In an October 2020 speech, SEC Commissioner Hester M. Peirce called for a framework detailing which circumstances would cause the SEC to seek personal liability from CCOs and which would militate against personal liability. Peirce argued that such a framework would help the compliance community by “eliminating uncertainty and inspiring good practices,” while aiding the SEC’s staff in deciding whether to charge CCOs. The New York City Bar Association (Association), in conjunction with the American Investment Council; the Association for Corporate Growth; and the Securities Industry and Financial Markets Association, recently granted Peirce’s request, releasing a framework for CCO liability in the financial sector (Framework). This first article in a two-part series explains the reasoning for the Framework and provides an overview of its components, as well as two additional proposals by the Association. The second article
will discuss CCO liability in general, as well as the Framework specifically, through the eyes of current and former CCOs, along with a former SEC Enforcement Division official. See “SEC Commissioner Peirce Shares Views on Personal Liability for CCOs
” (Nov. 5, 2020); and “NYC Bar Report on CCO Liability Calls for More Regulatory Guidance, Transparency and Cooperation
” (Mar. 5, 2020).