Backdating and Withholding Compliance Records Results In Stiff Penalty, Industry and SEC Bars for CCO

A recent SEC enforcement proceeding against the CCO of a private fund adviser bears out the adage that the coverup can be worse than the crime. The CCO had conducted a compliance review of an employee’s potential receipt of material nonpublic information but apparently neglected to document that review at the time. She allegedly backdated a compliance memorandum and, during a subsequent SEC exam, concealed her actions from the SEC. She now faces industry and SEC bars and a stiff fine. This action is a reminder of the importance of maintaining accurate and timely books and records, as well as not misleading SEC exam staff. This article details the CCO’s alleged misconduct and the terms of the settlement order. See “Disgorgement Action Reveals Dangers of Having an Unqualified CCO” (Apr. 16, 2020); and our two-part series “What a Recent SEC Opinion on a FINRA Disciplinary Action Says About CCO and CEO Liability”: Part One (Jan. 24, 2019); and Part Two (Jan. 31, 2019).

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