On June 18, 2015, SEC Commissioner Daniel Gallagher took the unusual step of publishing a statement explaining why he had voted against two proposed settlements for enforcement cases against investment advisers, each of which alleged fairly serious violations of the federal securities laws.  See “SEC Commissioner Speaks Out Against Trend Toward Strict Liability for Compliance Personnel,” Hedge Fund Law Report, Vol. 8, No. 25 (Jun. 25, 2015).  Gallagher did not seem to be moved by these violations.  He was, however, deeply troubled that the SEC’s Enforcement Division sought to hold both firms’ chief compliance officers responsible under Rule 206(4)-7, the so called “Compliance Rule” under the Investment Advisers Act of 1940.  In a guest article, Robert E. Plaze, a partner at Stroock & Stroock & Lavan, analyzes Gallagher’s statement; addresses the more interesting case of the two settlements Gallagher voted against; and discusses Gallagher’s criticisms of Rule 206(4)-7.  For additional insight from Plaze, see “Stroock Seminar Identifies Five Strategies for Mitigating the Risk of Supervisory Liability for Hedge Fund Manager CCOs,” Hedge Fund Law Report, Vol. 7, No. 2 (Jan. 16, 2014).  For more from Stroock, see “Aligning Employee and Investor Interests Under the Volcker Rule,” Hedge Fund Law Report, Vol. 7, No. 21 (Jun. 2, 2014); and “How Can Offshore Hedge Funds Ensure That Section 10(b) Will Apply to Their Transactions in Securities Not Listed on U.S. Exchanges?,” Hedge Fund Law Report, Vol. 5, No. 13 (Mar. 29, 2012).