for swap dealers

The Securities and Exchange Commission adopted a final rule this month requiring swap dealers to appoint chief compliance officers to run the compliance program and report to the board or the CEO.

The CCO rule is part of the new business conduct standards for security-based swap dealers and major security-based swap participants.

The SEC adopted the rule as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

It goes into effect on June 27.

Covered swap dealers will have to designate a CCO on their SEC registration form.

The CCO is required to report directly to the board of directors or to the senior executive officer.

The CCO must prepare and sign an annual compliance report that includes “a certification, under penalty of law, that the compliance report is accurate and complete.”

The CCO’s compensation and removal must be approved by a majority of the board of directors.

The CCO will have to “establish, maintain and review policies and procedures reasonably designed to ensure compliance” with the applicable securities laws.

And the CCO has to make sure the business has “policies and procedures reasonably designed to remediate promptly non-compliance issues” identified by the CCO.

The new rule requires the CCO, in consultation “with the board of directors or the senior officer of the organization, [to] promptly resolve conflicts of interest that may arise.”

The SEC rule for Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants (Release No. 34-77617; File No. S7-25-11) is here (pdf).


Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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