Boston - September 16, 2004. Industry professionals say they are well on the way toward responding to new federal securities regulations effective October 5. Nearly all those who participated in a survey conducted by Boston-based consulting firm Diversified Management Resources said their firms had appointed a Chief Compliance Officer, required under the regulations. However, 30% said their employers had not yet confirmed details of the reporting structure for the role.
The regulations require mutual funds and investment advisers to adopt and implement a Compliance Program and designate a Chief Compliance Officer. Mutual funds must also obtain the approval of the fund board.
The survey is not yet complete. Results are preliminary.
Charles ONeill, principal of D.M.R., reported firms said their internal audit departments and anonymous compliance hotlines would be used to police compliance in the future. Both internal and external audit firms - and in some cases, special committees created by the COO-- will in turn keep watch over the compliance department.
The New Year will be a good one for compliance professions looking for a job, with 60% of responses indicating their employers will add to the staff next year. Most seek professionals with previous compliance experience -not a JD-for the CCO spot. Operations experience was cited as important by 30% of respondents. More than 35% of those involved in staffing decisions for the compliance department said they expect to pay CCOs $300,000 or more.
Though they are on schedule, professionals say preparation for the upcoming deadline has not been without its challenges. Many participants commented that the new regulations, broad in scope, put pressure on existing staff and pose a special burden to smaller firms.
Participants in the survey, open for two more weeks, will receive an executive summary of results. A complete report will be available for purchase.
The project is sponsored by NICSA as well as by PA Compliance, PFPC and SalesLink, all securities industry service providers.
About D.M.R.
Diversified Management Resources, Inc is a business development consulting firm supporting the financial services community. The companys business includes a retained executive search division, a strategic resources division and a creative marketing services division.
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