SEC’s 2017 Exam Priorities

Last week the Securities and Exchange Commission issued the 2017 priorities for the Office of Compliance Inspections and Examinations. There are five main items on the list, plus some others. Private funds are still on the list.

Retail Investors

  • Roboadvisers
  • wrap fee programs
  • ETFs – redemption and sales practices
  • Never-before examined
  • Recidivist
  • Multi-branch -(Are your smaller branches as compliant as the main office?)
  • Share class selection

Senior Investors and Retirement Investments

  • Continuing the multi-year ReTIRE initiative, focusing on investment advisers and broker-dealers along with the services they offer to investors with retirement accounts.
  • Variable insurance products
  • Target date funds
  • Public pension plan advisers. “We will examine investment advisers to these entities to assess how they are managing conflicts of interest and fulfilling their fiduciary duty. We will also review other risks specific to these advisers, including pay-to-play and undisclosed gifts and entertainment practices.

Market-Wide Risks

  • Money market funds under the new rules.
  • Payment for order flow programs
  • Clearing agencies
  • Regulation SCI and anti-money laundering rules

FINRAConsistent with OCIE’s goal of enhancing oversight of FINRA to protect investors and the integrity of our markets, it will continue conducting inspections of FINRA’s operations and regulatory programs, and focus resources on assessing the examinations of individual broker-dealers.

Cybersecurity OCIE will continue its ongoing initiative to examine for cybersecurity compliance procedures and controls, including testing the implementation of those procedures and controls at broker-dealers and investment advisers.

In addition to those big ones, OCIE is continuing to look at municipal advisors, transfer agents and private fund advisers.

“We will continue to examine private fund advisers, focusing on conflicts of interest and disclosure of conflicts as well as actions that appear to benefit the adviser at the expense of investors.”

Sources:

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