In the heightened global regulatory climate, chief compliance officers of hedge fund managers are rightfully concerned about being held liable for their own acts or omissions, or for those of other employees of the management company.  See “Can the Chief Compliance Officer of a Hedge Fund Manager be Terminated for Investigating a Potential Compliance Violation by the Manager’s Principal, CEO or CIO?,” Hedge Fund Law Report, Vol. 4, No. 2 (Jan. 14, 2011).  A recent investigation and settlement by the U.K. FSA helps to define the scope of potential CCO liability and the standard of care applicable to CCOs presented with “red flags.”  See also “To Whom Should the Chief Compliance Officer of a Hedge Fund Manager Report?,” Hedge Fund Law Report, Vol. 4, No. 22 (Jul. 1, 2011).