Debevoise & Plimpton

Guidance (and a touch of solace) for compliance and legal personnel on potential supervisory liability

On 30 September, the staff of the Securities and Exchange Commission’s (SEC’s) Division of Trading and Markets addressed an issue of great interest to the compliance and legal community concerning the circumstances under which the compliance and legal staffs of broker-dealers may be viewed as ‘supervisors’ and thus face liability under the securities laws for failing to supervise firm employees.

The guidance, which appears in the form of responses to frequently asked questions (FAQs), seems to confirm the industry’s long-held view that supervisory liability does not attach unless a compliance or legal employee truly functions in a supervisory capacity. However, given that any such determination turns on all of the facts and circumstances, the FAQs underscore that senior management of broker-dealers would do well to engage in an assessment of the roles and responsibilities of their compliance and legal teams.

In order for compliance and legal staff of a broker-dealer to avoid potential supervisory liability, their roles should be limited to serving as advisers to, and a resource for, the chief executive officer and other senior management who, the FAQs confirm, bear ultimate supervisory responsibility. While the FAQs focus on broker-dealers, they are also relevant to assessing the potential supervisory liability of compliance and legal personnel of registered investment advisers…

If you are registered and logged in to the site, click on the link below to read the rest of the Debevoise & Plimpton briefing. If not, please register or sign in with your details below.

Sign in or Register to continue reading this article

Sign in

Register

It's quick, easy and free!

It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.

Register now

Why register to The Lawyer

 

Industry insight

In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.

 

Market intelligence

Identify the major players and business opportunities within a particular region through our series of free, special reports.

 

Email newsletters

Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.

More relevant to you

To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.

Briefings from Debevoise & Plimpton

View more briefings from Debevoise & Plimpton

Analysis from The Lawyer

  • Shell

    Shell: taking the power back

    Shell legal director Peter Rees is switching litigation control away from external counsel to a unified global team of in-housers

Browse This Firm’s

Overview

Old Broad St
London
EC2N 1HQ
UK