Is Your Firm “On the List” for a 2014 Exam?

Both the SEC and FINRA have recently released their 2014 exam priorities. At FrontLine Compliance, we look forward to the release of this information every January so that we can help our clients structure their compliance program priorities for the year. The exam priority releases tell the industry which types of firms the SEC and FINRA plan to visit and detail certain areas of concern for the regulators.

Based upon our discussions with SEC and FINRA staff in recent months, as well as what the regulators have disclosed publicly, your firm may be visited by its primary regulator or the SEC this year if it fits into one or more of the following categories:

  1. Dual registrants or firms with an affiliated adviser or broker-dealer
  2. Newly registered private fund managers – hedge fund or private equity firms
  3. RIAs that have not been examined by the SEC in any capacity within the last three years
  4. Firms with a primary focus on developing, sponsoring or selling wrap fee programs
  5. Fixed income firms, whether a B/D or RIA, especially if focused on derivatives and/or hybrid or structured products
  6. Private fund managers that have filed to take advantage of new Rule 506(c)
  7. Firms with past, egregious violations or those that have hired individuals with major disciplinary histories
  8. Firms with several affiliated entities, which increases the risk for conflicts of interest
  9. Firms with a focus on the retirement space, either from a sales or asset management perspective
  10. Research firms and quantitative trading firms
  11. Broker-dealers active in the private placement arena, especially crowdfunding
  12. Mutual fund distributors

2014 exams are already underway. If your firm falls into any of the above categories then it will move up in the 2014 risk profiling systems utilized by the SEC and FINRA. If your firm matches three or more of the above categories, that may put you at the top of the list for a 2014 exam.