The SEC’s recently released 2025 examination priorities indicate an evolving “risk-focused” approach to conducting exams, one that allows for more effective and efficient oversight of firms. With the lead comments, FrontLine Compliance Founder and President Amy Lynch explains how the SEC’s priorities statement stresses the risk-focused method of conducting exams as a necessity, using the terminology several times. She describes how the SEC has moved around their personnel to match the number of registrants in each region and strengthened its examination capacity to meet the expanded growth of advisers, seeking to conduct a greater number of exams in the coming year. The SEC states it will be assessing firms for the greatest risks they pose, with a larger focus on the use of artificial intelligence (AI), reliance on third party providers, use of proper disclosures, cybersecurity risks and anti-money laundering (AML) compliance. Ms. Lynch further comments that commercial real estate is a category she expects to get a lot of attention from the SEC next year. This will affect private funds, but also mutual funds with infrastructure exposure could face similarly heightened scrutiny. See IGNITES (subscription required), “SEC Examiners Home In on AI, Outsourcing”
Also see, Financial Planning (complimentary guest account required), “SEC warns firms to get their AI house in order,” where FrontLine Compliance Founder and President Amy Lynch is also extensively quoted on the SEC’s 2025 Examination Priorities.
