On December 20, 2018, the Office of Compliance Inspections and Examination (“OCIE”) of the U.S. Securities Exchange Commission (“SEC”) released its 2019 Examinations Priorities for SEC registered investment advisers. After completing over 3,150 investment adviser examinations in 2018, a 10 percent increase over 2017, the SEC outlined several themes for the focus of investment adviser examinations which include the following:
- Matters of importance to retail investors, including seniors and those saving for retirement
- Fees and Expenses: Disclosure of the Costs of Investing
- Conflicts of Interest
- Senior Investors and Retirement Accounts and Products
- Portfolio Management and Trading
- Never-Before or Not Recently-Examined Investment Advisers
- Mutual Funds and Exchange Traded Funds
- Digital Assets
- For investment adviser firms actively engaged in the digital asset market, the SEC will conduct examinations focused on, among other things, portfolio management of digital assets, trading, safety of client funds and assets, pricing of client portfolios, compliance, and internal controls.
- The SEC will emphasize cybersecurity practices at investment advisers with multiple branch offices, including those that have recently merged with other investment advisers, and continue to focus on, among other areas, governance and risk assessment, access rights and controls, data loss prevention, vendor management, training, and incident response.
These themes will not be the only issues the SEC addresses in its investment adviser examinations, risk alerts, and investor and industry outreach. The SEC’s exam priorities also reference services, fees, expenses, conflicts of interest for investment advisers, and trading and execution quality issues for broker-dealers as other exam focuses.
RIA Compliance Consultants strongly encourages your CCO and other executives to read the SEC’s examination priorities and to speak with a compliance consultant about adopting and implementing policies and procedures to address SEC’s examination priorities. If you are an existing client of RIA Compliance Consultants contact your consultant or click here to schedule an introductory call.