Think Before You “Fix” It: CCO Missteps That Led to Personal Fines and Bars
By Janaya Moscony
SEC3 President
August 13, 2025 | SEC3 Compliance
Two recent SEC enforcement actions serve as a clear reminder that Chief Compliance Officers (CCOs) can be held personally liable—not for every firm misstep, but specifically for misleading regulators during an examination. Both cases involved backdated compliance records, and in each, the SEC determined that the CCO’s effort to “fill in the gaps” crossed the line into misconduct.
Case 1: Forged Pre-Clearance Forms and False Statements
In the first matter, the SEC charged a CCO of a former registered investment adviser with altering or creating approximately 170 pre-clearance trading forms. Some were completed after trades had occurred, while others were entirely fabricated, with signatures added without the traders’ knowledge. When questioned by the SEC during an examination, the CCO misrepresented the origins of the forms. The result was a $40,000 civil penalty and a three-year bar from serving in a compliance or supervisory capacity. The SEC found violations of the Advisers Act’s books and records and compliance procedure provisions.
Case 2: Backdated Annual Review Reports
In a separate matter, another CCO created and backdated annual compliance review documents that were required by the firm’s internal policies, though not required under SEC rules. The documents were presented to the SEC during an exam as if they had been contemporaneously prepared. Unlike the first case, this CCO voluntarily admitted to exam staff that the documents had been created after the exam began. The result was a $10,000 civil penalty, with no bar from the industry. The lower penalty may have reflected the CCO’s admission of wrongdoing.
Takeaways for CCOs:
Backdating or creating compliance documents after the fact becomes a serious issue when those documents are presented to regulators as contemporaneous records. In both cases, the SEC found that the CCOs misled exam staff by submitting newly created documents and representing them as if they had been timely prepared.
Internal compliance policies carry real weight. Even when a specific document is not legally required by the Advisers Act, the SEC may still bring an enforcement action if a firm’s own policies require the document—and the CCO fabricates or falsifies it in response to an exam request.
Honesty matters. In the second case, the CCO’s voluntary admission that he had created the records during the exam may have helped avoid a harsher penalty. But even well-intentioned efforts to “fill in gaps” can lead to enforcement if they result in false or misleading submissions to regulators.
The SEC generally does not pursue enforcement lightly. Most actions are reserved for cases involving intentional misconduct or a total failure to meet compliance obligations. But these cases show that misleading SEC exam staff—even in an attempt to protect the firm—can quickly become a personal liability issue for the CCO.
At SEC3, we understand the real-world pressures compliance officers face—especially during exams. Our team works closely with CCOs and senior management to ensure documentation practices are sound, policies are realistic, and interactions with regulators are handled with care and confidence.
If you’re preparing for an exam or dealing with gaps in your records, talk to us early. We help clients spot risks before they escalate and navigate exams without putting their firm—or their personal standing—at risk. Let’s work together to keep your firm compliant and your name out of the headlines.
Need assistance with your compliance program? SEC’s team of experienced compliance professionals can help. For more information, please email us at info@sec3compliance.com, call (212) 706-4029 x 214, or visit our website at www.sec3compliance.com.
SEC3 provides links to other publicly available legal and compliance websites for your convenience. These links have been selected because we believe they provide valuable information and guidance. The information in this e-newsletter is for general guidance only. It does not constitute the provision of legal advice, tax advice, accounting services, or professional consulting of any kind.
Photo by Morgan Vander Hart on Unsplash
For over two decades, we have been providing compliance consulting services and servicing as outsourced Chief Compliance Officers. Our professionals have served as SEC regulators and in senior leadership, guiding the industry’s principal compliance association. Our consultants also have hands-on industry experience as chief compliance officers, experienced securities attorneys and senior management of investment advisers, broker-dealers and fund administrators.
What can SEC3 do for you?
SEC3 offers an extensive suite of customizable compliance services for investment advisers, private fund advisers, CPOs, CTAs, investment companies, institutional investors and broker-dealers which can complement your internal compliance program on a one-time or recurring basis depending on your needs.
Call us today at (212) 706-4029 x 229, or shoot us an email at info@SEC3compliance.com so we can set up a time for one of our consultants to discuss your needs and how we can help.