Law firm Stroock & Stroock & Lavan LLP (Stroock) recently hosted a seminar on liability risk confronting chief compliance officers (CCOs) at hedge fund management companies. Panelists addressed lessons learned from recent enforcement actions involving CCO liability; the impact of the SEC’s recently-published frequently asked questions (FAQs) addressing supervisory liability of fund manager CCOs; and best practices that CCOs can implement to mitigate liability risk. See “What Do the SEC’s Recently Released FAQs on Supervisory Liability Mean for Legal and Compliance Personnel at Broker-Dealers and Hedge Fund Managers?
” Hedge Fund Law Report, Vol. 6, No. 41 (Oct. 25, 2013). The panelists included Stroock partner Robert E. Plaze, who previously served as Deputy Director of the SEC’s Division of Investment Management; Stroock partner Tram N. Nguyen, who previously served as Branch Chief of the Private Funds Branch within the Division of Investment Management; William Braverman, general counsel (GC) of asset management and managing director at Neuberger Berman Group LLC; and Ronen Voloshin, associate general counsel and CCO at Monarch Alternative Capital LP. This article discusses the salient points raised during the seminar and describes the five strategies identified by panelists for mitigating the risk of supervisory liability for manager CCOs.