and Section 15(b)( 6) of the Securities Exchange Act of 1934.173 Basically,
OMNI failed to create an effective compliance program, which caused its
employees to be unsupervised.174 Before Beynon became CCO in November
2010, OMNI did not have a chief compliance officer.175 Unfortunately,
Beynon was also the sole owner and Chief Executive Officer and was living
in Brazil while the firm was in Utah.176 His actions with the company did not
reflect the new role of CCO.177 He performed nearly no compliance functions
while CCO.178 There were no annual reviews completed and no code of
ethics enforced.179 As a result, Beynon was fined a civil penalty of $50,000
and barred from being in a compliance or supervisor role.180
This case is a prime example of the CCO position not being taken
seriously. There would be a clear conflict of interest for the sole owner and
CEO to also be the CCO. Because CCOs must report findings to the SEC, a
CEO would likely never report against themselves. Even if Beynon
performed compliance functions, he would have been biased in his auditing
of the company’s policies. Additionally, Beynon residing outside the country
for his time as CCO illustrates that OMNI was not concerned with the legal
requirements. Most, if not all, in the compliance industry would agree with
the SEC’s enforcement of this case personally against Beynon.
B. Feltl & Company Inc.
In 2011, the SEC charged Feltl & Company Inc. (“Feltl”) under Section
15(b)( 4) of the Securities Exchange Act of 1934, Sections 203(e) and 203(k)
of the Investment Advisers Act of 1940, and Section 9(b) of the Investment
Company Act of 1940.181 Feltl was a registered broker-dealer and investment
adviser.182 The company failed to approve and implement a compliance
program that would prevent violations of the Advisers Act.183 Furthermore,
Feltl did not make proper disclosures to their customers and overcharged fees
174. Id. at 2.
175. Id. at 2–3.
177. Id. at 2.
178. Id. at 3–5.
179. Id. at 2–3.
180. Id. at 6–7.
181. In the Matter of Feltl & Co. Inc., U.S. Sec. & Exch. Comm’n, Admin. Proc. File No.
3-14645, at 1 (Nov. 28, 2011), https://www.sec.gov/litigation/admin/2011/34-65838.pdf