Is the notion of an in-house compliance officer antiquated? BISYS' compliance product seems to think so.

The outsourcing specialist is on the lookout for compliance officers for its ComplianceEDGE product. BISYS just hired OppenheimerFund's former chief compliance officer, Frank Pavlak, to join the 70 compliance professionals working at BISYS.

Fred Schmidt, founder of his own private advisory company, also joined BISYS, the firm announced on Monday.

Pavlak and Schmidt will serve as chief compliance officers within ComplianceEDGE. The product, which was launched in April, helps fund companies comply with the new SEC Rule 38a-1 which takes effect October 5. The rule requires fund companies to institute additional compliance measures as well as requires fund boards to have independent compliance officers reporting directly to the board.

As an outsourced compliance officer, Pavlak may be taking on two or three times his former workload -- one compliance officer may handle two, three or eventually more than three fund firms' compliance, a BISYS spokesperson told The 401kWire when it launched the product in April.

Although BISYS currently employs 70 compliance professionals, it said it expects to hire more. A call to BISYS regarding additional hiring was not immediately returned.

Clearly BISYS stands to gain from hiring compliance officers and selling their services back to multiple clients, but what about fund firms?

It seems the idea is appealing to some. BISYS said that it had already signed 12 fund clients, nine of which were using BISYS' compliance officer service.

Apparently the idea was not compelling enough for OppenheimerFunds, however. OppenheimerFunds did not choose to hire its now outsourced compliance officer back from BISYS; the New York-based firm promoted a company insider to senior vice president and chief compliance officer a few months ago, said Gregory Stitt, spokesman for OppenheimerFunds. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE