Chief Compliance Officer Blamed for Faulty SEC Filing

In the latest instance of federal regulators holding chief compliance officers liable for company failings, the U.S. Securities and Exchange Commission has fined David Osunkwo and suspended him for one year from securities-related jobs.

The SEC said in its Aug. 15 order that Osunkwo submitted inaccurate information in a filing for two affiliated investment advisory companies, and Osunkwo listed the chief investment adviser as having certified the figures when, in fact, he had not.

Osunkwo, who is also a licensed attorney in New York, served as a contracted chief compliance officer for Aegis Capital and the now defunct Circle One. Osunkwo, now of Charlotte, North Carolina, could not be reached for comment. His company, Strategic Consulting Advisors, has closed, the SEC said.

In April 2011, the SEC said, Osunkwo submitted an annual filing that reflected a merger between Aegis and Circle One. The filing said the two companies had combined "assets under management" of $182,000, and a total of 1,289 clients. 

The SEC said the filing overstated the assets under management by some $119,000, and the number of clients by about 1,000. In reality the companies had only about $93,000 in assets under management from fewer than 300 clients.

The commission said Osunkwo had relied on somewhat vague estimates from an email sent by the chief investment officer. Osunkwo did not bother to verify the accuracy of the estimates, the SEC said.

Osunkwo also "misstated that the CIO had also certified the contents to be true and correct," according to the SEC order. Among other things, the SEC said the compliance officer "willfully violated" the Investment Advisers Act of 1940, which makes it "unlawful for any person willfully to make any untrue statement of a material fact in any registration application or report filed with the commission."

A footnote states that a willful violation of securities laws simply means "that the person charged with the duty knows what he is doing." It does not require that the person be aware that he is violating the law, it added.

Osunkwo consented to entry of the order, without admitting or denying the findings.

He is not the first chief compliance officer to be penalized for not fulfilling his duties. In mid-May the Federal Deposit Insurance Corp. held an unidentified chief compliance officer at Banamex USA, a Citigroup Inc. subsidiary in California, liable for the bank's money laundering and compliance violations of the Bank Secrecy Act. The CCO was barred from working at a financial institution in the future and ordered to pay a $70,000 fine.

And earlier in May, the federal government settled its first ever suit against a compliance officer in finance. Thomas Haider, the former CCO of MoneyGram International Inc., agreed to pay a $250,000 civil penalty and to accept a three-year bar on acting as a compliance employee at a money transmitter.

Contributing Author

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Sue Reisinger

Sue Reisinger is a Senior Reporter for Corporate Counsel. You can read more of her articles here or email her at

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