Management Liability for Financial Institutions

Chief Compliance Officer Endorsement

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Chief Compliance Officers (CCOs) play a critical role in promoting compliance with regulations and ethical standards in the investment management industry. They have specific obligations to make sure their firms comply with complex and ever-changing rules governing their operations. In the post credit crisis era, there has been an increase in the number of regulatory actions brought against individual CCOs. These actions may hold CCOs personally liable for regulatory violations and are often brought as violations of the Investment Advisory Act Rule 206(4)-7 which requires registered investment advisory firms to:

  1. Adopt and implement written compliance policies and procedures;
  2. Perform annual reviews; and
  3. Designate a CCO to be responsible for the administration of the compliance policies and procedures.

Chubb’s Asset Management Protector Policy Chief Compliance Officer Coverage Endorsement provides a separate, dedicated Side A limit for CCOs when a case such as the above occurs. The CCO Endorsement is non-indemnifiable coverage for CCOs and is not shared with other parties under the policy. This dedicated Side A coverage gives CCOs confidence in knowing they will have coverage even if they are not indemnified by their organization. Chubb’s Asset Management Protector Policy Chief Compliance Officer Coverage Endorsement is available in the United States for both new and renewal investment advisory clients if underwriting qualifications are met.

Endorsement Highlights

  • $1,000,000 of coverage in addition to the limit of liability for the CCO who is listed by name on the endorsement
  • Provision to prevent the doubling or tripling of CCO additional limits when coverage is being provided across multiple insuring clauses
  • After primary limit and excess policy limits are exhausted, coverage applies for Side A claims and on an excess basis
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