Even in the best of circumstances, administering the compliance program of a hedge fund manager presents intellectual, logistical and personal challenges for chief compliance officers (CCOs).  However, the inherent difficulties of the job are compounded when senior management of a manager is not committed to a culture of compliance.  Specifically, CCOs that discover conduct that merits reporting may be disinclined to report internally where they fear retaliation.  See “Sullivan v. Harnisch and SEC Proposed Whistleblower Rules Bolster Internal Compliance Programs While Creating Catch-22 for Compliance Officers,” Hedge Fund Law Report, Vol. 4, No. 10 (Mar. 18, 2011).  This disinclination may be compounded by a recent New York Court of Appeals decision generally holding that CCOs of New York-based hedge fund managers are not exempt from the “employment-at-will” doctrine and can be dismissed for internal reporting of suspected wrongdoing.  Among other ramifications, this decision may further incentivize external reporting and whistleblowing – precisely the sort of incentives that the industry and individual managers have been working to mitigate.  See “How Can Hedge Fund Managers Incentivize Employees to Report Compliance Issues Internally in Light of the SEC’s Whistleblower Bounty Program?,” Hedge Fund Law Report, Vol. 5, No. 20 (May 17, 2012).