In a recent National Exam Program Risk Alert,1 Securities and Exchange Commission (“SEC”) staff within its Office of Compliance Inspections and Examinations (“OCIE”) noted a growing trend among SEC-registered investment advisers and investment companies (collectively, “registrants”) to outsource compliance activities to unaffiliated third parties, such as consultants and law firms. According to a 2011 study, 38 percent of registrants opted to outsource some aspect of their compliance function, up more than 10 percent from the previous year. The OCIE has observed that some registrants have decided to outsource all compliance activities to third parties, including the role of their chief compliance officers (“CCOs”). These outsourced CCOs may perform key compliance responsibilities, such as updating firm policies and procedures, preparing regulatory filings, and conducting annual compliance reviews.