The Securities and Exchange Commission (“SEC”) Office of Compliance Inspections and Examinations (“OCIE”) recently released its annual Examination Priorities. It focuses on practices, products, and services that present potentially heightened risk to investors and/or the integrity of the U.S. capital markets.

The priorities are organized around three areas: (1) retail investors; (2) senior investors and retirement investments; and (3) market-wide risks.

Retail Investors – OCIE is pursuing a variety of examination initiatives to assess potential risks to retail investors highlighting: (i) electronic trading advice and the overseeing algorithms that generate recommendations; (ii) wrap fee programs; (iii) exchange-traded funds; (iv) never-before examined investment advisers; (v) recidivist representatives and their employers; (vi) multi-branch advisers; and (vii) share class selection.

Senior Investors and Retirement Investments – As the U.S. population ages, OCIE will increase attention on its (i) ReTIRE initiative; (ii) public pension advisers; and (iii) senior investors.  To this end, the OCIE will focus on recommendations and sales of variable insurance products, pay-to-play and undisclosed gifts and entertainment practices and supervisory programs and controls relating to products directed at senior investors.

Assessing Market-Wide Risks – In order to maintain fair, orderly and efficient markets, OCIE will focus on the following initiatives: (i) money market funds; (ii) payment for order flow and firms duty of best execution; (iii) clearing agencies; (iv) the quality of FINRA examinations; (v) regulation systems compliance and integrity; (vi) cybersecurity; (vii) national securities exchanges; and (viii) anti-money laundering.

OCIE recognizes the above list is not exhaustive and expects to allocate resources to other priorities including municipal advisors, transfer agents, private fund advisers, and will continue to conduct examinations focusing on new matters that arise from new market developments.

Click here to read the SEC 2017 Examination Priorities Letter.

Click here to read about FINRA’s 2017 Regulatory and Examination Priorities.

Please contact Chicago attorney, Doug Hyman, with questions about our firm’s regulatory practice.

Share This