The Dodd Frank Act now requires Private Equity firms with over $150 Million in assets under management to register with the SEC as an Investment Adviser. Along with this comes the requirement to design and implement a compliance program and designate a Chief Compliance Officer. Private Equity firms have 3 options to fulfill the compliance requirement:
Hire a full time CCO
Add the CCO duties to the existing duties of the CFO or COO
Outsource to an industry expert
Hiring a full time CCO can be expensive, and is unnecessary given the scaled back compliance needs of private equity firms.
CFO's and COO's don't have the subject matter expertise to build and manage a quality compliance program.
It is also not the highest and best use of these valued resources. In addition, CFO's and COO's don't want the responsibility or the liability of this role, for which they have no expertise.
The outsource option is ideal for most private equity firms.
The outsourcer is a subject matter expert, the outsourcer doesn't take sick days, and the outsourcer doesn't resign suddenly.
Compliance is becoming more important to institustional buyers, and there is significant reputational risk in not doing it well.
Contact us to learn more about how Cipperman Compliance can build a custom compliance program and either name one of our people to be your CCO, or assist the in-house person you designate as your CCO.